If this turbulent year of logistics so far has got you feeling the strain, the truth is that the end isn’t in sight just yet. Congestion is the theme in 2021, and news outlets reporting that it
could continue until the end of the year. The next few months will be crucial for your business as what would normally be our peak season arrives to compound the pressures being felt around the world.
But hope is not lost! If you act now there are plenty of steps you can take to lift the pressure. Here we give you a sense of the current shipping situation – and three steps you can take into the busy season ahead.
It’s all one big peak season
The disruption of the last 12 months has shaken up the logistics industry, changing many of the norms and regular activities that most businesses are used to.
Covid-19 continues to be the primary cause of delays – with outbreaks and lockdowns forcing ports to close or reduce staff. The vital Yantian Port in South China is just one example, as it slowly returns to full operations after a partial shutdown, and many other key ports feel the same strain.
The knock-on impact of these shutdowns is delays across the supply chain – with other ports trying to pick up the load and containers sitting in terminals waiting to be released. Analysts believe 8-10% of cargo capacity around the world is absorbed by delay right now.
But don’t ignore the holidays
The past months have shown that there may no longer be just a few peak seasons, but rather a continuous peak over the year. However, it is still important to know seasonal events in logistics and shipping to plan ahead and prepare. As two-day shipping has become the norm, it’s more important than ever to have your cargo ready to go in time for the holidays. So your cargo arrives well on time and you don’t run out of goods.
If you prepare correctly, these global events can be huge opportunities for you to grow your business and expand into new markets – but fail to do so and you may be left with disappointed customers and disgruntled suppliers. So, here’s our summary of the key events and holidays in logistics and shipping:
Golden Week: The landmark national holiday in China that takes place in October each year, sees offices, schools, businesses, and factories in China close their doors for a week to enjoy the celebrations.
Black Friday and Cyber Monday: The capacity crunch that results from the holiday season is compounded by Black Friday and Cyber Monday – two of the biggest commercial holidays on the calendar. Every year millions of shoppers head to stores and online on the Friday after Thanksgiving to spend big. In the US in 2019, $7.4 billion was spent in a single day. The Monday that follows has become known as Cyber Monday – a continuation of the shopping boom focused on e-commerce, that sees shoppers spend an estimated $11 million a minute!
Christmas: These big festive holidays round off the year and see booms in sales of everything from festive food to gifts and decorations. While they sit a few months away, retailers and consumers have already been busy making plans and organising inventory. To accommodate this demand, you’ll see many companies getting their cargo prepared as early as September or even before.
Chinese New Year: Beginning on February 1st – causes the largest annual mass human migration in the world – and more importantly sees factories in the region close for over a week, with full productivity not resuming for over a month and further impacts for many months after. The unique impacts of Chinese New Year as well as Golden Week, seeing closures in one of the biggest and busiest economic regions in the world, should make them a high priority for your planning ahead.
Just-in-time to Just-in-case – the future of peak periods
The difficulties of the last 18 months, since COVID-19 wreaked havoc on global supply chains, has led to one noticeable shift in supply chain management. More and more companies are moving from a 'just-in-'time' to a 'just-in-'case' approach to their logistics and inventory management.
The 'just-in-'time' strategy has been common in recent years. Built on efficiency it means stock is ordered only when it is needed, to decrease waste and reduce inventory costs. But in the aftermath of COVID-19, companies using this system felt the worst of the impact of supply chain disruption as delays hit and their inventory wasn't sufficient to meet demand.
The fallout forced a number of businesses to assess how delicate their supply chains are and move to a 'just-in-'case' approach – which prioritises risk management, mainly by ensuring greater inventory in warehouses. This shift could be something to consider for your own business – but one thing is for sure, it could change peak periods this year and into the future, with bigger shipments becoming increasingly regular - adding their strain on logistics management.
What can your business do to avoid peak season delays?
The low-capacity levels in vessel space and container availability that we might expect during the height of a peak season, has become the norm. So, what actions can you take to keep your logistics moving and your business running as key seasonal events approach on top of this year’s port congestions and shortage of containers?
1. Plan early, book early
If you haven’t caught the hint yet, we’ll make it clear – planning your logistics and organising cargo bookings and shipments early this year is the single most important thing you can do to get you through peak season. In this new world of logistics, your ability to organise and forecast will define the success of your business.
“You should be moving or booking cargo as early as possible this year to accommodate for potential delays. On top of that, if you can be flexible when it comes to container types, that will give you an edge with availability being an issue across the globe. For instance, check for availability of different container types such as 20-feet containers instead of sticking to the more usual 40-feet containers.”
2. Get in touch with your suppliers
With capacity being so critical, now is the time to be talking to your suppliers. If you rely on importing particularly, you should be crystal clear and proactive with your communications – making sure you set expectations and lay out each party’s responsibilities as per the agreed terms of your contract.
“Importers should be ensuring their suppliers are regularly engaging with their nominated shipping companies to get their goods moving as planned. You should insist that suppliers keep to the critical timelines of required cut-offs – including equipment, documentation, customs and all payment processes.”
3. Watch out for inland transport capacity
Logistics is more than just ocean freight – and at Twill we offer end-to-end logistics services that incorporate the crucial component of inland transportation; whether by rail, road or barge.
The delays and disruption as a result of COVID-19, bottlenecks and port closures are being felt here too – with trucking, in particular, being subject to restrictions and lockdowns, creating a shortage in capacity that is leading to inland delivery delays. Being proactive and flexible can make a difference.
“Getting your cargo moving early will give you room to breathe in case of delays at a destination port. Once it’s there, make sure that all documentation is completed, and fees are paid upon arrival – so that you keep the chain moving smoothly.”
If you’re unsure of how to handle the customs and documentation process, our Customs services can take it off your hands, keeping you informed and up to date along the way.
Overcome challenges during the peak season in 2021 and stay informed with Twill
The next months will be a test for your business, there’s no avoiding that. Delays will be a constant threat, but by planning your shipments early, communicating proactively and clearly with suppliers to set expectations, and being aware and open to different transport combinations and equipment types – you will give yourself the best chance of coming through unscathed.
As always, you’re not alone – and Twill is here to help. With solutions in our platform and beyond that, we can help keep your logistics moving. For more insights, information and guidance like this, head to our Knowledge Hub!