As we enter the peak season for global trade, the air and ocean freight industries are demonstrating their ability to adapt to significant capacity pressures. This adaptability is evident in the strategies being employed to manage heightened demand and ongoing supply chain disruptions. So, what are the factors influencing this?
The Current Landscape
Global trade has returned to pre-pandemic peak season trends, yet many challenges from the pandemic era persist. Key issues include limited capacity, port congestion, labour shortages, and strikes across Europe, all of which contribute to bottlenecks and delays in the ocean and air freight sectors.
Moreover, the migration of manufacturing from China to Southeast Asia has exacerbated congestion at transit points like Hong Kong and Singapore, further squeezing air cargo capacity. As a result, air freight rates have increased, with some routes seeing significant price increases as shippers seek alternative methods to avoid sea freight delays​.
Capacity Crunch and Rate Inflation
One of the key drivers of rising rates is the imbalance between supply and demand. A combination of tight vessel capacity and surging demand in the ocean freight sector has allowed carriers to increase rates. Industry reports suggest carriers’ blank sailings and operational adjustments, such as skipping port calls, have further reduced capacity, leading to higher spot rates.
The air freight sector faces similar constraints. The continued recovery of passenger travel post-pandemic has reduced the availability of cargo space on passenger flights, adding to the capacity crunch. According to experts, the demand for air freight, particularly for high-value goods and time-sensitive shipments, remains strong, pushing up rates even as ocean freight remains a costlier option.
Implications for Supply Chains in Peak Seasons
Peak seasons can present significant challenges for businesses dependent on international trade. Longer lead times, higher costs, and a lack of available transport options can disrupt supply chains, potentially leading to stock shortages and missed deadlines. Companies in the automotive and retail industries are particularly vulnerable during this period due to their reliance on just-in-time inventory systems.
Solutions and Recommendations
To navigate these challenges, businesses must adopt a proactive logistics planning approach. Securing capacity early through long-term contracts with logistics providers can help mitigate the risk of price hikes and delays.
Diversifying transport modes by incorporating both air and ocean freight solutions can also provide flexibility, ensuring businesses are not overly reliant on one mode of transport.
Our expertise in handling time-sensitive and critical shipments, combined with our global network of partners, enables us to offer reliable and stable solutions worldwide. Through key strategic partnerships with carriers, we provide clients with low-cost transport options that can serve as contingency plans when time-critical shipments are required.
For more information reach out to our global control centre at info@evolution-timecritical.com.
