This year’s peak shipping season is already in full swing, getting an earlier start than usual. Peak season always brings higher prices and some sort of capacity crunch. This year however, experts are warning that it will be tougher than ever due to a number of contributing factors.
The U.S. economy has accelerated to 4.1% growth in the 2nd quarter while low unemployment rates and high consumer confidence are pushing retail sales up to 6%. Retailers, who had kept their inventories lean after sales plateaued last year, are having to replenish their inventories. And the tit-for-tat tariffs imposed by the Trump administration and China have forced companies to ramp up shipment schedules prior to the tariffs going into effect.
This increased demand for consumer goods is running up against a tight transportation supply, especially within the trucking industry.
The U.S. truck driver shortage is expected to get worse over the next few months, and importers are warned to expect many inbound loads to go into demurrage as it will be nearly impossible to secure the required trucking after going through Customs clearance. If this happens on a major scale in any port, expect congestion problems to worsen. For more information on what caused the truck driver shortage, click here.
Air freight volumes started increasing in mid-July, especially in the transpacific lane (Asia – North America), reducing capacity levels and raising prices. Some airlines have added additional charters as the tightening capacity has become apparent, but the added space is snatched up quickly – at premium prices.
Ocean carriers started cutting services, especially in the transpacific lane, just prior to the start of peak season to combat excess supply, low rates, and increased fuel costs. Multiple weather disruptions have also lead to delays, cancellations, and rate increase.
Shippers with less-frequent loads are likely to feel the effects more than anyone else this season as carriers are looking for large volume commitments or higher rates. With less clout and limited options, they will find it more difficult than ever to secure space. Seasoned shippers, freight forwarders, and beneficial cargo owners (BCO) may have pre-secured space allocations, giving them an advantage over one-time shippers. It is important to note that there is only so much influence a freight forwarder can have in obtaining cargo space during times of tight demand as ultimately the carrier makes the decision to allocate space.
The tips outlined below can help avoid costly delays, increase turn times, and reduce costs.
Freight forwarders, such as OCEANAIR, are your great allies in helping you navigate the turbulent the peak season. Communicate early and often with your freight forwarder and provide them with insight into your shipping forecasts and purchase orders so that they can advise you on the best routing options and the most appropriate lead times.
- Air: Book 6 – 7 days in advance of the Cargo Ready Date (CRD)
- Ocean: Book 3 – 4 weeks in advance of the CRD
- Transit times for LCL shipments will be 7-10 days longer than FCL shipments
- Avoid shipping 45’ HC containers if possible as these are more likely to be rolled
- Ports and warehouses will be extremely congested so expect more time to load / unload at point of origin and destination
- FTL: Book 72 hours in advance
- LTL: 24 – 48 hours in advance
- Note: As capacity thins out, please be sure to extend transit time for all LTL carriers.
Consider choosing a service with a slightly longer transit time. The fastest transit time services are more likely to be overbooked which increases the chances for having a shipment rolled.
Prepare to Pay for Extra Fees
Peak season surcharges (PSS), bunker surcharges, emergency bunker surcharges (EBS) imposed by several of the world’s top shipping lines due to rising fuel prices, and general rate increases (GRI) are driving up costs for all modes of transport. Congested ports mean longer wait times for truckers, who will charge wait fees and port congestion fees. Some ports and rail ramps may also apply chassis split charges if they experience chassis shortages.