Peak season for container shipping typically kicks off around late August and goes full throttle until November, followed by a shorter second peak season in January to February. Both periods are marked by an intense period of shipping activity.
Early holiday shopping preparations are what sets the first peak in motion. To fulfil increased consumer demands, large volumes of goods are shipped from manufacturing centers in Asia to Western markets during this quarter. The Chinese Lunar New Year ushers in the second peak season. Factories ramp up production to fulfill orders before shutting down or operate at reduced capacity during the festivities. This leads to a surge in shipping volumes as businesses worldwide stock up on goods to avoid supply chain disruptions during the holiday.
Peak season in full swing often means supply chain disruptions in the form of congested ports, delays in delivery, route restrictions, and equipment and personnel shortage. As companies experience a heightened level of activity and a surge in demand during this period, how their supply chains hold up often determines the outcome. A robust supply chain can be the key to capitalizing on growth opportunities, and it can often mean the difference between a business maintaining its competitive edge and grappling with logistical nightmares.
Understanding Peak Season Disruptions
Under current market conditions, that may be two times when business peaks every year; August to December, and January to February. Black Friday sales, Christmas shopping, and Chinese Lunar New Year spending for the latter, often contribute to peak seasons.
It is equally important to know that peak season differentiates itself from general season freight trends, and the challenges that come with the former are typically greater than that of the latter. Scott Kates, Shipco’s national operations manager from LCL Import USA, explains that peak season is a ‘more sustained time frame’ of an increase in the demand and movement of goods, impacting ‘many trade lanes and port pairs’ instead of ‘only a few select lanes’.
For carriers, there is a lot to do during peak season. With a flood of cargo pouring in, capacity constraints become a looming threat, putting pressure on infrastructure and potentially causing delays in the supply chain. Ultimately, they come up against supply chain disruptions that inhibit the manufacturing, sale, or distribution of goods. Examples of supply chain disruptions include:
- Increased demand
- Capacity constraints
- Transportation delays and
- Inventory shortages
Just how do these disruptions really affect the supply chain during peak season? Let’s review them.
Increased Demand
During peak season, carriers get more demands than necessary as businesses try to accommodate heightened consumer activity. The increased demands may result in fulfilment spaces overflowing and an imbalance in inbound and outbound freight. Ports become congested as suppliers try to make sure they get large volumes of goods across to consumers as quickly as possible, increasing the risk of delivery delays.
Capacity Constraints
Since peak season happens to be the busiest shipping season, the race for cargo space heats up, causing a squeeze on capacity. Freight forwarders find themselves in a tight spot, needing to collaborate closely with carriers to snag precious cargo space for their clients. But with demand skyrocketing, it often means more money for as little space as you can get.
Transportation Delays
When ports get jam-packed, it spells trouble for cargo flow, causing delays that can throw delivery schedules off track and disrupt the entire supply chain. Transportation delays may also be caused by communication silos between carriers, suppliers, and logistics partners, leading to poorly managed inventory, route planning, and cargo space optimization.
Inventory Shortages
During peak season, getting your hands on specialized equipment, such as refrigerated containers, can be a real challenge. Businesses that do not reserve equipment ahead of time will encounter challenges getting their goods shipped out. Additionally, carriers often need to prioritize high-value shipments or certain partnerships as they have limited transport capacity. Businesses that fail to secure priority for their goods will also encounter delays.
Mitigation Strategies for Peak Season Challenges
Preparing and identifying peak season disruptions is just the beginning of the job; much of the work lies employing strategies to mitigate them. From optimizing the use of vessels and freight routes to managing supplier-carrier relationships, there are several ways to overcome bottlenecks, minimize delays, and increase the bottom line.
Transportation Optimization
Transportation optimization is a critical component in effectively managing logistics costs and meeting delivery demands, especially during peak seasons. Optimizing transportation involves reviewing routes, diversifying transportation modes, and selecting the right carrier ahead of time.
Route optimization is a core element of transport optimization. It aims to identify the most efficient paths for delivering goods. Consideration of various factors such as port of departure, distance, traffic conditions, and delivery schedules helps minimize travel time and fuel consumption while maximizing delivery efficiency.
