Real case: Imagine I want to move an oil from one terminal to another.

I have about 20 +/- tanker companies, but all of them have max capacity on their top deadweight (DWCC) vessel about 10'000'000 b(arrels) (1)

As you may know, oil is traded in futures contracts with contract_size x1000b, but quotes are for x1b

Vessel companies have many options to evaluate their payment for transportation based on how much oil will be delivered by one ship for certain customer. (2)

One of formulas (3) I'm using calculate the the transaction cost % based on nearest future contracts price, for example:

$$ (FullPayment / (({\dfrac{DWCC}{contractsize}})) / contractprice ) * 100 $$

For example: $$ 20000 / (({\dfrac{10'000'000}{1'000}}) / 74) *100 = 2.7% $$ So the question is: Is it okay? Can this formula been much more simplify then that?

(1): Actually, there are much more companies, routes and vessel capacities, but the question isn't about it. It's also not about Incoterms/FOB/futures contract pricing, so I'm not interested in theory.

(2): In this certain example payment is fixed. Ship always goes by one-route from terminal A to terminal B in X days. Don't ask about any other options.

(3): The real formula is a bit more complicated than that, but basis of this exact situation is still the same. If you think it's a bit simple for QF just remember that in real case there are much more data and all this calculations


Guess it's all about Rubber Duck Problem Solving. Actually I was working on huge part of old legacy code/formula that misdirect me and I know that I'm probably missing something. But when I form the problem I easily solve it. Just calculate price of all (DWCC x price) and divide it by transaction cost

Thank you, QF

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