Peak shipping season traditionally starts in mid-August and lasts until December and is the busiest time of year for freight forwarders' that is until 2022 threw yet another curveball for everyone involved in the supply chain.
This year's peak season is unlike any other. It highlights (yet again) that businesses need to gear up for navigating volatile waters. Expecting the unexpected is the new normal.
Here's our expert guide - what we expected this peak shipping season vs the reality of 2022.
Increased demand and activity during this time of the year, translate into higher port charges and freight rates.
Reality: Falling rates
Rates began a big drop around May. The general assumption was that once Shanghai reopened from lockdown, availability of goods would increase and demand would follow, especially heading into peak season months. Correct? Wrong.
As we move through the traditional peak season, rates from China and SE Asia are still falling and we haven't seen the spike we normally see this time of year.
The reasons behind the fall; less demand for goods and inventory overstocks. It can also be influenced by businesses shipping their goods early, so the volume has been more evenly spread over a longer period.
Cargo is moving among much higher volumes of traffic, with freight forwarders competing for space on vessels.
As we started navigating this unconventional peak season we found that capacity and space were more available than they would normally be.
The reasons behind it are falling demand and businesses shipping earlier than in previous years.
A normal season would bring frequent backlogs, congestion, delays and containers getting rolled (i.e. move to the next vessel). So, if peak shipping season 2022 has been almost non-existent, there has been no congestion. Correct? Wrong again.
During pre-pandemic times major ports would normally have one or two ships at a standstill, even during the peak season. Now it's not rare to see ports with backlogs of dozens of ships.
The volatility of the industry, which includes lockdowns, labour shortages and strikes can be the one to blame. Inventory overstocks don't help either - if new goods arrive before the old inventory has left the warehouse, containers end up standing in ports and creating congestion.
Rates will continue to vary subject to space, equipment availability and the Shipping Line's response to those falling rates.
Rates will inevitably go down but they won't go back to pre-COVID levels.
China's Covid Zero policy, labour shortages, energy costs and general volatility will continue to loom large.
Well, that's easier said than done. Where to start?
Start by using a digital freight forwarding platform to access live tracking of shipments, receiving, inventory, loading and shipping. This enables you to track the whereabouts of your shipments in real time and work with accurate ETAs.
Integrating PO Management into shipment management allows you to optimise your inventory. So you know exactly what stock is in every container and when it's arriving.
This reduces your costs, because you can consolidate your shipments, forecast pricing and reduce the risk of added storage costs or delays.
Make smarter bookings to keep your cargo sailing smoothly no matter what season you're in. Book with full-rate visibility for every trade lane and multiple options in routes, vessels and companies.
Stay in contact with your trusted forwarder to discuss your priorities and possible transit times. This is always a good idea, no matter what season.
Don't miss the boat! Subscribe below or follow us on Linkedin to keep ahead of industry news and updates.
Get in touch to find out how we can help you focus your actions and resources to achieve your sustainability goals.