Lead time

Lead time is the time between starting a process and finishing it — in logistics, usually customer lead time: from receiving an order to its arrival at the customer's door, including production, shipping, storage and delivery. Transit time is one part of it. Maersk distinguishes it from material lead time and production lead time.

Three lead times

Maersk lists what stretches it: transport delays, distance, order complexity — bulky, perishable or special-handling goods — customs clearance and unforeseen events. Unpredictable lead times upset inventory and production plans, and the costs of expediting, storing excess stock and paying demurrage and detention add up. On Maersk Spot, the carrier compensates if it fails to load booked cargo or delays it by more than 3 days, unless the shipper chose a rollable booking.

The World Bank's 2023 Logistics Performance Index, modelling 2.5 million container movements between May and October 2022, found lead times widely dispersed and skewed to the right of the mean, with the import end the largest driver of variability. Its conclusion: a lack of reliability matters more than the average delay.

Worked example: an import order

The mistake people make

Quoting transit time as lead time. A 30-day sailing is not a 30-day promise: production, the first mile, clearance and the last mile sit either side of it, each with its own variability, and the customer feels the total.