Are you using Excel for your 2021 shipping Budget?

You probably recently started or will be starting soon to create the 2021 budget for your maritime operations. This will be a challenging one with many uncertainties. There are uncertainties regarding shipment demand and freight rates, but also on the cost-side in regard to for example bunker costs.

Many will prepare their shipping budget with Excel. This is the easy and obvious choice; you already have it at your disposal. You can easily e-mail versions around etc.

That said, have you ever considered the frequency of errors in spreadsheets and the impact of those errors? Over the years, the Financial Times has published several articles and columns about “spreadsheet hell” (a few links at the bottom of the post). Research has shown that 1-5% of the cells with formulas contain errors. Many of those cells are used as input for other formulas, which lead to smaller or larger bottom-line mistakes in spreadsheets. With such a per cell error rate, that means that well above 90% of the spreadsheets contain errors!

Here a quote from a FT.com article (“Spreadsheets: catalogue of errors”) regarding the bottom-line impact of some of the high profile mistakes:

“(…) Magnificent bloopers may result. A forgotten negative sign once led Fidelity’s Magellan fund team to miscalculate a loss of $1.3bn as a gain. JPMorgan Chase’s $6.2bn trading losses in 2012 — the “London Whale” incident — were traced back to mistakes in the financial model used to calculate the risks associated with the trades. This required data to be manually copied and pasted from one Excel spreadsheet to another.”

The money involved in your budget may not be in the billions like in the examples above, but money involved in trading vessels or (specialized) containers is quickly involving tens of millions (or even more). Avoiding mistakes will help you to avoid difficult conversations with the board, investors, and other stakeholders.

Now that you are aware of the frequency and impact of errors in spreadsheets, are you still convinced that relying on Excel for key business process is the right way to go for your organization?

If you are interested in learning more how you can prepare and analyze your budget (what-if) scenarios in a more robust and reproducible manner, please do not hesitate to reach out. You can drop me a message via LinkedIn or give me a call at +31 6 3079 9720 or

Financial Times articles about Spreadsheets in business:

1. Beware the perils of spreadsheets ($)
2. Spreadsheets: catalogue of errors ($)
3. M&S takes back shop-soiled figures (Embarrassment as ‘rise’ in sales of 1.3% switched to fall of 0.4% due to error in spreadsheet) ($)