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Early Peak Season in 2022

In Uncategorized Posted June 22, 2022 at 3:18 pm
By Con Xegas

Early peak June 2022 (1200 × 627 px) x2

The reopening of Covid-related lockdowns in China, equipment availability at Chinese ports, and congestion at empty container depots are the three most significant factors influencing the international sea freight market in the leadup to the traditional Peak Shipping season.

According to Descartes Datamyne figures, Chinese origin shipments to US west coast ports declined by around 6% between January 1 to May 29 this year, compared with the same period last year. This figure illustrates the impact of Covid lockdowns on China’s manufacturing hubs. The flip side of this was the 5-9% reduction in productivity in the US’s busiest ports in a comparative period, representing significant unmet demand and undelivered orders.

The lifting of Shanghai’s lockdowns has resulted in a spike in volumes as importers in the West scramble to catch up on delayed shipments.  As a few hundred thousand TEU of unshipped cargo hits the water, a commensurate space shortage is felt around the globe. This spike is the most likely reason behind what looks like an early beginning to the Peak. While we expect that there will be a lull once the backlog clears, the Peak is a looming presence in our calendars. Advance planning by many retailers, determined not to be caught by future lockdowns and delays, may pull forward the ordering of Christmas stock.

If this bears out, we could see further rate rises. And if high sea freight volumes remain, it may result in additional congestion in Los Angeles and Long Beach in the US and a bullwhip of knock-on capacity constraints throughout the supply chain.

As it stands, freight rates remain high, and as space tightens for the Peak, we should expect shipping lines to implement similar approaches to those we saw in 2020, including:

  • More frequent rate changes: rates rising daily/weekly instead of a monthly rate offering
  • The strict control of space allocations by evaluating the earlier support by individual shipper’s low seasons
  • Earlier bookings (21 days in advance)
  • More new charges imposed, e.g., cancellation fees

Peak Season presents challenges every year; this year will be no exception. However, with solid advance planning, Magellan will navigate a path for your cargo. It is the ultimate juggling act – securing enough space to get your Christmas product into store while keeping an eye out for better rates and options.

Magellan Logistics provides freight and logistics services to all industries, including sea freight, air freight, customs clearance and the all-important digital freight portal. Get in touch with one of our freight specialists today.

Check out Edi’s tried and true tips to make it through the Peak Season.

Sources:
https://www.cips.org/supply-management/news/2022/may/freight-forwarders-warn-of-chaos-as-shipping-enters-peak-season
https://splash247.com/growing-congestion-poses-threat-as-peak-season-gets-underway
https://theloadstar.com/peak-season-set-to-be-shanghaied-as-260k-boxes-bullwhip-market

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