4 ms·

I've heard from multiple sources that about $9b per day in commerce goes through the Suez, so that's probably just $9b * number of days stuck. I imagine the cos

I've heard from multiple sources that about $9b per day in commerce goes through the Suez, so that's probably just $9b * number of days stuck. I imagine the cost is actually quite a bit more, as the ripple effect from this traffic jam will continue for at least another month while shipments are diverted or delayed until traffic pressure returns to normal.

joosters 6y ago
It's not like the $9b of daily commerce that can't get through the canal is being set alight and tipped overboard, it will reach its destination in the end. Some of that produce might have gone off, or the delay in its arrival causes knock-on costs, but the final cost is only going to be a fraction of that figure, not a large multiple!
- craftinator 6y ago
  I agree that it won't be a large multiple, but, I do think it's naive to assume that it'll be a fraction of the cost. Consider the shear volume of stuff being transported. Millions of tons of goods across hundreds of delayed transports, some perishable, some with tight timeline requirements, some with tight contract requirements. And it's not like as soon as ships start moving again all of that cost will go away. Ships are still going to be diverted for weeks of not months to relieve traffic pressure.
  - Clewza313 6y ago
    If it's really time-critical, it's shipped by air, not sea. Container ships being delayed by a few days by rough weather, port delays etc happens all the time, and we're looking at a week tops here even for directly impacted ships.
- craftinator 6y ago
  I never said a large multiple. Regardless, below are some numbers that could get us started in estimating costs: According to this paper by the National Bureau of Economic Research, the average loss of value per day of delay from the cargo on these ships is between 0.6 and 2.2 percent [1]. According to other research I've seen, somewhere between 12% and 30% of daily global sea trade goes through the Suez Canal. Anyone want to do the math? 1) https://www.nber.org/digest/jun12/time-trade-barrier https://www.nber.org/digest/jun12/time-trade-barrier
skullx 6y ago
I would image the opposite tbh, that $9b of delayed goods per day is not lost, it's just delayed. Most of that goods, unless they are perishable goods, will sell like normal, just a bit later. There is obviously a loss here on increased costs and loss of sell opportunities due to the delay, but that figures are mega inflated IMO.
- formerly_proven 6y ago
  Also... ships are slow. The voyage from the Suez canal to Rotterdam or Hamburg is at least six days, so there was quite some time to prepare for a gap in supply.
  - craftinator 6y ago
    Well, this is a supply delay in hundreds of equally sized or larger ships. This is a delay in a majority of the global shipping industry of at LEAST a week, and shipping scheduling will be thrown off for months by this. https://www.reddit.com/r/Damnthatsinteresting/comments/mf705v/ships_waiting_for_the_suez_canal_to_open/?utm_medium=android_app&utm_source=share https://www.reddit.com/r/Damnthatsinteresting/comments/mf705... https://www.reddit.com/r/interestingasfuck/comments/meopv9/satellite_view_of_the_ships_lining_up_at_the_suez/?utm_medium=android_app&utm_source=share https://www.reddit.com/r/interestingasfuck/comments/meopv9/s... That is a LOT of cargo that's suddenly going to arrive 2 or 3 times later than expected. Huge economic impact. I really don't understand why people on HN are pushing so hard against the idea that this is just an economic blip. Is there anyone involved in the industry that can chime in?
- craftinator 6y ago
  According to this paper by the National Bureau of Economic Research, the average loss of value per day of delay from the cargo on these ships is between 0.6 and 2.2 percent [1]. According to other research I've seen, somewhere between 12% and 30% of daily global sea trade (the 30% figure may be out large cargo freighters specifically, not sure) goes through the Suez Canal. Anyone want to do the math? 1) https://www.nber.org/digest/jun12/time-trade-barrier https://www.nber.org/digest/jun12/time-trade-barrier
bombcar 6y ago
A better calculation is to see how much Egypt makes per day in Canal fees and use that as an estimate, as the canal fees are set to make it just a bit cheaper to use the canal vs the horn.
- Clewza313 6y ago
  $14M/day seems to be the usual media estimate. I think it's safe to say the knock-on effects of several hundred ships being delayed will be more than that.

