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Infrastructure and project financeAdvanced · ~45 minWorking draft · 13 sheets · 906 formulas

Container shipping model: liner company

Fleet in TEU, liftings, freight rate, bunker, BAF, leverage. Build a container liner from its fleet up: owned and chartered-in capacity in TEU, newbuilds paid for in yard instalments and scrapping, liftings from slot turns and the load factor, a freight rate on a cycle, bunker fuel from vessel-days at sea with a bunker adjustment factor recovered a year late, charter hire, handling and port costs, vessels depreciated to scrap value and dry-docked every five years, then net debt, leverage and a value on through-the-cycle EBITDA.

By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.

On this subject: container shipping model: liner company.Updated 5 November 2026

Who builds it, and for whatThe model an equity research analyst covering the listed container lines keeps for each of them, and that a leveraged finance or ship finance team rebuilds before lending against a fleet. The analyst uses it to say how far earnings move for each $100 on the freight rate and what the shares are worth across a cycle rather than at its peak; the lender reads the same lines to see whether the newbuild programme and the dividend can both be paid when rates fall, and how much of the revolver the trough would use.

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ABCDEFGHIJK
1Assumptions
2$m unless stated. Capacity and liftings in thousand TEU; rates and unit costs in dollars. All figures are illustrative.
4YearUnitFY0FY1FY2FY3FY4FY5FY6Notes
5Year number#0123456FY0 = 0. Drives the cycle, price and cost growth.
7Scenario
8Scenario#11 = base, 2 = freight-rate collapse, 3 = fuel spike. Selects a row of each case on the Scenarios sheet, from FY1.
10Fleet
11Owned capacity, FY0'000 TEU1,450.0Nominal slots on the vessels the company owns at the end of FY0.
12Chartered-in capacity, FY0'000 TEU1,250.0Vessels hired from owners on time charter: the owner crews and runs them, the liner buys the fuel.
13Newbuild deliveries'000 TEU--120.0150.090.0-Owned vessels delivered by the yard during the year. Nothing is ordered for delivery after FY6.
14Owned capacity scrapped'000 TEU25.030.035.040.040.030.0The oldest vessels, sold for demolition at their scrap value.
15Chartered-in capacity added or redelivered'000 TEU--(80.0)(100.0)(60.0)-Negative: charters returned to their owners as the newbuilds arrive.
16Average vessel size'000 TEU7.50Turns capacity into a number of vessels for the costs charged per vessel-day.
18Newbuild programme
19Newbuild price$ per TEU13000Contract price per TEU of capacity, fixed when the vessel is ordered.
20Yard instalment two years before delivery%20.0%Paid when the steel is cut.
21Yard instalment one year before delivery%20.0%Paid at keel laying and launch.
22Yard instalment on delivery%60.0%The three instalments sum to 100%.
24Liftings and freight rate
25Days in the yeardays365
26Slot turns a yearx6.00TEU a slot can carry in a year at full load: the round voyages and the legs on which a box is loaded and discharged.
27Load factor, base case%86.0%86.0%85.0%84.0%84.0%85.0%86.0%TEU carried / slots available, the liner’s utilisation. The scenario adds to it.
28Average freight rate, FY0$ per TEU1,350.0Revenue per TEU carried before the bunker surcharge, across every trade and contract.
29Freight rate cycle, base case%102.0%105.0%104.0%102.0%104.0%107.0%The rate in each year as a share of FY0: a mild cycle around a rising trend. The scenario scales it.
31Bunker fuel and the BAF
32Share of vessel-days at sea%75.0%The rest in port, at anchor or in the yard, burning far less.
33Fuel burned per vessel-day at seatonnes60At slow-steaming speeds, across the fleet’s mix of sizes.
34Bunker price, FY0$ per tonne600Very low sulphur fuel oil. Also the reference price built into the base freight rates.
35Bunker price growth, base case%1.5%Annual, from FY1. The scenario scales the price.
