Much like the predictable surge of holiday shopping, global ocean freight experiences cyclical peak seasons. With space shortages and soaring costs, how can shippers gain a competitive edge, manage logistics expenses, and ensure stable supply chain operations? This article examines the challenges of peak shipping periods and provides actionable strategies for shippers.
Peak Shipping Seasons: Challenges and Opportunities
Peak shipping seasons typically occur during these periods:
- Pre-holiday season (August–October): Western retailers stock up for Christmas sales, driving a surge in shipping demand.
- Pre-Chinese New Year (January–February): Factories in China rush to export goods before the holiday shutdown.
- E-commerce promotions (e.g., Black Friday, 618): Major sales events spur consumer demand, increasing freight volumes.
During these periods, the market exhibits three key dynamics:
- Demand surge: Export orders and e-commerce shipments spike, with small and large shippers competing for limited space.
- Capacity constraints: Carriers may reduce sailings or prioritize long-term contract customers, leaving smaller shippers scrambling.
- Cost inflation: Carriers and forwarders impose peak season surcharges (PSS), bunker adjustments (BAF), and mark up space resale prices. Port congestion also raises detention and demurrage risks.
To counter these challenges, shippers must adopt a proactive approach: early resource locking, precise demand forecasting, and diversified booking channels form the core strategy.
Securing Space: From Reactive to Proactive
1. Lock Space Early: Turn Uncertainty Into Certainty
Long-term contracts (LTCs): Ideal for stable-volume shippers, LTCs guarantee space and often offer rates 20–30% below spot prices. Key terms to negotiate:
- Fixed routes and container quantities (e.g., "3x 40HC monthly, Shanghai to LA")
- Peak-season coverage and rate caps (e.g., "maximum $3,000/40HC during peaks")
- Space protection clauses and refundable deposits (5–10% of freight costs)
Block space agreements: Partner with primary forwarders who control actual carrier allocations. Verify their space commitments with carrier confirmation letters and insist on deposit refund clauses if space isn’t secured.
Book 7–15 days early: For hot routes like US West Coast or Europe base ports, submit bookings at least 15 days ahead with complete documentation (invoice, packing list, HS codes) to expedite processing.
2. Partner Strategically: Leverage Expertise
Work with primary forwarders: These agents have direct carrier relationships and priority access. Verify their NVOCC licenses and carrier authorizations.
Build a "1+2" forwarder matrix: Rely on a main partner for 80% of volume, with two backups specializing in alternate routes (e.g., one for US, one for Europe). Require 4-hour status updates during peaks.
3. Flexible Solutions: Avoid Direct Competition
Switch between FCL and LCL: Convert full container loads (FCL) to less-than-container (LCL) if space is tight, or consolidate smaller LCL shipments into FCL for better rates.
Alternate ports: Avoid congested hubs like Shanghai or LA/Long Beach. Consider Ningbo or Oakland instead, weighing inland transport costs.
Hybrid air-sea models: Ship 80% via pre-booked ocean freight, reserving 20% for air transport if delays threaten deadlines (e.g., holiday inventory replenishment).
Cost Control: Optimize Every Link
1. Lock Base Rates
In LTCs, cap all surcharges (e.g., "BAF not exceeding $500/container"). Compare total landed costs (freight + fees per cubic meter) rather than base rates alone to avoid hidden markups.
2. Reduce Hidden Expenses
Minimize detention/demurrage: Extend free periods via carrier negotiations (e.g., 14-day container free time). Pre-clear cargo and retrieve it within 24 hours of arrival.
Optimize loading: Use vacuum packing for lightweight goods (50% volume reduction) and professional stowage to maximize container utilization (e.g., boosting 20’ container loads from 30 to 32 cubic meters).
3. Structural Savings
Consolidate shipments: Merge small orders into FCLs—LCL costs 30–50% more during peaks.
Off-peak shipments: Avoid mid-September to October for Christmas cargo; shift pre-Chinese New Year shipments to early January.
Hedge currency risk: Use forward contracts to lock exchange rates (e.g., fix USD/RMB at 7.0 for three months).
Peak Season Pitfalls to Avoid
- Fake bookings: Demand carrier-issued Shipping Orders (S/O) before payments.
- Verbal promises: Insist on written contracts with penalty clauses (e.g., "10% compensation for unsecured space").
- Real-time tracking: Monitor vessel schedules daily; switch to backup forwarders if bookings are canceled.