Newbuild ship IRR calculator — VLCC, Suezmax and Aframax / LR2 break-even rates
What daily rate does a tanker ordered today need to earn its owner a 10% return? Pick a class: the price, operating cost and today's rate fill in from our data, each with its source and date. Then change any input. Your result is your own scenario, not our forecast, and not investment advice.
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Type to filter: Tanker · VLCC · Tanker · Suezmax · Tanker · Aframax / LR2.A new VLCC needs $54,788/day for a 10% return on the owner's equity ($59,382/day with no loan).
Against today's class rate of $493,106/day that is a buffer of +$438,318/day; against our average since 2025-01, $149,866/day, .
At $149,866/day for the whole life, the owner's equity earns — a year (the ship alone: —). Equity paid in: —. First-year cash break-even: $42,644/day (operating cost, interest and loan repayment per earning day).
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What a newbuild tanker needs to earn, by class
| Class | Price | Rate needed for an equity return of | No loan, 10% | First-year cash break-even | Today's class rate | Buffer at 10% | ||
|---|---|---|---|---|---|---|---|---|
| 8% | 10% | 12% | ||||||
| VLCC | $131.5m 2026-11 | $50,370/day | $54,788/day | $59,390/day | $59,382/day | $42,644/day | $493,106/day 2026-11 | +$438,318/day |
| Suezmax | $90.5m 2026-11 | $38,587/day | $41,580/day | $44,702/day | $44,742/day | $32,312/day | $204,603/day 2026-11 | +$163,023/day |
| Aframax / LR2 | $78.0m 2026-11 | $40,595/day | $43,094/day | $45,709/day | $45,819/day | $34,005/day | $297,000/day 2026-11 | +$253,906/day |
At our default inputs, listed in full below. "Rate needed" is the level daily rate, before commission, that makes the owner's equity earn the return shown over the ship's whole life; with a 60% loan unless marked "no loan". The buffer is today's class rate less the rate needed for 10%. The rate is one month's; a ship trades for twenty years, so a buffer against one month says little about the whole life.
Where the defaults come from
- VLCC: price $131.5m, Xclusiv Shipbrokers Weekly newbuilding average (2 November 2026; source: Xclusiv Shipbrokers Inc.). Operating cost $9,200/day: FRO's own figure for Q2 2026 (one issuer prints it). Today's rate $493,106/day (2026-11) and the average $149,866/day since 2025-01: our class blend, the median across the routes mapped to the class.
- Suezmax: price $90.5m, Xclusiv Shipbrokers Weekly newbuilding average (2 November 2026; source: Xclusiv Shipbrokers Inc.). Operating cost $9,000/day: FRO's own figure for Q2 2026 (one issuer prints it). Today's rate $204,603/day (2026-11) and the average $99,681/day since 2025-01: our class blend, the median across the routes mapped to the class.
- Aframax / LR2: price $78.0m, Xclusiv Shipbrokers Weekly newbuilding average (2 November 2026; source: Xclusiv Shipbrokers Inc.). Operating cost $13,300/day: FRO's own figure for Q2 2026 (one issuer prints it). Today's rate $297,000/day (2026-11) and the average $90,260/day since 2025-01: our class blend, the median across the routes mapped to the class.
Fixed assumptions, the same for every class: 20 years of trading, 98.0% of days on hire, 2.5% commission, operating cost rising 2.0% a year, a $3.0m drydock every five years (rising with operating cost), 15% of the price back at the end, a 60% loan repaid in equal instalments over 12 years at 6.0% all in, 3 years from order to delivery with 30% of the price paid before delivery (from equity), and a 10% return wanted on equity.
How it is computed: yearly cash flows after delivery and the instalments before it, all discounted at the return wanted; the rate needed is the one that makes their value zero. Only classes with a price, an owner's printed operating cost and our rate blend are offered; MR waits for an owner that prints MR operating cost.
Questions
- What is a cash break-even in shipping?
- The daily rate that pays a ship's operating cost, its loan interest and its scheduled loan repayment. Companies print it for their fleets; a new ship with a new loan has a higher one than an older, paid-down fleet.
- Why is the rate needed for a 10% return higher than the cash break-even?
- The break-even only keeps the ship afloat for a year. The rate needed for a return also has to pay back the owner's own money, with a return on it, over the ship's life.
- Is a 10% return on a ship realistic?
- It is a common target for equity investors. Over long periods ships have often earned less: Martin Stopford's Maritime Economics (3rd edition, 2009, chapter 8) puts the average return on tankers at about 5% a year from 1975 to the early 2000s, with wide swings from year to year.