Not all goods will be transported in the same way, depending on their urgency and special requirements (such as fragility, weight, temperature control, and customer preferences). Diversifying transportation modes across rail, air, and ocean freight is another strategy to maximize efficiency while mitigating potential supply chain disruptions. When businesses employ multiple transport modes, they reduce their vulnerability to delays caused by natural disasters, labor shortages, infrastructure issues, or regulatory changes.
More broadly, the selection of carriers plays a pivotal role in transportation optimization. Choosing the right carriers involves evaluating factors such as reliability, cost-effectiveness, capacity, and geographic coverage. During peak season, when we see large volumes of goods moved, carriers typically require a temporary Peak Season Surcharge (PSS) on export to specific trade lanes.
By streamlining transportation processes and leveraging optimization techniques, businesses can navigate through peak seasons with greater efficiency and effectiveness, ensuring smooth operations and meeting customer expectations.
Maintaining Supplier/Transportation Service Provider Relationships
A strong relationship with transportation service providers also plays a crucial role in mitigating supply chain challenges during peak season. Increased capacity means limited availability, and early communication can lead to more effective inventory allocation, allowing businesses to secure shipping commitments ahead of time and negotiate more favorable rates.
Of course, not all disruptions can be predicted or prevented. This also highlights the importance for businesses to have strong relationships with a suitable transportation service provider, such as the common carrier. Common carriers typically have experience dealing with delays and bottlenecks and have a good understanding of business requirements and global air and ocean regulations. By keeping open lines of communication with common carriers, businesses can tap into their extensive networks of transportation service providers, IT solutions, and more in times of need. Routes can be rerouted, problems can be solved quickly, and the impact of disruptions can be minimized.
For example, here at Shipco, we are a founding member of the WorldWide Alliance (WWA), operating as the world’s premier neutral NVOCC (Non-Vessel Operating Common Carrier). The WWA offers over 2,700 direct LCL services alongside Value-Added services such as warehousing, deliveries, and tracking. This provides great coverage around the world, and it enables collaborative and comprehensive planning across the entire shipping journey when businesses work with just one carrier. Not only does this save time and money, but also allows for flexibility in contingency planning to reduce the effects of disruptions.
Employing Technology Solutions to Mitigate Disruptions
Having a strong Transportation Management System (TMS) can assist in managing transportation status, from route planning and freight tendering to shipment tracking. While peak season demands global visibility, a domestic TMS can provide further insights into how shipments can be sorted and distributed within the country and identify potential bottlenecks and challenges as they arise.
As inventory moves through your logistics operation, clear and easily accessible information is key. This not only creates accountability within your own operation but also among your partners and vendors. Real-time supply chain visibility enables more efficient processes and inventory management, ultimately driving down costs and improving overall efficiency.
Shipco’s close partnerships with carriers ensure clients have a reliable partner equipped with a diverse network of resources to address challenges. Thanks to consistent year-round volumes and strong relationships with numerous carriers, we possess the flexibility to swiftly adapt capacity planning and find alternatives for space, rates, and transit times as needed.
In addition to LCL and FCL services, Shipco also provides airfreight services; which is also a core part of their business. The ocean and air services offerings are 100% Shipco-controlled. This is greatly beneficial to forwarder customers, seamlessly transitioning between different modes of transport based on the specific needs of their clients, providing a versatile and tailored approach to logistics solutions.
Work with a Strong Provider to Mitigate Supply Chain Disruptions
With heightened business activity during peak season, supply chains operations are often stretched to their limits, with suppliers, carriers, retailers, and other parties attempting to streamline increased cargo flows. Supply chain disruptions such as congested ports, capacity shortages, and delivery delays are common, but they can be mitigated with forward planning and operational transparency, and working with a strong logistics provider can help build resilient supply chains.
As a leading NVOCC, we at Shipco have over 90 offices worldwide and decades of experience being a ‘one-stop’ provider of global shipping solutions, including LCL, FCL, and Airfreight services. With a sophisticated package of customized eBusiness tools available round the clock, we not only provide shipment visibility and transparency in rates, but also flexibility during peaks with our suite of added-value services like warehousing, labelling, and documentation.
Working with a strong and reliable provider like us, businesses can be confident to always stay in the game. For inquiries, market insights, or simply to learn more about our services, you can contact us.
