A vessel costs the same on a full day and an empty one. Prices did not know that.
In short. A river tourism and ports operator lives on capacity: vessels, berths, crews, all paid for year-round and consumed in a short season. TDABC capacity costing separated the cost of doing the work from the cost of being ready to do it, sailing by sailing and month by month. Pricing, scheduling and the winter conversation all changed.
Published with the client's consent, identity withheld · TDABC capacity costing
THE ENGAGEMENT
Scoping
Three structural questions: cost per sailing, cost per berth-hour, cost of idle capacity.
Data intake
Sailing schedules, rosters, berth logs, the fixed asset register and the general ledger.
Model build
Capacity pools, practical capacity honestly defined, rates per vessel-day, berth-hour, crew-hour. CONFIRM: duration
Handover
The unused-capacity report now opens the annual winter conversation.
A cost base that barely moves, revenue that moves with the weather.
The operator runs river cruises and port operations with a fleet of CONFIRM: number of vessels and berth infrastructure across CONFIRM: number of ports or landing stages. Its cost base barely moves through the year. Its revenue moves with the weather, the cruise calendar and the tourist season.
Traditional costing handled this badly in a specific way: it divided annual cost by actual passengers or actual sailings. In high season the business looked artificially cheap to run. In low season, unit costs exploded and every departure looked like a mistake. Neither picture was true, and pricing built on either would be wrong twice a year in opposite directions.
The real questions were structural. What does one sailing actually cost when the fleet exists anyway? What does an hour of berth occupancy cost? And what is the annual bill for capacity that nobody used?
Why is practical capacity the whole story here?
Because in a seasonal business, the difference between theoretical and used capacity is where the money hides.
Cost pools around capacity resources
Vessels (ownership, insurance, maintenance, mooring), crews, berths and shore infrastructure, ticketing and guest service, port operations, administration.
Practical capacity, honestly defined
For a vessel: sailable days in the navigable season, after maintenance, inspection and realistic weather allowance. Not 365 days, and not last year's actual sailings either. For berths: available occupancy hours. For crews: rostered deployable hours.
Capacity cost rates
Cost of capacity supplied divided by practical capacity gave a rate per vessel-day, per berth-hour, per crew-hour. These rates are stable across the year, which is exactly the point: the cost of a sailing does not change in November, only the willingness of passengers to buy it.
Time equations per product
A scheduled cruise, a charter, a port call by a third-party vessel: each became a formula consuming vessel-days, crew-hours, berth-hours, turnaround and guest-service minutes. Fuel and catering entered as direct, volume-driven terms.
The cost of unused capacity, reported separately. Whatever practical capacity the season did not consume was priced at the same rates and shown as its own line: the cost of being ready. CONFIRM: annual cost of unused capacity in the first model
USED AND UNUSED CAPACITY THROUGH THE YEAR
Seasonality, priced.
Products had been cross-subsidising by season. At stable capacity rates, shoulder-season departures were closer to viable than the old unit costs suggested, while some peak products earned less than their popularity implied once full turnaround and berth time were counted. CONFIRM: number of products repriced after the first model run
The unused-capacity line was the largest single number in the model. Seeing idle vessel-days and empty berth-hours priced in currency, month by month, converted "seasonality" from an excuse into a management object. CONFIRM: peak-month vs low-month utilisation percentages
Charters and third-party port calls were underpriced. They had been quoted from marginal thinking, ignoring the capacity they reserved. With a berth-hour and vessel-day rate in hand, quoting became arithmetic. CONFIRM: charter pricing adjustment approved for publication
We do not have a cost problem in winter. We have unsold capacity priced at zero.
WHAT ONE SAILING CONSUMES
The winter conversation became annual and factual.
Priced against stable rates
Floors per departure and per charter grounded in capacity cost rates, with commercial judgement layered on top rather than underneath.
Attacked the idle line directly
Shoulder-season products, off-peak charters and third-party berth agreements aimed explicitly at converting priced idle capacity into contribution.
Rescheduled with a cost lens
Turnaround times and crew rosters adjusted where the model showed capacity leaking in slack minutes between sailings.
Made winter a report, not a mood
Lay-up, maintenance windows and fleet size decisions now start from the unused-capacity report. CONFIRM: fleet or roster decision taken on the model, if approved
Three numbers where there used to be one.
The operator now sees the cost of work done, the cost of capacity held ready, and the gap the season must pay for. The first year of decisions on the model produced CONFIRM: client-approved outcome figure.
Seasonality stopped being weather. It became a line item.
Fair questions.
- Why not just use last year's passenger numbers to unitise cost?
- Because then your unit cost falls when you are busy and rises when you are quiet, which is backwards for pricing. Rates built on practical capacity stay stable, and the season's shortfall appears where it belongs: as unused capacity, not as inflated product cost.
- Does this argue for cutting the fleet in winter?
- Not automatically. It prices the alternative honestly. Sometimes the answer is smaller capacity; more often it is new uses for capacity already paid for. The model funds that debate with numbers instead of moods.
- How does the ports side differ from the cruise side?
- Same method, different capacity objects. Berth-hours and handling operations replace vessel-days and sailings. Running both on one model exposed the internal transfer that had never been priced: the operator's own vessels occupying its own berths.
- What data did this need?
- Sailing schedules, rosters, berth logs, the fixed asset register and the general ledger. Nothing the operator did not already have.
What does your idle capacity cost per year?
One scoping call. Bring your schedule and your cost base; we will sketch the capacity model on the call.