In the vast ocean of global trade, the timely arrival of goods is paramount. Delays not only increase costs but may also lead to customer attrition and disrupt entire supply chains. To help businesses accurately gauge the pulse of global ocean freight and anticipate potential risks, Flexport has introduced the Ocean Timeliness Indicator (OTI). This newsletter provides an in-depth analysis of OTI, offering a quantitative measure of global shipping pressures to optimize supply chains and enhance competitiveness.
Focus: Flexport's Ocean Timeliness Indicator (OTI) - Quantifying Global Shipping Pressures
The Flexport Ocean Timeliness Indicator (OTI) comprehensively measures pressure levels in global ocean freight. It tracks containers throughout their entire journey—from factory readiness (cargo ready date) to final pickup at the destination port (destination port departure)—providing businesses with a tool to quantitatively assess global shipping pressures. Currently, OTI primarily offers data for the world's two largest trade routes:
- Trans-Pacific Eastbound (TPEB): Asia to North America
- Far East Westbound (FEWB): Asia to Europe
Measured in days and updated weekly, OTI enables businesses to intuitively understand current market delays and better evaluate supply chain risks.
Key Characteristics of OTI
Understanding OTI's key features enhances its practical application:
- Frequency: Updated weekly, reflecting the previous week's container journey durations.
- Retrospective Metric: Measures completed journeys, meaning current shipping estimates may differ significantly from OTI data.
- Average Calculation: Combines diverse cargo types, ports, and shipping dates to reflect overall trends rather than specific shipments.
- Sampling: Uses Flexport platform data, representing a broad cross-section of global shipping networks through multiple carriers and ports.
Data Insights: Challenges and Opportunities
OTI data reveals critical market conditions:
- TPEB journey durations have more than doubled, while FEWB shows significant increases.
- TPEB percentage growth exceeds FEWB, indicating greater pressure on North American routes.
- Data volatility shows temporary declines during spring 2020-2021 that proved to be brief pauses in upward trends.
- Recent data remains near record highs, suggesting unresolved shipping challenges.
Early Warning: Stage 1 Index
Flexport's supplementary Stage 1 Index tracks delays from cargo readiness to origin port departure using a four-week moving average. This helps detect early-stage disruptions, though seasonal factors like Lunar New Year may cause temporary fluctuations.
Practical Application: Optimizing Supply Chains
Businesses can leverage OTI to:
- Adjust inventory levels to compensate for delays
- Explore alternative transport modes like air freight
- Coordinate production schedules with suppliers
- Revise pricing strategies to offset increased logistics costs
Industry Perspectives
Supply chain experts recognize OTI's value in quantifying global shipping pressures. Future developments may include:
- More granular data segmentation
- Advanced predictive analytics using AI
- Integration with weather and port congestion data
- Customized consulting services
Market Conditions
Current industry challenges include:
- Persistent global port congestion
- Continuously rising freight rates
- Increasing environmental regulations
Businesses are adapting through closer supplier collaboration, multimodal transport strategies, and safety stock increases.