Peak season in Foreign Trade: The challenges and strategies to face this atypical period

Peak season is a period in international trade characterized by a significant increase in demand for cargo transportation, causing congestion at ports and airports, increasing freight costs.

This atypical phase is driven by festive dates, seasonal events and specific consumer trends, especially the Chinese New Year, whose festivities last several days and lead to the closure of Chinese factories and ports, the largest in the world, making this one of the events with the greatest impact on the global logistics chain.

It is worth noting that, unlike air transport, which has the flexibility to transport cargo on passenger flights, and road transport, which has a variety of vehicles and alternatives to keep its operations running, maritime transport is the one that ends up being most overloaded by peak seasons, due to limited space, high demand and longer transit time.

According to data from Antaq (Agência Nacional de Transportes Aquaviários), the period of greatest port activity in Brazil, the peak season, is concentrated between the months of May and September, when the ship occupancy rate can reach 120% of the capacity offered by shipowners.

The biggest challenges during Peak Season:

• Increased demand and congestion at ports and airports: The volume of cargo grows exponentially, overcrowding ports, airports and highways, to the point of causing overbookings.

• Lack of equipment: The lack of available containers, ships and trucks leads to a significant increase in delivery times and freight costs, generating a domino effect throughout the logistics chain.

• Increased costs: Freight and storage rates tend to increase significantly during peak season, with shipping companies even applying a surcharge, called PSS.

PSS (Peak Season Sub-charge)

This practice is common and recognized in international trade, serving to balance the supply and demand for containers and space on ships during peak seasons through higher prices, in addition to also being used to cover extra operational costs that arise during these periods of high demand.

PSS is calculated based on several factors, such as the type of cargo, destination, size and type of container, and route. Busier routes, such as Asia-Europe and the Suez Canal, tend to have a high PSS due to the high volume of trade and the concentration of production.

Strategies for Facing the Peak Season

To minimize the negative impacts of peak seasons and ensure the continuity of their logistics operations, companies need to take strategic actions, such as:

Planning operations in advance

Preparing a detailed operations plan based on the company’s historical data and market projections allows anticipating customer needs and optimizing the supply chain. This makes it possible to pre-define dates for production, shipping and delivery of products, considering the deadlines for each stage.

Intelligent stock management

Historical data and market projections can also be applied to stock management, avoiding both a lack of products, whose last-minute replacement can become an even more challenging problem during peak seasons, and an excess of them.

Be flexible and diversify routes

Advanced planning also makes it possible to seek alternative options when necessary.

Whenever possible, alternative modes and routes should be considered, which can help reduce costs with high demand rates, avoid congestion and ensure on-time delivery of goods.

Partner with a good freight forwarder

Freight forwarders have a broad network of contacts, which makes it easier to reserve spaces, especially during peak seasons. Through this network, they are also able to negotiate more competitive rates and optimize transportation routes.

BR Company, as an experienced international freight forwarder, is prepared to help your company overcome the challenges of peak season, offering strategic and personalized logistics solutions.