36Share of a bunker price change recovered by the BAF%75.0%Contract customers pay the surcharge; spot rates absorb part of it.
37BAF lagyears10 or 1. With 1, the surcharge in a year follows the previous year’s bunker price.
39Charter hire and operating costs
40Charter hire, FY0$ per TEU a day5.00Time charter rate per TEU of chartered-in capacity, crew and running costs included.
41Charter hire growth, base case%2.0%Annual, from FY1, as charters roll over. The scenario scales it.
42Cargo handling, FY0$ per TEU lifted380Terminal handling at both ends, container equipment and empty repositioning.
43Port and canal charges, FY0$ per vessel-day15000Port dues, pilotage, towage and canal transits, spread over every vessel-day.
44Vessel running costs, FY0$ per owned vessel-day8000Crew, repairs, stores and insurance on owned vessels. Charter hire covers them on the rest.
45Overhead, FY0$m1,300.0Sales offices, agencies, IT and head office.
46Cost inflation%2.5%Annual, from FY1, on handling, port, running costs, overhead and dry-docking.
47Lease element of charter hire, IFRS 16 memo%50.0%Memo item: the share of hire paid for the ship rather than the owner’s crew and running costs.
48Average remaining charter period, IFRS 16 memoyears3.00Memo item: for the indicative lease liability.
50Vessels, depreciation and dry-docking
51Net book value of owned vessels, FY0$m9,300.0
52Average age of the owned fleet, FY0years10.00
53Useful life of a vesselyears25
54Scrap value$ per TEU1000Light displacement steel at the demolition price: the residual each vessel is depreciated to.
55Dry-docking intervalyears5Class surveys every five years: each docking is capitalised and amortised to the next.
56Cost of a dry-docking, FY0$m per docking2.50
58Working capital and tax
59Net working capital, % of revenue%3.0%Freight receivables and bunkers on board less payables to ports, terminals and owners.
60Tonnage tax$ per TEU8Charged on average capacity operated, not on profit, as under most shipping tax regimes.
62Debt and dividends
63Existing debt, FY0$m7,500.0Bonds and ship loans on the owned fleet.
64Existing debt repaid each year, % of FY0%10.0%
65Vessel loan, % of delivered cost%60.0%Drawn on delivery, secured on the ship.
66Vessel loan tenoryears12Repaid in equal instalments from the year after delivery.
67Interest rate%5.5%On opening balances of every loan and the revolver.
68Cash, FY0$m2,000.0
69Minimum cash$m1,500.0The revolver is drawn to hold it and repaid from any surplus.
70Dividend payout, % of net income%50.0%Paid in the year; nothing in a loss year.
72Valuation
73Discount rate (WACC)%9.0%
74Through-the-cycle multiple, EV / average EBITDAx5.0xApplied to the average EBITDA of FY1 to FY6, not to the last year: a liner is valued across the cycle.
75Shares outstandingm shares180.0

Select a cell to see its row, its schedule and the type of cell. Font colours: blue for inputs, black for formulas, green for links to other sheets. Scroll sideways to see every period.

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Container shipping model: liner company: the workbook

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13 sheets and 906 live formulas, all 10 schedules built and linked, every check reading zero. Change an input in Excel and the whole model moves.
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The same inputs and layout with the bunker fuel and the bunker adjustment factor left blank for you to build, each blank cell marked. The worked model is its answer.
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What the base case says

Equity value per share ($)
89.69
Enterprise value
$21,644.2m
EBITDA, FY1
$3,865.9m
EBITDA margin, FY1
20.2%
EBIT, FY1
$3,245.9m
Liftings, FY1 (thousand TEU)
$13,867.5m
Average freight rate, FY1 ($ per TEU)
1,377
EBITDA break-even freight rate, FY1 ($ per TEU)
1,098
Through-the-cycle EBITDA
$3,411.6m
EBITDA, lowest year
$2,783.5m
Net debt, peak
$3,867.9m
Net debt / EBITDA, FY4
0.8x

Read from the workbook as served, every input at its default. Periods: FY0, FY1, FY2, FY3, FY4, FY5, FY6. The figures are invented and move with whatever you type in.

