Perpetual Peak Season
As 2020 thankfully fades in the rear view mirror, we are getting a lot of inquiries about whether shipping rates have finally begun to retreat from the record levels seen in late 2020. In a word, the answer is no. It has become a perpetual Peak Season.
If anything, we have seen further increases in international rates, diminished capacity and increasing delays at ports and airports worldwide. Domestically, U.S. truck capacity remains very tight, with full-truckload rates (FTL) remaining at historic highs.
The global supply chain continues to buckle under record demand for space, with intense competition for bookings and a lack of capacity in all modes of transport. To quote one industry expert recently interviewed in American Shipper magazine, “there will be no slack season this year”.
The article goes on to say: “Competition for freight space is so fierce that companies will need to pay exorbitant premiums to get on planes and vessels and apply more flexible shipping methods to avoid delays.”
For the full text of this very insightful article, see here: Global Supply Chains Choke Under Tsunami of Freight
What You Can Do to Adjust
As a shipper what can you do to steer your business through the choppy waters of early 2021? Thankfully, you have some options:
The days of booking this week and getting on a boat or airplane next week are over. At least for now. Work with your suppliers to make sure you grab space at least 2-3 weeks prior to your planned shipping date. That will help avoid paying last-minute premiums for space.
Anticipate Longer Transits
Vessels departures are being delayed worldwide, while many ports in the USA are overwhelmed with inbound freight, especially on the West Coast. Then, after a delayed arrival, there simply aren’t enough longshoremen to unload the vessels, chassis to hold the containers, or truckers to deliver them. Airports are backlogged as well. COVID related staff reductions are making the situation even worse. You need to build these likely delays into your production/distribution plans.
Update Your Budget Often
It is not safe to budget your 2021 shipping costs based on last fall’s shipping rates, or even last month’s. Rates are changing monthly right now, or in some cases even weekly. The market is expected to remain very volatile for the foreseeable future. Revise your budget often. Our Quotes Team can help.
Shift Transport Modes and Be Flexible
In the age of Amazon Prime, we all want our freight “right now”, but do you really need it that fast? Can you ship a few cartons now by air to satisfy key accounts, and then send the rest via ocean? Does it have to be a direct sailing (more expensive), or can you live with the proverbial “slow boat” that makes a couple extra stops and saves you 25% on shipping.
Like many industries, a great deal of today’s logistics workforce is working remotely. This often makes for slower communication. In addition, many shippers, not understanding the situation, are frantically calling multiple forwarders in search of lower shipping rates. This surge in quote requests only strains already overloaded staff resources. Please understand that the entire supply chain, from dockworkers, to airline crews, to warehouse staff, to pricing teams are all struggling under a crushing volume of business. Be patient and we will all push through it together and come out stronger in 2021.