Mother’s Day, Black Friday, and the spring harvest of cantaloupes and watermelons are just a few of the external events that cause a peak shipping season, a period when increased demand for products or services kicks an industry into overdrive, sending shipping volumes through the roof and pushing the supply chain to its limits. Peak seasons can be good for a company’s bottom line but also disruptive to the regular supply chain functions that support that company.
Throughout each peak season, the supply chain acts as the connective tissue that links all businesses to their customers. Over Shaker’s 30 years of operation, we’ve helped our customers navigate hundreds of peak seasons and the tight freight markets they create. Here are the basics on peak seasonality and a few tips on preparing for a peak with Matt Janeski, Director of Logistics Services at Shaker.
Peaks and Valleys in Transportation
In a typical year, shipping volumes can be plotted along a predictable path of peaks and valleys. Every industry has its own peak period to focus on, but seasonality and market conditions cause these peaks to overlap, putting pressure on the supply chain that impacts everyone.
One of these peaks happens in the middle of the year, around spring and summertime. The nicer weather kicks some industries into high gear – produce farmers begin harvesting their crops, and construction firms can finally start working at job sites – putting more freight on the road. Additionally, industrial chemical manufacturers begin to ramp up production in anticipation of year-end demand spikes.
There’s a second peak at the end of the year preceding major holidays like Christmas, New Year, and the Lunar New Year. Retailers stock up their inventory as consumers flood stores to take advantage of holiday sales. Importers and exporters experience their peak around this time as well, moving products across borders before processing facilities offshore close for the holidays.
These mid-year and end-of-year peaks happen when increased freight volume drives up the need for carrier capacity. Alongside these major seasonal peaks, there are several micro-peaks throughout the year that are caused by fewer trucks on the road. Mother’s Day and Orthodox Easter cause micro-peaks, as more drivers are taking time off to be with family on these days. Shippers often adjust their schedules with the help of 3PLs to move extra supplies and products before these holidays.
Additionally, DOT Blitz Week (a three-day stretch in May when more authorities are performing vehicle inspections on the road) is a time when smaller carriers and owner-operators stay at home to avoid the possibility of a shutdown, generating another micro-peak. Shippers partnering with Shaker Logistics don’t have to worry about this peak, as we vet and monitor our carrier network for compliance, so we never work with carriers who need to dodge the authorities.
Though peak seasons typically remain regular and predictable, there are instances where capacity can be disrupted, moving peaks back or flattening them entirely. Recently, we’ve seen pandemics and trade wars alter standard volume patterns. When this happens, it’s important for shippers to have a loyal logistics provider who will help them navigate unexpected changes to freight volumes and rate patterns.
The Freight Market in Peak Season
Each peak season sends a ripple effect across the national supply chain, impacting anyone trying to move goods – even shippers who aren’t currently experiencing their own peak. This is what shippers can expect to encounter during a typical peak season:
- Equipment becomes increasingly harder to get ahold of as carriers try to accommodate the dramatic increase in volume.
- Tender rejection rates (the percentage of loads a carrier refuses to haul) increase as carriers can afford to have more discretion on which loads they take to make the most money.
- Shippers will potentially see an increase in carrier rates, driven up by the mechanics of supply and demand. Shippers using the spot board might find themselves paying exorbitant prices to move their usual freight.
- Shippers paying favorably low rates could be left scrambling to find a truck or working with a less-than-reputable carrier, risking delivery delays or freight damage.
Tips for Shippers to Conquer the Peak
Matt Janeski, Director of Logistics Services at Shaker, has years of experience helping shippers through the tricky peak season market. Here’s the advice he gives to shippers:
1. Partner with a trusted 3PL.
“When shippers form a relationship with a 3PL like Shaker, they’re insulated from the market swings that happen in peak seasons. At Shaker, we don’t start dumping freight when things get busy. We value loyalty, and we never ditch regular customers to chase high-paying spot loads. Shippers dealing with a lower-quality broker or working directly with carriers are going to experience that a lot more.”
In addition to gaining a loyal partner, shippers working with 3PLs will also have access to that 3PL’s wealth of knowledge. While shippers can track transportation trends with newsletter subscriptions, an experienced logistics provider sees capacity trends happening in real time and can help shippers plan for peak market shifts well in advance.
2. Consider contracting rates.
Shippers who contract rates with their logistics provider will have more consistent, affordable transportation service. Contracted rates allow logistics partners to build systems and resources around the shipper’s needs, so when peak season causes market pressure, that shipper will already have access to dedicated coverage. Contracting rates also protect shippers from extreme market swings, giving them access to consistent pricing across peak seasons.
3. Share plans with your 3PL.
Stress can run high during peak seasons, especially for shippers balancing increased demand and new business plans, like expanding or moving facilities. A 3PL can help shippers smoothly transition through peak seasons with enough advanced notice. The team at Shaker also offers consultative supply chain and freight management services and can run scenarios to let shippers know how any potential changes will impact their transportation.
Matt has seen the pressure that peak season can cause for shippers: “There’s a lot to keep track of during peak seasons. You have to keep an eye on other industries and carrier movements across the whole country. It can be a lot for a shipper to balance, which is where Shaker can help. Our team has the resources, knowledge, and experience to support our customers through their peak season and beyond.”
Preparing for your next peak season? Let Shaker Logistics support you! Contact our team today.