The end of the Australian winter and well into spring is recognised as the shipping peak season time.
Shipping internationally hits some choppy waters around this time of year. But if handled well, shippers can avoid disappointment.
Read on to find out how.
When Is Shipping Peak Season?
The peak season for shipping generally starts in mid-August and goes through to October. It’s known as the busiest time of the year in the supply chain industry: retailers, distributors, shippers, freight forwarders and all those who play a role in the industry are affected.
Peak season is when demand for shipping skyrockets, but supply is marginally lower. This causes higher container shipping rates and tighter capacity. It’s during this time that it gets harder to secure your cargo space on vessels.
It happens every year but still catches many by surprise. Shippers and importers who are prepared have their cargo space booked well in advance, leaving many struggling. Without the space, shippers often fork out huge amounts of money just to get their items shipped.
Why Is The Peak Season So Important For Ocean Freight?
This is when demand for products rise. Why? Because with the holiday season around the corner, consumerism hits a high and retailers need to stock up. Businesses want products on their shelves as early as they can get them there.
Around 30 percent of yearly sales for many retailers occurs in the Christmas period. Getting the logistics wrong beforehand can have a detrimental impact on those sales. According to the statistics, global sales only tend to increase year by year, due to the continued ascension of e-commerce.
How Will My Cargo Be Affected During Peak Freight?
High volumes of traffic and delays
Your cargo will be among extremely high volumes of traffic. In 2018, volumes skyrocketed early due to anticipation over a looming U.S.-China trade war.
It’s critical that you secure your shipping space as early as possible. Otherwise, you’ll find yourself in a logistics nightmare, fighting for space on vessels along with hundreds of others.
You will also come into difficulties with deliveries, extra fees for storage, delayed supply – the list goes on.
Higher port charges and freight rates
It’s basic economics – as demand for the services goes up, so will port charges and shipping rates. Extra vessels may even need to be used if demand goes up that high.
Not to mention, General Rate Increases (GRI) will also begin to kick in. This is the adjustment of container shipping rates across all shipping routes. Unfortunately, there’s no real way to avoid paying higher rates during this time.
There are also extras you might have to pay like an Emergency Bunker Surcharge (which covers the cost of increasing fuel prices). This is on top of the Bunker Adjustment Factor (which is a fancy way of saying ‘another way of covering increased fuel costs’).
Take a look at our blog on the hidden costs of shipping that may also rise due to increasing demand.
GST on low value imported goods
Remember that since 1 July 2018, the Australian Tax Office imposed GST on sales of low-value imported goods made to consumers in Australia. This applies to businesses meeting the registration threshold of AUD$75,000.
So, this shipping peak season, keep in mind that goods imported over a $1,000 consignment will be subject to GST, customs duty and clearance charges. They’ll be levied on the importer at the border.
More information can be found on the Australian Tax Office website.
Higher risk of theft
Shippers must also be aware that, during peak season, cargo is at a higher risk and more likely to be pilfered than other times of the year.
FreightWatch International, an international logistics security services company, says that holiday weekends are especially “notorious” for presenting higher cargo risks. Organised theft groups are active and target shipments that are unattended for longer periods of time.
What’s targeted? You name it – electronics, clothing and apparel are all really popular.
Watch out for fake pickups
Identity theft is real, and it’s only worse in shipping peak season. Your cargo may be further exposed to thieves impersonating as a fellow worker.
In the Port of Montreal during peak shipping season in September 2015, 16,000 kilograms of silver bars worth $10 million were stolen from Maersk in broad daylight. How? Thieves got past security, posing as truck drivers, walked into a truck full of silver and drove away. It was that easy.
Always ensure you’ve got a good cargo insurance policy covering these incidents.
How To Survive Peak Shipping Season 2019?
Follow these handy tips and you’ll be okay during this season.
If you’ve got certain products you really need to transport and arrive on time (more so than others), get these shipped first. Perhaps they’re products that you know are of higher demand, compared to other products you’re selling.
Because peak season is crazy, shipments can get delayed. Sometimes ships reach overcapacity and then a container can get “rolled” (i.e. moved to the next vessel because of overdemand – yep, it happens).
Tell your freight forwarder what boxes are a higher priority. That way, they can request the most important containers are not “rolled”.
How to prioritise? Visualise what your peak retail season will look like and use that to determine what volumes and products to import.
Focus on transporting the essentials that you know will make you money. Don’t focus on shipping stuff that might make you money, i.e. new goods on the market that have not been tested on the shelves yet.
A handy way to manage your inventory is to split your shipments.
If you are shipping numerous containers in one go (on one shipment), consider separating them onto numerous bills of lading.
Let’s say you’ve got six containers on a bill of lading. If that bill gets rolled, so will all six containers. Some containers might still come through if you ship into, say, three bills of lading (each with two containers).
As we said above, capacity is tight in the shipping season so get in there early to secure your space.
Also, whilst booking ahead, consider securing a shipment with a longer transit time. Choosing a less popular route could reduce the chances of your cargo getting “rolled”, but speak to your forwarder about transhipment ports as some are extremely congested at this time of year.
We’ve discussed theft, but there’s also the risk of accidental loss and damage. It is always worth organising marine insurance, particularly in turbulent times such as the peak season.
Marine Insurance covers the loss, damage or theft of goods in transit, including any storage points between points of origin and final destination. During any one shipment, your freight is handled multiple times and deciding to insure your goods will protect you from potential damages, cost and even total loss. Contact your freight forwarder for an evaluation on whether the risks outweigh the costs.
One Last Tip
The National Day of the People’s Republic of China holiday takes place from 1st to 7th October. As most activities cease during this time, importers and exporters can expect delayed responses to freight queries as well as considerably less space available on the vessels for their cargo. To avoid disappointment, please place your booking prior to the holiday.
Should you have any queries relating to the intense peak season for shipping, please leave a comment below or contact one of our shipping experts for a tailored consultation.