Importers brace for difficult peak season
The shipping industry is bracing for what many project will be another difficult peak season, as maritime and logistics interests attempt to prepare for the increased demand.
The shipping peak season typically begins in mid-August and lasts until mid-October. This period, due in large part to the upcoming holiday retail pressure, is often characterised by high demand, low supply and scarce container capacity, which typically lead to higher freight rates. However, with the impact of the coronavirus pandemic, the industry, over the past three years, at the start and end of the season, have been far from the standard.
As the global economy adjusts to the pandemic, and territories ease restrictions, an increase in demand is expected to further challenge the supply chain. For some, including Neil Smith, deputy chairman of Shipping Services Limited Group of Companies, this year may be even more difficult than the last, when a shortage of containers, lockdowns and bottlenecks at ports caused significant delays in shipments.
Smith said, “I expect to see an increase from last year’s peak. With the tourism industry opening back and the continued growth in the BPO (business process outsourcing) sector, there is more disposable income being generated, which will lead to increased retail sales, local and online.”
For importers who need to get ahead of the rush to meet consumer demand, the coming weeks will be all-important for their businesses. “Importers can expect the usual delays, especially in Montego Bay, and higher freight rates,” Smith said, warning that they “should also be on the lookout for pop-up shippers overseas offering low freight rates. Many importers flock to the low rates and then are left searching for the whereabouts of their cargo.
“These shippers may collect charges for freight and customs duty upfront and run off with the money, leading to the importer to have to duplicate the payment in order to get the release of their goods.”
He advised that “importers should seek out seasoned freight forwarders that are able to explain to their clients the possible delays to expect, and route them to another port if time is a factor.”
The outlook for freight charges, given the congestion and delays still being experienced at some ports globally, is less than optimistic.
“As oil prices rise, the freight costs will rise with it. Also, when the factories in China reopen, there will be an overwhelming demand for containers in the East, which will also lead to a shortage of equipment available to the US-to-Jamaica routes, which will lead to an increase in freight rates,” Smith said.
Smith continued, “Congestion is usually only an issue at the airports and at Montego Bay ports and warehouses. With Customs implementing multiple technological advances to their system, wait times at warehouses have been dramatically reduced, as well as making the process more transparent.”
Nevertheless, importers can still plan ahead to avoid the worst of the peak season.
“Importers should ship early (September or October) ,if possible, to beat the rush. For those travelling for the holidays, I would recommend they speak to their freight forwarder and ask for realistic time frames, and also ask about door-to-door services. The best option might be to ship to Kingston and truck goods to the desired final location, to be able to meet preferred time frames.”