Running the Numbers

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Last night I ran a few numbers with a friend to get a better view of another friend’s boat.

Here’s the number’s I came up with.

Currently their new boat has a holding capacity of 750 metric tonnes. To be conservative I cut the production capacity to 500 metric tonnes and beefed up their fuel expenses.

Here’s a rough estimate of what a gross income looks like.

Boat capacity 500 metric tonnes (1,000,000 lbs of product; 500 metric tonnes at 2,000 lb per ton)

Price per pound $.80

Gallons of fuel used per day 4,000

Price of fuel per gallon $3.50 we use off road fuel in commercial fishing (tax free) but because our fuel source is on an island (Kodiak, AK and Dutch Harbor, AK) we lose the savings

Day’s per fishing trip 10

So 1,000,000 * .80 = $800,00 

4,000* 3.50 = $14,000 fuel per day

* 10 days = $140,000 cost of fuel per trip (fuel expenses typically run 12-16% percent per trip; my example runs a little high at 17.5% to be conservative. Additionally, boats with new technology have better fuel efficiency which again would make my numbers more conservative)

$800,000 – $140,000 = $660,000 gross per trip (boats make a few trips)

Please note net income for each boat depends on their business model, and structure of costs of goods sold. For example, individuals who contract to work on commercial fishing vessels get a percentage of the boats earnings after expenses have been paid. Some business owners consume the costs of fuel and groceries, while other business owners include fuel and groceries to be taken off of the top decreasing the contractors take home pay.

Like other businesses, commercial fishing is effected by outside forces too.

Weather, season, species, market value, forces of nature, and regulation and the global economy (consumer behavior, fuel prices and exchange rates).