What this model is

A six-year model (FY1 to FY6, from an FY0 base year) of an invented container liner operating 2.7 million TEU of capacity, a little over half of it owned and the rest chartered in, through a freight cycle.

The fleet rolls forward in TEU: newbuilds delivered after three yard instalments, the oldest vessels scrapped, charters returned as the new ships arrive. Liftings are capacity x slot turns x the load factor, and revenue is liftings x an average freight rate that moves on a cycle, plus the bunker adjustment factor.

Costs are fuel (vessel-days at sea x tonnes burned x the bunker price), charter hire on the chartered-in fleet, cargo handling per TEU lifted, port charges per vessel-day, running costs on the owned ships and overhead. Most of them follow the ships, not the boxes, so a change in the freight rate falls almost entirely to EBITDA: that is the operating leverage the model is built to show.

Vessels are depreciated to scrap value over 25 years and dry-docked every five; EBITDA runs to free cash flow, net debt, leverage and a valuation on through-the-cycle EBITDA.

Three scenarios (base, a freight-rate collapse and a fuel spike) and two board-style sensitivity tables: FY1 EBIT by freight rate and load factor, and equity value per share by discount rate and multiple. Container liners only: tankers and dry bulk earn day rates and are not modelled here.

Seats: Equity research and hedge funds, Investment banking, Private equity.

Careers that do this work: infrastructure & real assets, debt capital markets, private credit.

How the schedules connect

Every row in the workbook is tagged with the schedule it belongs to; the inspector above shows the tag when you click a row. These are the schedules this model is made of and where each one lives.

Container fleet: owned, chartered, newbuilds and scrapping

Capacity in TEU, yard instalments, charters returned

Assumptions, rows 11–16 · Assumptions, rows 19–22 · Fleet, rows 6–11 · Fleet, rows 14–16 · Fleet, rows 19–25 · Fleet, rows 28–32

Liftings and freight rate: a liner’s revenue

Slot turns, load factor, TEU carried, rate per TEU

Assumptions, rows 25–29 · Revenue, rows 6–10 · Revenue, rows 13–20

Bunker fuel and the bunker adjustment factor

Vessel-days at sea, tonnes burned, BAF with a lag

Assumptions, rows 32–37 · Bunker, rows 6–10 · Bunker, rows 13–19

Operating costs and margins

Cost of sales, opex, EBITDA

Assumptions, rows 40–48 · Operating Costs, rows 6–13 · Operating Costs, rows 16–19 · Operating Costs, rows 22–25

Capex and depreciation (PP&E roll-forward)

Opening, plus capex, less depreciation, closing

Assumptions, rows 51–56 · Vessels, rows 6–10 · Vessels, rows 13–19 · Vessels, rows 22–24

Working capital schedule

Receivables, inventory and payables in days

Assumptions, rows 59–60 · P&L & Cash Flow, rows 17–22

Debt schedule

Tranches, interest, amortisation and the sweep

Assumptions, rows 63–70 · Debt, rows 6–8 · Debt, rows 11–15 · Debt, rows 18–24 · Debt, rows 27–34

Discounting and terminal value

Discount factors, two terminal methods, reconciled

Assumptions, rows 73–75 · Valuation, rows 6–14

Enterprise value to equity value

Debt off, cash on, per share

Valuation, rows 17–22

Sensitivity tables

Two assumptions at once, without a data table

Sensitivity, rows 5–8 · Sensitivity, rows 11–15 · Sensitivity, rows 18–23 · Sensitivity, rows 27–34

