Break-even freight rate
The freight level at which a voyage returns a target daily earning, solved backwards from a voyage estimate, and the cash, operating and full break-evens.
The break-even freight rate is the freight level, in USD per tonne or as a lumpsum, at which a specific voyage returns a stated daily earning. It is a voyage estimate solved backwards: set the target Time Charter Equivalent, multiply by the total voyage days to get the required voyage result, add the voyage costs, gross up for commission, and divide by the cargo intake.
The full article will separate the three break-evens a desk actually uses and which are routinely confused. The cash break-even covers voyage costs alone and says only whether the ship loses less money trading than idle. The operating break-even adds the daily running cost of crew, stores, lubricants, maintenance and insurance. The full break-even adds debt service and the capital charge, and it is the only one that answers whether the ship earns its cost of capital on this employment.
It will also cover the negotiating use of the figure, the sensitivity of the answer to bunker price and to the ballast leg allocation, and why a break-even quoted without its day basis and bunker assumption is not comparable across two desks. See voyage estimation for the forward calculation this inverts.