Every year in summer, when others are still on vacation, preparations for the peak season begin in retail and logistics. This time of the year, when sales are at their highest, presents a particular logistical challenge. After all, goods need to arrive at warehouses on time and be ready for sale when they are in demand. Retailers and logistics not only have to prepare for Christmas but also for Black Friday and Cyber Monday, the last Friday and the last Monday in November. Because on these days, online retail always records immense sales. However – and this is one of the difficulties that logistics, in particular, has to deal with – these high-turnover periods are always preceded by Golden Week in China, a work-free week on the occasion of the Chinese National Day. Production in China comes to a standstill during this period, and goods are not delivered.
And after Christmas, planning continues, especially for time-critical seasonal goods. This is because the Chinese New Year is celebrated in China in January/February. This also involves a rest period of around seven days in the production facilities.
What are the special features of the peak season? What should you look out for in your logistics planning in the coming weeks and months? What factors must you take into account in this context to ensure that your goods reach you on time and that the costs for transport as a result of seasonal surcharges, for example, do not exceed your planned budget? We have listed what you need to pay attention to and, of course, we also address the special conditions of this year that affect logistics.
The most important dates of the Peak Season
Golden Week in China always begins on October 1 and ends on October 7. During this period around the Chinese National Day on October 1, a veritable migration of people begins in China, as production facilities are closed with the exception of a skeleton workforce. All employees either go on vacation and, among other things, see the great sights of China such as the Great Wall or visit their relatives, some of whom are scattered far and wide in China. The ports are also largely quiet. Arriving ships are not unloaded, and ships waiting to depart are not loaded. Containers that could not be cleared before the work-free period are piling up in the ports, shipping companies are curbing their capacities, and customs is working only to a very limited extent. Since many workers leave work shortly before Golden Week because they need more than a week to complete their projects, delivery problems can already be expected in the days leading up to October 1. After Golden Week, some do not return to work because they have accepted new jobs elsewhere.
Experience shows that freight rates, therefore, rise in the period before Golden Week. This is because many retailers try to ship their goods before October 1 so that they arrive on time for Black Friday or Cyber Monday, for example. Airports are also generally very busy, because retailers for whom sea freight is no longer an option, for example, due to lack of space, have their goods shipped by air freight. That’s why logistics need to plan early, think about the end of the year in the summer, and make bookings in good time.
Black Friday and Cyber Monday
A good month and a half after Golden Week, the big sales days for e-commerce are already upon us: Black Friday and Cyber Monday. They are among the strongest sales days of the year, although many customers are now also looking for deals in online retail beforehand. This makes it all the more important for retailers to have a sufficient quantity of goods in stock before these two dates at the end of November, if possible. Forward-looking and very detailed production planning and the timely placement of transport bookings are therefore essential, especially when not exactly foreseeable capacity bottlenecks are added, which are exacerbated by the days off in China for Golden Week.
Oh yes, and then of course there is Christmas, which as we all know always comes too quickly. Retailers should already set their sights on the end of the year and ramp up production of their goods in order to be able to meet consumer demand in November and December. Therefore, shipments should also be booked in September at the latest – with a view to freight rates, shipping capacities, and possible supply chain disruptions, the earlier the better.
Chinese New Year
After Christmas, retailers and logistics experts cannot breathe easy for a long time yet. That’s because the Chinese New Year is approaching with rapid strides. Even in the days around Chinese New Year, which is celebrated every year at the end of January/beginning of February, most workers in China have the day off. Goods that are to arrive in Europe on schedule in February, March or April should be ordered in good time, if possible already towards the end of the previous year. Bookings for transportation should also be made as early as possible because around Chinese New Year there can be both production and delivery difficulties. Freight costs also tend to rise at this time.
The peak season and its impact on logistics
Impact on transport modes
During Peak Season, finding the right mode of transportation for cargo is not easy. While many traders still prefer sea freight, disruptions can cause delays and vessel cancellations. In such cases, alternative transportation modes such as air freight or a combination of different transportation modes should be considered. It may also make sense to choose a port of destination other than the one originally envisaged in order to have the rest of the transport carried out on the ground by truck. For cost reasons, a slower mode of transport, i.e. a slower ship, can also be chosen, since freight costs are generally higher the faster the goods reach their destination. Transports that reach their destination more slowly are often less popular. But here too, the earlier a booking is placed, the more certain it is that the goods will reach their destination on time.
Peak season air freight starts later due to the speed of the airplane as a mode of transportation, but with many retailers and logistics providers no longer relying solely on ocean freight, capacity can be tight here as well. Forto’s digital platform, which allows you to determine freight rates and capacity at any time, makes it easy to choose the best mode of transportation for your goods or to combine different modes of transportation.
By the way, betting on falling freight rates and delaying a booking during peak season can mean that only parts of your freight can be transported or that you have to accept higher prices after all. Therefore, it is better to calculate with higher prices from the outset and rethink your budget plan and, if necessary, your sales prices.
Peak Season Surcharges
Expect to pay surcharges during peak season. As a rule, shipping companies charge these surcharges for imports from Asia during the peak season between June/July and the end of October. The same is true for imports by air freight. Some carriers also impose a Peak Season Surcharge for cargo shipped to and from certain ports. Inquire well in advance about these surcharges and calculate them into your budget planning.
Peak Season in current times
Peak Season 2022 could be even more difficult for logistics providers than the years before, which really weren’t easy at all. Many things are simply not calculable this year. For example, as a result of the ongoing Covid 19 lockdowns in many major Chinese cities, certain goods are not available or not available as quickly, so there could be shortages in availability for some goods. On the other hand, Russia’s war against Ukraine has made not only energy prices but also, as a consequence, many everyday goods much more expensive. This inflation is inhibiting demand for consumer goods. Many consumers currently prefer to do without things they do not absolutely need, because the economic developments mean that they cannot foresee whether and how they will continue to manage their money.
Retailers are therefore faced with the question of how many goods to buy for the peak season in order to be able to meet demand on the one hand and not be left sitting on goods on the other. At the same time, the problem arises: can the goods be delivered at all and, if so, will they arrive on time because of the production bottlenecks, but also because of the ongoing congestion at ports worldwide, which is partly a consequence of the lockdowns? In July 2022, for example, more than 20 large container ships jammed in the German Bight for the first time.
In addition, it is not clear to what extent rising energy costs will influence the level of freight rates. Here, too, there is uncertainty for logistics companies and traders.
There is no alternative to transporting goods, but with all the ongoing uncertainties about delivery problems or the level of freight costs, there is, for example, the option for retailers and logistics providers to ship goods with LCL transports during the peak season. In this way, retailers ensure that they have the most important goods in stock even when sea freight capacity is tight, but can have goods they do not need until later transported after the peak season without peak season surcharges. For time-sensitive goods, transportation by air freight is an alternative. Combined transportation of goods can also be a worthwhile, and possibly even less expensive, option. There is also the option of prioritizing freight. If not all goods can be transported due to a lack of capacity, retailers should inform their freight forwarder which items have priority and which do not.
How Forto can support you during peak season
At Forto, we are breaking new ground in logistics. On our digital platform, you can compare transport offers in real time and book them immediately. Communication with everyone involved in getting the goods to you also goes through the platform, so there’s just one source for all the important information. Of course, you can track the cargo’s path in real-time and reroute and switch modes of transportation as needed if there are any disruptions along the way. Forto’s experts use data-driven information and the use of artificial intelligence to help you identify disruptions in time and advise you on alternatives. Feel free to get in touch with us. We look forward to assisting you.