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What is the state of the global supply chains? How long is it taking to ship goods by sea? Are conditions universal? The Flexport Ocean Timeliness Indicator (OTI) provides a proprietary read on how long it takes to get products from factories in Asia to the time they leave ports in the US and Europe. This report provides an overview of the OTI, how it works and what it does and does not show.
A Key Metric for the Shipping Industry
Flexport’s Ocean Timeliness Indicator (OTI) is meant as a broad measure of the severity of the stress on global ocean shipping. It measures the journey of a container from the time it is set to leave a factory (Cargo Ready Date) to the time it is picked up from its destination port (Destination Port Departure).
There are two separate indicators provided, one each for the world’s two largest trade lanes: the Trans-Pacific Eastbound (TPEB), from Asia to North America, and the Far East Westbound (FEWB), from Asia to Europe.
Each of these is measured in days, allowing for easy interpretation, with data provided on a weekly basis.
We do not give a detailed breakdown of the journey into its component stages: from Cargo Ready to Origin Port Departure, from Origin Port Departure to Destination Port Arrival (often referred to as transit time), from Destination Port Arrival to Destination Port Departure. We also do not provide a breakdown of routes, carriers, and ports involved at this stage.
We can, however, say that there have been significant increases in all three stages over the course of the pandemic. The OTI has recently been augmented with an additional measure of the first stage of the journey (Cargo Ready to Origin Port Departure, also known as the Stage 1 Index) on an indexed, four-week trailing average basis as part of the Logistics Pressure Matrix.
Key Features of the OTI
Some key features of the measures include: Frequency: We release updates at the beginning of each week. The weekly figure describes the journey length of containers that were picked up from the destination port in the preceding week.
Retrospective: The OTI is a retrospective measure, as the journey lengths are measured upon journey completion. This means that there could be a significant discrepancy between the expected journey time for a container that is cargo-ready today and this week’s OTI. The Stage 1 Index, meanwhile, is meant to provide a more timely indication of potential shifts in the early stage of the journey, shifts that might not otherwise show up for a substantial length of time (note that total journeys are now lasting more than three months).
Average: For each trade lane, the OTI averages across many containers with different types of goods, different origin ports, and different destination ports. This composition can shift from week to week. Because it is a retrospective measure, it necessarily also averages across containers that were cargo-ready at different dates.
Sampling: The OTI uses Flexport platform data. As such, it covers only a fraction of ocean shipping. However, the containers move on multiple routes and multiple carriers and pass through multiple ports. Thus, the OTI provides a broad sample of the performance of the ocean shipping network.
Relief Yet to Make It Over The Horizon
We present the data so everyone can draw their own conclusions about recent experience. The chart below provides a snapshot of the OTI as of January 23, 2022.
However, we note four striking features of the data to date:
The length of the journey has more than doubled on the TPEB and increased significantly on the FEWB. This is a measure of the severity of the crisis.
While both the TPEB and the FEWB have increased significantly, in percentage terms, the TPEB has increased more.
The series are not smooth. In the spring of both 2020 and 2021, there were prolonged periods of shortened times (downward movements by more than 10%), which ultimately served only as temporary pauses in the upward march of journey times. In particular, over the last 53 weeks (52 differences) to Jan. 23, the TPEB has increased 37 times (71%) and the FEWB has increased 31 times (60%). This means, going forward, that several weeks of numbers trending down is a necessary but insufficient sign of the end of the crisis.
The series have recently been at or near their high points, offering no indication that the shipping crisis has passed.
An Early Look - the Stage 1 Index
For the first stage of the journey, from Cargo Ready Date to Origin Port Departure, Flexport now offers a Stage 1 Index. It is an indexed 4-week moving average of the times for this first stage. The Stage 1 Index follows the same retrospective principle as the OTI, but the data is registered significantly sooner – upon departure from the origin port.
This is intended to shorten the time it would take to observe important changes in this first stage of the journey. Because this is an indexed moving average and because it is based on a different checkpoint, the Stage 1 Index for a given week is not directly comparable to the OTI.
Notably, as at Feb. 20, 2022 shown in figure 2 above, there is an indication of worsening shipping times through stage 1, with the measure having increased by 13% from its trough in mid-January and by 38% compared to the same point a year earlier.
Some care is needed in interpreting short-term moves in the first stage of the OTI however.
Figure 3 shows the Stage 1 Index rebased so that week 1 of each year is equal to 100. The chart shows that over the past three years there has been an increase in time taken to complete the Cargo Ready to Origin Port Departure stage during the first 8 to 12 weeks of the year. That’s likely linked to a rush in shipments to beat the lunar new year holidays which are normally held between week 4 and week 7 (week 6 in 2022).
Flexport does not post the data underlying the OTI. We make it available to the media for the limited purpose of creating graphics for publication. For others, please inquire at firstname.lastname@example.org.
Editorial Note: This report was updated on Feb. 24, 2022 to include new seasonality information as well as updated Stage 1 Index data.
Disclaimer: The contents of this report are made available for informational purposes only and should not be relied upon for any legal, business, or financial decisions. Flexport does not guarantee, represent, or warrant any of the contents of this report because they are based on our current beliefs, expectations, and assumptions, about which there can be no assurance due to various anticipated and unanticipated events that may occur. This report has been prepared to the best of our knowledge and research; however, the information presented herein may not reflect the most current regulatory or industry developments. Neither Flexport nor its advisors or affiliates shall be liable for any losses that arise in any way due to the reliance on the contents contained in this report.
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