On KiteTugs© copyright 1996, Dave Culp Speedsailing
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| Maintenance, helium and repairs (this is 50% more than expected maintenance costs of other modern sail assist rigs, on a per sq. ft. basis)1 |
$100,000 |
| Fuel for auxiliary power, maneuvering, and free flying. Average of 200 gals/day x 250 days @ sea. (This would be zero if solar powered.): |
$50,000 |
| Crew salaries (three crew at $50k, 35k and 35k): |
$120,000 |
| Total annual operating costs: |
$270,000 |
We'll look at profitably two ways; gross profit model, with the KiteTug leased, and simple payback model, with the KiteTug purchased for all cash.
We assume that the KiteTug is 100% leased, on a seven year schedule.
| We assume the interest to be 9%/year, with a salvage value of 30% after 7 years. This will result in annual lease payments of: |
$487,000 |
| Grand total cost of operation: |
$757,000 |
| Annual income stream: |
$1,092,500 |
| For a gross annual profit of: |
$335,500 |
| Gross operating costs: |
$270,000 |
| Gross income stream: |
$1,092,500 |
| Gross profit: |
$822,500 |
Industry expectations for capital payback are on the order of three years1. $3.0 million, divided by $822,500 gives a payback of 3.65 years
and then production KiteTugs are built there as well. This presumes a capital cost for the prototype of $2.0 million, and $1.6 million for production Tugs.
| This brings the gross annual profit on the prototype, under the gross profit approach to: |
$497,500 |
| And the gross annual profit for the production model to: |
$563,500 |
Under the simple payback model, paybacks are:
Asian prototype: 2.43 years
Asian production model: 1.95 years
These figures are well within acceptable ranges, indeed they are far better than virtually any sailing retrofit system envisioned to date1. Even presuming wide variations in actual revenue streams, an average payback period under 2 years is perfectly acceptable to investors.
Under current standards of practice, deep-sea tugboats charge from $100-500/mile run, both out to a disabled ship, and back to harbor26. Thus, a 30,000 ton vessel, stranded 500 miles offshore, might pay $400,000 for a tow to harbor. Such a trip, under KiteTug, would take less than a week, both out and back (24 kts out, 8 kts back = 3.5 days). One single such salvage per year would dramatically change the financial outlook for a KiteTug:
| Domestic prototype gross profit: |
$735,500 |
| Asian prototype gross profit: |
$897,500 |
| Asian production gross profit: |
$963,000 |
Domestic prototype 2.45 years
Asian prototype 1.64 years
Asian production 1.31 years
This activity is obviously very profitable and KiteTug dispatch services will seek such commissions for their Tugs.
(presumes "pure" sailed days, which generate $8,550/day in fees) This may be done by reducing deadhead days (through finding closer "back tows"), reducing "at harbor" days, reducing "sail assist" days, towing larger ships, or any combination of all four. It only needs to add 20 average days/year to the mix.
| Domestic prototype gross profit: |
$506,500 |
| Asian-built prototype gross profit: |
$668,500 |
| Asian-built production Tug: |
$734,000 |
Domestic Prototype: 3.02 years
Asian prototype: 2.01 years
Asian production: 1.61 years
Fairly small increases in utility of the system can make dramatic differences in profitability.
| Domestic Prototype profit: |
$1,378,000 |
| Asian Prototype profit: |
$1,540,000 |
| Asian production unit: |
$1,615,500 |
Domestic prototype: 1.61 years
Asian prototype: 1.07 years
Asian production: 0.86 years
Here we see that a doubling in fuel prices (a likely scenario within the foreseeable future) brings payback of a production KiteTug to less than one year. While materials costs for the Tug itself will likely also rise, its raw materials, though petroleum based, are a relatively small proportion of its all-up cost. Perhaps a 10-15% increase is foreseeable, which will still keep paybacks under one year.