The end of summer marks the beginning of a peak season that extends into October and perhaps even beyond, for the logistics sector. This is a very healthy period for international trade, but that can cause logistical headaches if one is unprepared.
This peak season is linked to consumption, starting with the “back to school” effect and ending with shipments coinciding with the Christmas season and Black Friday. Retailer turnover during these dates is very high, and they need to receive more goods, posing a challenge for the supply chain.
We are talking about tricky dates that could be even further complicated with the coming into play of new factors, such as the possible impact of Brexit, strained China-US trade relations or the IMO mandate to limit sulphur emissions by 2020.
Chinese New Year
The Chinese New Year will be on 25 January 2020, greatly affecting world trade forecasts. Activity at Chinese factories grinds to a halt for an entire week, disrupting international trade. As if that were not enough, its ports and customs operate at minimum capacity.
In anticipation of this impasse, companies that manufacture in China are scrambling to produce extra units before that date. This means that once the Chinese New Year is over, this accumulated product will impact the supply chain, leading to congestion and capacity problems for carriers.
The United States vs China
The trade war between the two powers has recently intensified this September with the entry into force of the new tariffs of 15% for Chinese products into the US and of between 5 and 10% for U.S. imports into China. Washington is threatening another yet another round of tariffs for December therefore meaning that all imports from China would be penalised.
Meanwhile, both economies suffer and the IMF has warned that the global economy is heading towards a period of uncertainty, which will also impact the logistics sector if no emergency negotiations are put in place to reverse the situation.
Impact of the 2020 IMO standard
We have been talking about standard IMO 2020, a new regulation that is forcing ships to emit less sulphur. This is something that can be achieved using heavy fuel oils with lower sulphur content, using scrubbers to neutralise the sulphur from classic fuel oil or the use of alternative fuels such as LNG.
This means that shipping companies need to adapt their ships in one way or another by 2020, very likely leading to freight price surcharges to offset extra expenses related to fuel or with investments needed to adapt to the standard
How Brexit will unfold is anyone’s guess. 31 October is currently the date set for the UK to leave the EU. Congestion and blockages along the restored borders are expected if this goes ahead. While steps have already been taken to avoid possible contingencies, it is impossible to imagine such a change without an impact being felt in the logistics sector.
Forwarding agents, the best weapon against uncertainty.
Forwarding agents, or forwarders is anyone acting on behalf of importers, exporters and other companies in order to organise the transport of international freight in a secure, efficient and profitable manner in any type of means of transport.
A good forwarding agent will consider the peak season dates and the other events that may affect a logistical shipment and will act accordingly in order to eliminate or minimise risks, looking for the best freight, planning shipments in advance and taking transportation decision-making alternatives to ensure on-time arrival.
And this is behind the importance of having a comprehensive logistics service that we at Bilogistik offer when dealing with transport with all guarantees, particularly during these types of sensitive dates. We can help you with services such as forwarding agents, multimodal transport or our goods storage solutions so that your shipping does not suffer the season fluctuations of the market.