What you should be able to explain

  • Why most of a liner’s costs follow its ships rather than the boxes it carries, and why that makes EBITDA move several times as fast as the freight rate.
  • How liftings come from capacity, slot turns and the load factor, and why a liner cuts capacity by returning chartered ships before it touches its own.
  • How a bunker adjustment factor recovers part of a change in fuel price a year late, so a fuel spike costs money in the first year and can be over-recovered as prices fall.
  • Why newbuild cash leaves in instalments years before the capacity earns anything, and how that collides with a freight-rate collapse.
  • What changes when charter hire is capitalised under IFRS 16, and why EBITDA and net debt must be on the same basis.
  • Why a cyclical company is valued on through-the-cycle EBITDA rather than its latest or its best year.

What a reviewer looks for

  • Revenue grown at a rate rather than built from liftings and the freight rate, so the fleet plan and the load factor cannot move it.
  • Fuel cost from liftings rather than from vessel-days at sea, so empty slots appear to save fuel.
  • The BAF treated as a full and immediate pass-through, so a fuel spike costs nothing.
  • Newbuild capital spending booked on delivery, missing the instalments paid to the yard in the two years before.
  • EBITDA under IFRS 16 set against net debt without lease liabilities, or the reverse, so leverage looks better than it is.
  • A valuation on peak-year EBITDA, which prices the boom as if it would last.

Conventions this workbook uses

Stated on the cover sheet too. A model is only as trustworthy as the decisions it tells you it made.

  • Annual periods. FY0 is the base year, built from the same drivers as the forecast; the valuation date is the end of FY0. Every scenario changes FY1 onwards only.
  • Capacity is nominal TEU. Deliveries, scrapping and charter changes fall evenly through the year, so average capacity drives liftings and costs. Vessel numbers are capacity / average vessel size.
  • Liftings = average capacity x slot turns x load factor. Freight revenue = liftings x the average freight rate, which is the FY0 rate x the base cycle x the selected scenario.
  • Fuel = vessels x days x share at sea x tonnes a day x the bunker price; the liner buys the fuel for chartered-in ships as well as its own. The BAF earns the recovered share of the change in the bunker price from the FY0 reference price, applied to the year’s fuel burned, with a one-year lag unless the lag is set to nil.
  • Charter hire is an operating cost, so EBITDA is after it and net debt holds no lease liabilities. The IFRS 16 view (the lease element of hire capitalised) is a memo on Operating Costs and is never mixed into the case.
  • Newbuilds are paid 20% two years before delivery, 20% one year before and 60% on delivery; instalments paid before FY1 sit in the FY0 progress payments balance. Nothing is ordered for delivery after FY6.
  • Owned vessels are depreciated straight line to scrap value: the FY0 fleet over its remaining life, each newbuild over 25 years from the year after delivery. Scrapped vessels are fully depreciated and sold for their scrap value, so there is no gain or loss. Dry-dockings are capitalised and amortised over the five years to the next one.
  • Tonnage tax is a charge per TEU operated, not a share of profit. Interest is charged on opening balances; vessel loans are drawn on delivery and repaid over their tenor; a revolver holds minimum cash. Dividends are a share of positive net income.
  • Enterprise value discounts FY1 to FY6 unlevered free cash flow and a terminal value of average FY1 to FY6 EBITDA at a through-the-cycle multiple, so neither the peak nor the trough year sets the value alone.

What this model does not cover

Where its answer stops, so you know what to add before relying on it.

  • Tankers and dry bulk, which earn day rates on whole ships and buy no fuel on time charter. This is a container liner.
  • Trades and contracts. One average freight rate stands for every route, contract and spot box; there is no split by trade lane or between contract and spot rates.
  • Terminals, logistics and air freight, which the large lines also own. Containers themselves are inside the handling cost.
  • Fuel hedging, the regional emissions charges and the speed at which the fleet steams. Fuel burned per day is fixed.
  • Income tax. Tonnage tax is charged on capacity operated, and there is no deferred tax.
  • A real company. A.P. Moller-Maersk and Hapag-Lloyd are candidates for a case built from their reports; this model uses invented figures.

