Shippers need adaptability and reliability to function well in the face of constant change and uncertainty. They must be nimble to adapt to fluctuating market dynamics but also need reliable supply chain partners they trust.
Read More
Implementing carbon accounting and reporting to track direct and indirect emissions is a great start to taking control of supply chain emissions. Another is joining with industry partners to develop strategies to reduce emissions operations-wide.
Work stoppages and strikes may constitute only a small percentage of the disruptions that may occur. However, they remind us that our supply chains should have safeguards to keep operations and networks running smoothly.
We’ll explore three primary causes of current container freight rate volatility and then turn to three strategies shippers should employ to stabilize rates, including some that can help shippers beat market averages at every stage of the freight rate cycle.
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.
What power would a single boulder have at stopping the powerful waves of a storm surge approaching a vulnerable marina? But piles of boulders together can form a breakwater to shelter boats and shorelines from intense wave energy. There’s power in numbers.
Likewise, what power does a single shipper have at stopping the powerful market forces that drive transportation rates up? But the collective bargaining power of many shippers together can shield vulnerable budgets from the whiplash of market volatility.
While experienced supply chain practitioners can recognize many of the winds of change driving typical market cycles and stay a step ahead in the delicate rate negotiation dance between shippers and carriers, the COVID moment taught many that another curveball could always be around the next corner.
Let’s take a closer look at the “new normal” that today’s shippers need to navigate, and how the power in numbers can pay off for shippers wanting a better outcome in their next budget.
Today’s Shippers are Tasked with Operating in a Volatile Logistics Landscape
In a previous article on navigating rate fluctuations, we walked through half a dozen factors that contributed to rate volatility in the first half of 2024, from the Red Sea Crisis and geopolitical shifts to weather events and added carrier surcharges. Each included links to articles detailing the impacts on freight rates, so we won’t rehash those in-depth here. One example will suffice: when Houthi rebels attacked cargo ships in the Red Sea, prices on some lanes from Asia to Europe that typically go through the Suez Canal surged nearly five-fold. And that link isn’t from a niche transportation publication. It was J.P. Morgan assessing the global economic impacts of the shipping crisis.
While obviously not the first time piracy has taken place on the open seas, even the best prognosticator probably didn’t have Houthi hijacking on their transportation budget bingo cards. Because nobody could have. Like COVID. Like the Baltimore bridge collapse. Like the Ukraine war.
Manufacturing indices, unemployment reports, inflationary pressures, consumer spending, and countless other global trade trends to watch can be leading and trailing indicators of what will happen to rates overall, but the bottom line is there will always be unpredictable rate volatility driven by real-time, impossible-to-predict events.
A Strong Foundation on Unsteady Ground: Rate Stability for Improved Business Resilience
Market analysis and forecasting are important, but just as a meteorologist can give an indication of what weather may be coming, there’s a difference between knowing a storm is on the way and making tangible preparations for the storm.
Some of the more well-known ways to achieve rate stability include:
- Carrier Diversification – Just as a diversified investment portfolio reduces risk for future retirees, spreading freight across a variety of capacity providers can minimize risk for shippers.
- Shipment Consolidation – This is another example of power in numbers, but with cargo itself. Smaller shipments are combined to negotiate bulk discounts.
- Contract vs. Spot Balance – Shippers often try to secure a mix of contracted capacity over long durations vs. spot market capacity that fluctuates day to day, and shift the amount of each depending on the rate environment at the time, but overplaying a hand in one market condition can come back to bite in another.
But there are some lesser-known ways, like the collective bargaining power of a shippers association, which lets even small shippers band together to bring greater combined volumes to the table, that can then work to secure more fixed rates for longer terms and with more reliable space allocation. But not all shippers associations are created equal.
Gemini Shippers: Stability in Uncertain Times
The Gemini Shippers Association procurement experts secure fixed rate contracts for each member based on individual rate and service requirements. We also go beyond a typical shippers association to streamline the entire process from quote request to shipment arrival with rate search, tracking and tracing, rate auditing, and data analytics tools.
Gemini rate lock solutions provide a shield from today’s increasingly volatile logistics environment, using a simple process that starts with a consultation and continues with ongoing membership resources and customer service.
Shield Yourself From Market Volatility with Gemini Shippers
When the next storm comes and the waves of rate hikes rise, will you weather the storm alone, or will you gain rate security and stability by joining forces with other member shippers via the Gemini Shippers Association?
Join Gemini today to get all the benefits of membership in our not-for-profit collective that’s been serving members for nearly 100 years. We’re eager to serve you in a mutually confidential environment.
… there are ways to neutralize the impact of volatile shipping rates through the budgeting process and via creative strategies to build rate stability, several of which we’ll discuss in this helpful guide
Companies can’t manage what they can’t measure, and Scope 3 emission data — which companies have the least control over — is notoriously difficult to obtain. When it can be obtained, it’s often inconsistent between suppliers. That’s where big data and data analytics come in.
Recent geopolitical tensions have heavily impacted supply chains and shipping operations, making the choice of tools and partners even more crucial. This article explores global trade trends, technology’s role in facing them, and how Gemini Shippers can help.
Data analytics in the logistics process streamlines and optimizes your inventory management process. It can achieve this by enhancing demand forecasting by reviewing historical data, trends, and patterns.
