Shipping Data Provides Insight into Supply Chain Delays

As widely covered in the press in recent months, imports are currently being impacted by a backlog of vessels and goods that cannot reach or be unloaded at U.S. ports. According to the most recent Deloitte CFO Signals Survey, “More than 40% of CFOs indicate supply chain shortages or delays have increased their companies’ costs by 5% or more, and 60% said this year’s sales have either been reduced or will be by the end of the year as a result of supply chain disruptions.”

Throughout the recent third quarter earnings season, companies frequently commented on earnings calls about their supply chains and how they are attempting to mitigate delays or disruptions. As companies report their quarterly results, the market reacts to their revised guidance by recalibrating their valuations and outlooks. How can investors gain an information advantage ahead of these quarterly releases?

Diving into Detailed Shipping Data

With novel alternative datasets becoming more usable and connected to standard security identifiers, it is becoming far easier for investors to piece together what's happening in real time as events unfold. The FactSet Shipping data set allows us to isolate the industries, companies, and ports most negatively affected by the current supply chain issues surrounding U.S. ports. FactSet Shipping is sourced directly from U.S. Customs and Border Protection (CBP), which provides data on daily shipments of goods arriving by ship into the U.S.

The database is built using the raw bills of lading (legal documents issued by a carrier to a shipper that details the type, quantity, and destination of the goods being carried) provided by CBP. Combining these company-level shipping transactions with FactSet RBICS Focus sector classifications, we can analyze quarterly trends in shipment delays broken down by sector, issuer, and even port. The shipping data is limited to CBP transactions where a Russell 3000 constituent (or a linked subsidiary) has been identified as the consignee receiving the goods.

Quantifying Shipping Delays

Estimated and actual arrival dates are parsed directly from each bill of lading, allowing us to approximate the extent of unexpected shipment delays by calculating the difference between the two and studying how those average delays change over time. In Figure 1, we take an overall look at the Consumer Non-Cyclicals sector and find the industries with the largest delays. We can see that shipment delays increased dramatically in the fourth quarter of 2020 and have gotten progressively worse for most industries throughout 2021.

From here, we can drill down into the sectors and companies exhibiting the most pronounced increases. Combining the shipping data with RBICS Focus classifications, we can isolate ports and sectors for the Russell 3000 and highlight sectors such as Department Stores and uncover companies that have experienced higher-than-normal delays in average arrival times. As shown in Figure 2, Nordstrom, Macy’s, and Amazon all share similar port activity in New York and had at least a one-week delay in unloading their items in the third quarter of 2021, with Nordstrom seeing delays of more than six weeks.

Adrian V. Mitchell, Chief Financial Officer of Macy's, Inc. commented on the company’s concerns about their supply chain at the Goldman Sachs Global Retailing Conference on September 9, 2021. According to Mitchell, “Now, our focus is on the entire supply chain from overseas to our distribution centers to our stores. And we're being proactive as we prepare for mid-November in order to ensure we have a successful holiday season...We're working closely also with ocean carrier partners to maximize our capacity and, where possible, minimize disruptions.” As shown in Figure 3, Macy’s is experiencing a nearly 10-day delay in its shipment arrivals.

Impacts Beyond Consumer Goods

These interruptions in transporting goods are not unique to consumer goods sectors. Other sectors such as Industrials and Technology are also feeling the impact. Industrial companies have also had to adjust their production because of materials not arriving on time. As shown in Figure 4, in the Aerospace industry the average delay is over nine days. Raytheon Chairman and CEO Gregory J. Hayes discussed the challenges of obtaining materials in the company’s third quarter 2021 earnings call on October 26, 2021: “In terms of specifics on supply chain, I don't know that I could point to a single supplier that is – other than, again, its components, its raw materials. Think about aluminum prices going up, thinking of the steel, all of the basic raw materials, lead times pushing out, and it's just harder to get material in the door on time.” The shipping data indicates that Raytheon saw an 8.5-day delay in shipment arrivals in the third quarter.

Conclusion

U.S. transportation Secretary Pete Buttigieg believes the current supply chain bottlenecks at the country's major ports will likely persist for the foreseeable future. FactSet Shipping data provides statistics on daily imports by sea, allowing us to make sense of the current issues at ports and their sector-by-sector disruptions in near real time. While this data only contains information for goods arriving in the U.S. by ship, it allows us to identify the sectors and companies most at risk for supply chain disruptions in the current environment.

Terence Kempf, Director of Strategy for Content and Technology Solutions also contributed to this article.

The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.