Peak season 2024 promises to keep supply chain pros on their toes with the usual blend of ever-evolving market dynamics and the not-so-usual geopolitical curveballs that have already shaped the first half of the year.
The maritime peak season always represents a significant time in global trade, with shippers looking to beat the clock and the competition to get goods across the ocean at the right time and price to meet consumer demand and keep inventories in balance.
The shippers that win this peak season will be those that understand the market dynamics at play and prepare for the potential challenges they may face. We’ll outline those challenges in detail after quickly getting our bearings about peak season.
Understanding Maritime Peak Season
Peak season is an annual time with increased demand, higher rates, and container space shortages as shippers prepare for global holidays and major commercial events.
Demand typically peaks August through October. It’s also affected by Golden Week (Oct. 1-7 in 2024), when East Asian countries almost completely shut down commercial and manufacturing activities.
During peak season, the price to ship consumer goods, including electronics, toys, and textiles, can quickly rise, with perfect-storm scenarios pushing spot container rates from a few thousand dollars per forty-foot equivalent unit (FEU) to $10,000 and $15,000. Let’s take a closer look at what could influence those levels of rate fluctuation this year.
A Disrupted Market Presents Hurdles for Shippers
Rarely does peak season mean smooth sailing for shippers, but 2024 certainly presents some unique challenges.
Current Conditions in Container Shipping
Red Sea vessel diversions and rising port congestion have eaten into the extra capacity that was available in late 2023, and impending U.S. tariffs and possible East and Gulf Coast port strikes have led many shippers to front-load their peak season shipments. Haunting memories of historic pandemic-era port backlogs are further pulling forward demand, as Bloomberg predicted global shipping strains to extend well into the second half of 2024.
Container rates are now in the range of $7,000 to $8,000 per FEU, with potential to hit five figures in a most likely scenario of a slow decrease in demand later in peak season, but a confluence of ongoing Red Sea diversions, sustained demand, and port strikes could force spot rates higher.
Forecast Trends and Scenarios
High port volumes are projected to continue, including in Singapore, the world’s second-busiest port, where shipments are up nearly 30% year over year. Many are projecting loaded import volumes at the top 12 container ports to remain above 2 million twenty-foot equivalent units (TEUs) through October, a threshold only achieved in two months in all of 2023.
Factors Influencing Peak Season Dynamics
While many economic indicators like U.S. inflation levels would seem to project reduced consumer spending, current consumer activity shows active demand, with shippers happy to meet the demand.
In the midst of a tumultuous election year in many countries throughout the world, changing political dynamics will certainly have their say as well, both in policy shifts and the potential for more fallout from the Ukraine-Russia and Israel-Hamas conflicts.
Of course, climate conditions could have an impact on shipping routes as well, as evidenced by the Panama drought over the last year limiting volumes through the Panama Canal. Hurricane season in the U.S. and any other number of weather events also could impact this year’s peak season.
With peak season 2024 already showing its hand, it’s time for shippers to prepare.
Building Resilience for Peak Season 2024
While peak season presents its fair share of unpredictability, shippers can take actions to meet the challenges that will inevitably come.
Planning Ahead
Simply knowing what’s happening in the market and planning shipments accordingly can go a long way toward mitigating the impacts of demand peaks and supply chain disruptions. With an earlier start to peak season, shippers are wise to get a head start on securing container space to get optimal container availability.
Rate Stability
Spot rates inevitably fluctuate, but shippers can gain access to greater space allocation and more stable long-term rates via participation in a shippers association. By pooling members’ freight together, a shippers association can leverage the collective power of larger freight volumes to negotiate better rates per FEU and TEU.
Flexibility and Communication
When push comes to shove, flexibility will always need to be a core strategy for shippers with the high number of variables impacting rates. But again by combining volumes via a shippers association, each individual shipper can gain access to more flexible shipping schedules. Proactive communication with logistics partners is always a best practice to achieve optimal outcomes even in less-than-optimal peak season conditions.
Join the Gemini Shippers Association to Optimize Your Peak Season 2024 Results
Whatever happens during peak season 2024, becoming part of a shippers association can give you the leg up you need to navigate the challenges and get your freight where you need it when you need it at the price you want it.
Join Gemini today to unlock your best peak season potential.