Build it yourself

The starter workbook

The Bunker sheet has been cleared: vessel-days at sea, fuel burned, the bunker price in the selected scenario, fuel cost and fuel cost per TEU, the bunker price the BAF follows with its lag, the BAF revenue against the reference price, the cost not recovered and fuel net of the BAF. Rebuild it from the Assumptions and Scenarios sheets, then switch to the fuel spike and watch the unrecovered cost and the lag reach EBITDA.

Blanks: Bunker fuel and the bunker adjustment factor. Download it beside the worked model.

The path around this model

Understand it, drill it, read the build, then apply it to a real company.

Build · Lab · ~15 min

DCF Builder

Build a DCF by hand from revenue to a share price, know how much of it sits in the terminal value, and name the one assumption the answer hinges on.

Build · Lab · ~12 min

EV to Equity Bridge

Walk from enterprise value to a price per share without dropping a claim: net debt, pensions, minorities, leases and options.

Build · Lab · ~10 min

Covenant Headroom

Compute the three maintenance ratios from a certificate, find the binding test and its EBITDA cushion, and say whether a given downside breaches.

Read · Guide · 16 min

How to Build a DCF Model: From Operating Assumptions to a Defensible Valuation

Read · Guide · 10 min

Scenario and Sensitivity Architecture: Building a Model That Can Be Stress-Tested

Read · Guide · 7 min

Enterprise Value vs. Equity Value, Once and For All

Apply · Skill

Company Profile

Build a banker-grade one-pager on any company, fast.

Apply · Skill

Model Audit

Find the errors in a financial model before someone senior does.

Vocabulary: TEU (Twenty-Foot Equivalent Unit), Bunker Adjustment Factor (BAF), Operating Leverage, Operating Lease, EBITDA, Net Debt, Leverage Ratio (Debt/EBITDA), Terminal Value, Free Cash Flow (FCF).

Questions about this model

Why is a container line so sensitive to the freight rate?

Because almost every cost follows the ships, not the boxes. In FY1 the liner lifts 13,868 thousand TEU at an average of $1,377 per TEU and earns EBITDA of $3,865.9 million, a 20.2% margin. Only cargo handling moves with the boxes; fuel, charter hire, port charges, running costs and overhead stay where they are. So each $100 on the rate adds $1,386.8 million of EBITDA, and a 1% change in the rate moves EBITDA by 4.9%. EBITDA reaches nil at $1,098 per TEU.

What happens in the freight-rate collapse?

Rates rise 15% for a year and then fall to 75% of the base cycle, with load factors five points lower. EBITDA goes from $6,882.6 million in FY1 to a loss of $1,085.1 million in FY2 while $1,560.0 million of yard instalments fall due in FY3. The revolver peaks at $3,217.0 million, net debt at $8,245.0 million, and the value per share falls from $89.69 to $29.57.

How does the bunker adjustment factor work here?

It recovers 75% of the change in the bunker price from the $600 a tonne built into the base freight rate, on the previous year’s price. In the fuel spike the price rises 60% in FY1 and the surcharge has not yet moved, so $2,203.6 million of extra fuel cost is unrecovered and FY1 EBITDA falls to $1,715.2 million. In FY2 the surcharge catches up and brings in $1,635.8 million, more than that year’s extra cost, because it follows the higher FY1 price.

How is charter hire treated, and what is the valuation?

Charter hire stays in operating costs, so EBITDA is after it and net debt holds no lease liabilities; an IFRS 16 view is shown as a memo. Unlevered free cash flow for FY1 to FY6 and a terminal value of 5.0 times through-the-cycle EBITDA of $3,411.6 million, at a 9.0% discount rate, give an enterprise value of $21,644.2 million and $89.69 per share.

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