The Danish maritime data analysis company, Sea-Intelligence has said that “severe vessel delays” due to the COVID-19 pandemic resulted in a financial loss of about $5-10 billion for shippers globally.
Sea-Intelligence said its analysts calculated the share of global trade being moved on the deep-sea trades that are covered in its Global Liner Performance report and then calculated the share of cargo that was being shipped late to determine the loss to shippers.
“Before the pandemic, the baseline level was roughly 20%, increasing to 70% of the cargo arriving late in the past few months,” noted the analysts, who then calculated the number of TEUDays lost due to late arrivals. The pre-pandemic baseline was an average of 8 million TEUDays lost to delays each month.
In January 2022, this increased to almost 70 million TEUDays, before dropping in March 2022 to 57 million TEUDays, according to the study.
“To place this measure into context, it can be argued that the loss of 31 TEU*days in January is the same as having an “inventory” of 1 TEU of cargo just standing idle for the full month,” said Alan Murphy, CEO of Sea-Intelligence, who explained that “using this definition of ‘inventory’, the pre-pandemic normal is a permanent inventory of 260,000 TEU globally, due to cargo delays. This spiked, due to the current supply chain delays, to a present level of 1.8 million TEU of inventory.”
Having an inventory equals additional supply chain costs and the cost of inventory depends on the value of the cargo in the container, as well as the interest rate a company assigns to their inventory value (Internal Rate of Return, IRR), according to the Sea-Intelligence report.
“There is of course a very wide spread in the value of the cargo, but a reasonable global standard benchmark is US$40,000 per TEU,” noted the analysts in their study.
