It’s been a topsy turvy six months in the world of freight – and in the world in general – but there are some things importers can always rely on. For example, peak season.
When is Peak Shipping Season 2020 for Importers?
While there’s been many speculations about what peak season will look like in 2020, one thing everyone agrees on is that peak season is definitely happening, and importers need to be prepared.
August to October is historically prime shipping time, with back to school and holiday shopping propelling consumer demand every year. Despite lower consumer confidence, steep declines in demand, and continued coronavirus-related confusion, peak season 2020 is coming and retailers are stocking up on inventory.
So, what should importers expect and how can they prepare for peak season 2020?
Top 5 Questions for Peak Season 2020
To get answers, we reached out to some of our expert shipping logistics providers. With years of experience and deep knowledge of the most current trends, these Freightos.com partners are sharing their insight to help importers ship smooth this peak season.
We spoke to Niel from ExFreight, a pioneer in digital freight forwarding offering instant, digitized freight quoting, booking and tracking via all modes, air, ocean and ground to over 150 countries globally.
Steve joined us from Aver Logistics. Aver Logistics works with all major carriers, tailoring services and developing lean practices to optimize customer supply chains while saving costs.
We were also fortunate to have Charles and the team at Silver Streak Logistics in the conversation. Silver Streak Logistics specializes in express and economy air freight shipping and offers inclusive door to door services with a personal touch.
All three of these Freightos.com logistics providers have years of experience in managing freight over peak season. So, while this is likely the strangest peak season we’ve ever seen, our expert panel delivered some great insight to keep your sales on track.
Do you anticipate another increase in pricing or a flat peak season?
Despite the fluctuations and increases in pricing, our expert panel anticipates that express air freight shipping will likely maintain stable pricing through peak season without too many increases.
With recent trends showing that business is getting back to usual and rates stabilizing across almost every lane, premiums this peak season shouldn’t be out of the ordinary and in many cases, prices may fall as capacity returns to normal.
Furthermore, with air shipping rates stabilizing, many logistics providers are removing any emergency or administrative surcharges implemented as a result of the COVID-19.
Despite optimism that air capacity and rates are getting back to normal, it’s important to remember that this could change if:
- A vaccine for COVID-19 is released
- Demand for PPE spikes again
In these cases, capacity will likely be cut back significantly, resulting in rate increases.
On the ocean front, our marketplace logistics providers anticipate an increase in demand beginning mid August and likely lasting into November. This isn’t just coronavirus related:
New commodities are falling under Trump’s new tariff structure, effective this fall, so many importers will be stocking up to beat the tax hikes.
The combination of peak season and impending tariffs is propelling demand, constricting capacity, and pushing rates even higher – especially for the US East Coast.
While recently the price gap between the East and West Coasts was bridged, it will likely return to normal as rates are driven up by consecutive successful GRIs.
How should importers plan for potential pandemic related delays and hurdles?
One important tip is to ramp up production to accommodate ocean freight transit times instead of airfreight.
Airfreight is faster, but even Express LCL options, which are 3-4 times more expensive than traditional LCL, are still generally 2/3 the cost of airfreight.
Expert tipLeave extra lead time to enjoy cheaper ocean rates AND break up large shipments and diversify carriers and shipping modes to hedge against delays.
Getting in touch early with your logistics provider is essential to prevent delays and respond to unanticipated hurdles. Logistics providers can help guide you through the shipping process and save you money, for example by navigating customs clearance and documentation.
When booking with a carrier, make sure you take the entire transit time into consideration – from the moment the product is picked up from the factory to it being delivered to the customer. This can be significantly longer than shipping time so pre-booking with that in mind will help avoid delays.
Make sure your supplier is authorized to export by the CIQ (China Inspection & Quarantine Dept) and if you’re shipping medical goods, the factory of origin also needs FDA certification.
Expert tipCancellation fees are steep, so get proof of FDA and CIQ registration before even booking.
Finally, don’t forget that your goods need to clear customs in the country of destination. The cost of duties and taxes should factor into your decision about the economic feasibility of importing specific goods.
Do you recommend importers ship by air or ocean?
Ocean definitely offers more competitive rates, however express and economy air freight shipping have the benefit of quicker transit time and more frequently updated tracking.
With cancelled sailings and rolled cargo causing delays by sea, many importers have decided the added cost of air freight shipping is worth it.
Furthermore, despite still being less expensive than air freight, ocean freight prices are increasing, especially for express services.
Demand is growing ahead of a new round of China-US tariffs and many ships are still parked. The lack of capacity is driving GRIs, meaning that ocean freight prices likely haven’t plateaued.
Something else to consider is whether express air is a better bet considering the recent fluctuations in economy airfreight.
One fear with air freight is that if we see mass production of improved test kits or potential treatments for COVID-19, then air capacity will disappear. Nonetheless, if rapid transit time is your top priority right now, airfreight might be the best option.
If, on the other hand, you are shipping FCL and have time to book well in advance, sea is likely the most economical option.
One way to cover your bases is to diversify your shipping methods between air and ocean over peak season. This way you can get selling quickly and reliably with air, and replenish inventory while saving cost by ocean.
Amazon Peak Season 2020 for FBA Sellers
As Amazon sellers know, the COVID epidemic resulted in many challenges, for example restrictions on new products into Amazon fulfilment centers. When these restrictions were lifted, there was a rush to get products into warehouses and this resulted in long delays.
One way to avoid this is to ship products to long term staging or satellite warehouses and only move inventory into FBA as stock is depleting. This is also an advantage in case Amazon requests relabeling or repackaging.
For Amazon Europe sellers, a major challenge is that importers without a physical presence in Europe need trading partners or accountants to act as fiscal representatives, which adds considerable costs.
Another challenge in Europe is that customs agencies are often declaring higher values on goods to protect from customs audits, resulting in high VAT charges and additional duties that can be levied even months after the initial entry.
Expert tipFor Amazon international sellers diversifying fulfillment and finding alternate warehousing options is the best way to navigate changing policies.
What do you think the impact of COVID-19 will be on last leg logistics this peak season?
The majority of the delays early on in the pandemic were related to customs clearance and the export of PPE products from Asia. Last leg also contributed to delays, but this has improved significantly in the last month or two with only slight delays reported.
Heading into peak season, once export customs are cleared, shipping is fairly smooth.
Of course, importers should prepare all documentation and pay any duties and taxes quickly otherwise goods won’t be released, but if this is done quickly transit times are fairly fast and reliable.
Another way to keep things moving is to ship to main gateways and use expedited trucking. This is more expensive, but a smart way to get a product where it needs to be quickly and without hassle.
Expert tipBefore dispatching any shipment check that the receiving consignees have storage capacity.
If you’re sending a full container, the demurrage charges can add up very quickly, and devanning and warehousing goods adds additional costs on top of storage, so make sure delivery carriers are prepared to receive your goods or it could eat into your profits.
To sum up…
Peak season is here, and demand is climbing despite all odds. With rate volatility, limited capacity, and shifting regulations, keeping your business on track and running smoothly may seem daunting.
So, we brought in some experts to help clear up confusion and offer you actionable tips to make this peak season a success.
Special shout out to our logistics providers for their time and insight!
You can find Aver Logistics, Silver Streak Logistics, and ExFreight on our marketplace platform, delivering freight shipping solutions for importers everywhere.