As a 3PL provider, readying our shipping partners for “peak season” is one of First Call’s primary responsibilities. Anticipating annual shifts in demand is essential to effective supply chain management – which is why it pays to understand what drives the somewhat-predictable ebb and flow of shipping rates throughout the calendar year.
Here’s how your business can avoid out-of-stock items and slow shipping times during your next busy season:
2023 Shipping Forecast: What Experts Are Saying
Shipping is off to a slow start, which isn’t unusual for this time of year. However, even as we progress through the winter most industry forecasts predict lower-than-usual slumps and an overall drop in shipping volume in 2023.
After record-high container rates in 2022, Ocean freight prices are now plummeting in response to an oversupply of containers. Many shipping lines are reducing capacity or even “blank sailing” (industry jargon for canceling trips).
Similarly, air freight volumes recently dipped for the ninth month in a row, and chargeable weight was down 8% compared to rates in 2021. The trucking sector is also seeing a reduction in both rates and demand, though many experts see this as a natural normalization of rates for the industry as it moves past pandemic-induced highs.
Lower rates will help more companies move more products via air and ocean without straining budgets, which could in turn make many products more affordable for consumers compared to recent years.
Despite the slow start to 2023, expect a few reliable bursts of shipping activity to occur throughout the year as certain holidays and peak shipping seasons approach.
Anticipating Surges: Produce, Peak, and Holiday
One of the keys to predicting changes within the shipping industry is understanding freight seasonality. In a typical year, the shipping industry experiences four seasons:
- Quiet Season (January–March): Low temperatures create poor road conditions that aren’t conducive to easy shipping. Many carriers are also taking this time to recover from the buzz of activity during the holiday season.
- Produce Season (April–July): As various forms of produce come into season, demand for carriers rises – while carriers with capacity to move non-produce items become sparse.
- Peak Season (August–October): Preparation for the holiday season and back-to-school consumer demand causes freight volume and rates to spike.
- Holiday Season (November–December): The shortest season of the year, the holiday season is packed with tight deadlines and quick adjustments for delayed and last-minute shipments.
The exact start and end dates for each season vary from year to year, but you can reliably count on each of these four seasons occurring. Understanding when each season is about to hit can help you make smarter business decisions and plan the logistics of shipping out products more effectively.
Additionally, certain types of products may create their own peak shipping season and cause a sudden rise in demand for carriers. For example, holiday-related merchandise like Easter candy and Halloween decorations usually ship the month leading up to the holiday. Similarly, some products are in higher demand around a particular holiday (ex: jewelry for Valentine’s Day, toys for Christmas, and so on). Of course different kinds of produce have their own unique shipping seasonality, while pharmaceuticals and other medicinal products tend to experience a surge in demand during flu and allergy season.
Seasonal Challenges and Changing Prices
Every industry is affected by freight and product seasonality in two ways: availability and price.
As demand for certain products increases during produce, peak, and holiday season, overall shipping volume increases. This limits the supply of available drivers, cuts down on the amount of available space for additional cargo on each load and reduces the amount of warehouse space available for product storage and management.
The resulting lack of supply to meet rising demand causes shipping rates to soar. And, if there are additional supply chain challenges like the port congestion that happened during the peak season of 2022, already-high prices can quickly skyrocket to record-breaking levels.
Business owners with flexible product lines can save themselves significant time and money by planning ahead for these busy seasons, purposely organizing the majority of their shipping during the off-season to avoid peak season’s high prices and shipping congestion.
Those with limited flexibility, fewer resources or more complex shipping needs may require some additional logistical expertise. A reliable 3PL servicer like First Call can identify optimal shipping strategies for your business regardless of industry, negotiating around and navigating through seasonal difficulties as only industry experts can.