joosters 6y ago

It's not like the $9b of daily commerce that can't get through the canal is being set alight and tipped overboard, it will reach its destination in the end. Some of that produce might have gone off, or the delay in its arrival causes knock-on costs, but the final cost is only going to be a fraction of that figure, not a large multiple!

craftinator 6y ago
I agree that it won't be a large multiple, but, I do think it's naive to assume that it'll be a fraction of the cost. Consider the shear volume of stuff being transported. Millions of tons of goods across hundreds of delayed transports, some perishable, some with tight timeline requirements, some with tight contract requirements. And it's not like as soon as ships start moving again all of that cost will go away. Ships are still going to be diverted for weeks of not months to relieve traffic pressure.
- Clewza313 6y ago
  If it's really time-critical, it's shipped by air, not sea. Container ships being delayed by a few days by rough weather, port delays etc happens all the time, and we're looking at a week tops here even for directly impacted ships.
craftinator 6y ago
I never said a large multiple. Regardless, below are some numbers that could get us started in estimating costs: According to this paper by the National Bureau of Economic Research, the average loss of value per day of delay from the cargo on these ships is between 0.6 and 2.2 percent [1]. According to other research I've seen, somewhere between 12% and 30% of daily global sea trade goes through the Suez Canal. Anyone want to do the math? 1) https://www.nber.org/digest/jun12/time-trade-barrier https://www.nber.org/digest/jun12/time-trade-barrier

skullx 6y ago

I would image the opposite tbh, that $9b of delayed goods per day is not lost, it's just delayed. Most of that goods, unless they are perishable goods, will sell like normal, just a bit later. There is obviously a loss here on increased costs and loss of sell opportunities due to the delay, but that figures are mega inflated IMO.

formerly_proven 6y ago
Also... ships are slow. The voyage from the Suez canal to Rotterdam or Hamburg is at least six days, so there was quite some time to prepare for a gap in supply.
- craftinator 6y ago
  Well, this is a supply delay in hundreds of equally sized or larger ships. This is a delay in a majority of the global shipping industry of at LEAST a week, and shipping scheduling will be thrown off for months by this. https://www.reddit.com/r/Damnthatsinteresting/comments/mf705v/ships_waiting_for_the_suez_canal_to_open/?utm_medium=android_app&utm_source=share https://www.reddit.com/r/Damnthatsinteresting/comments/mf705... https://www.reddit.com/r/interestingasfuck/comments/meopv9/satellite_view_of_the_ships_lining_up_at_the_suez/?utm_medium=android_app&utm_source=share https://www.reddit.com/r/interestingasfuck/comments/meopv9/s... That is a LOT of cargo that's suddenly going to arrive 2 or 3 times later than expected. Huge economic impact. I really don't understand why people on HN are pushing so hard against the idea that this is just an economic blip. Is there anyone involved in the industry that can chime in?
craftinator 6y ago
According to this paper by the National Bureau of Economic Research, the average loss of value per day of delay from the cargo on these ships is between 0.6 and 2.2 percent [1]. According to other research I've seen, somewhere between 12% and 30% of daily global sea trade (the 30% figure may be out large cargo freighters specifically, not sure) goes through the Suez Canal. Anyone want to do the math? 1) https://www.nber.org/digest/jun12/time-trade-barrier https://www.nber.org/digest/jun12/time-trade-barrier

bombcar 6y ago

A better calculation is to see how much Egypt makes per day in Canal fees and use that as an estimate, as the canal fees are set to make it just a bit cheaper to use the canal vs the horn.

Clewza313 6y ago
$14M/day seems to be the usual media estimate. I think it's safe to say the knock-on effects of several hundred ships being delayed will be more than that.