Lead times in the Asian coal supply chain

This paper investigates the cross-sectional and time-varying properties of lead times for the procurement of ocean freight for coal cargoes in the Asian market. The lead time is defined as the time lag between the initial enquiry for ocean transportation and the intended shipment date of the bulk cargo. Using a unique new data set of nearly 40,000 drybulk cargo enquiries obtained from automated textual analysis of global shipbroker email flows in 1H 2015 we evaluate a number of hypotheses. Firstly, lead times should be positively related to the state of the freight market, with high freight rates being an indication of relatively fewer ships being available (i.e. possible “stockout” of transportation). Secondly, lead times should be positively related to cargo size, in part due to the shorter trading distances for smaller vessels and in part due to the greater total fleet size for smaller vessels, both leading to expected better transport availability. Thirdly, ports and countries with better export infrastructure (lower congestion, lower variability of port handling times) should have lower lead times associated with their lower risk of unexpected delays. Finally, there may be seasonal effects due to regional weather patterns (typhoons, hurricanes). The data and empirical results represent a key building block in the future development of optimization models for the matching of ships and cargoes in a stochastic framework.