With Black Friday on the horizon and Christmas hot on its tails, retailers are presented with a number of challenges when it comes to shipping their cargo, according to Jan van Casteren, VP Europe at Flexport.
Air and ocean space is tight and the competition is fierce. Retailers need a good plan in place for shipping their goods, as leaving it to the last minute means you’ve left it too late.
Handling peak season may seem intimidating at first, but there are practical steps you can take as a retailer to ensure that your goods get onto carriers, into stores and into your customers’ hands with as few bumps in the road as possible. With a bit of forward planning, retailers can streamline their supply chain and keep customers happy.
What causes peak season?
Starting in July and ending in December, peak season is the time of year when there is a higher amount of cargo moving around the world than usual. This is caused by a number of external events that cause a surge in consumer demand, like Christmas, Black Friday, Cyber Monday, and the launch of new electronic devices like the iPhone 8.
An increase in demand needs to be matched by an increase in supply – but increasing the number of planes and boats is a tall order in the freight world. Competition for space grows fierce – and air and ocean carriers must take steps to make sure that their capacity is used as efficiently as possible.
Any retailer’s worst fear during this highly competitive period is that carriers will roll your cargo. This means that your cargo won’t be loaded onto the vessel it was scheduled to sail on because that vessel ran out of capacity. The reason this happens is because carriers overbook spots on vessels – just like passenger airlines overbook seats on planes – and it tends to be a relatively frequent occurrence during peak season in particular.
So how can you avoid this? Here are three practical tips:
- Think like a carrier
When there’s limited space available, carriers must be discerning about how they allocate it. To get ahead of the competition, it’s worth the effort to put yourself in a carrier’s shoes and work out what factors they’ll consider when awarding this space.
The first thing carriers tend to look at is how much you have supported them in the past – if you’ve provided them with a sizeable volume of freight, they’ll be more likely to award you capacity. They also put an emphasis on how reliable your freight forwarder is. The freight industry in general is beleaguered by unreliability: 25 to 30% of bookings never show up. This number only increases during peak, so your and your forwarder’s track record is crucial.
Carriers also consider the rate that a customer is paying. They look at the possibility of implementing general rate increases (GRI), or a peak season surcharge (PSS). No surprises here – if you pay more, you can expect preferential treatment.
- Rank your shipments – and split them up
Rank all of your shipments by priority. Prepare for the inevitable by telling your forwarder what the least urgent shipments are and allowing them to roll if necessary. That way your forwarder can protect the most important ones.
Carriers tend to roll per bill of lading (i.e. the receipt your carrier gives you) – not per container. This means that if the carrier rolls your bill, then all containers on that bill get rolled. One way of getting around this is by splitting your containers across multiple bills so that there’s less risk of all your containers getting rolled together.
- Give your forwarder transit options
Try and avoid the crowds by considering slower transit times. They’re less popular, so you’ll face less competition – the one caveat is that you will have to plan quite far in advance. It’s also important to give your forwarder options. If your cargo is travelling inland, be flexible about your port of discharge. Being open to using, say, Rotterdam instead of Hamburg or Antwerp, means your forwarder can consider more possibilities so that your cargo is less likely to be rolled.
What you must do, however, is avoid transshipments – that is, changing vessel en route. During peak season, every vessel loading carries the risk of rolling. This means that if you transship, you could make the initial sailing and be rolled on the second leg, adding weeks to your transit time.
As you may have gathered from reading this far, when it comes to navigating the challenges of peak season, it pays off to be prepared. Try and understand what motivates your carrier, take sensible steps to edge out the possibility of your cargo rolling, and collaborate closely with your forwarder at all times. If you follow these practical steps, peak season will never catch you out again.
Jan van Casteren, VP Europe, Flexport