By Deborah Wolf, Content Specialist at Freightos
If you’re a business owner, time is short and to-do lists are long. With all the details you have to manage, freight shipping is not usually top of mind.
But here’s what you should know: being strategic about timing your international importing or exporting can prevent delays and save you thousands of pounds every year.
Freight prices fluctuate, presenting your business with uncertainties that can affect your bottom line. Knowing how to deal with these fluctuations– and even use them to your advantage– can make a big difference.
There’s a reason the CEOs of Apple, Lego, and Amazon are all supply chain experts.
So let’s get into when and why shipping prices fluctuate, and how you can time your shipments for success.
What causes freight rate spikes?
A number of factors can lead to freight rate fluctuations:
Freight, like anything else, operates according to supply and demand. Carriers have a certain amount of space, and shippers like you need to move your goods.
During peak seasons, when everyone is vying for the same space, prices go up, potentially even doubling. During less busy seasons, prices drop.
The good news is that peak season is fairly consistent: it centers around back to school and holiday sales. For sea freight, prices start to rise as early as July and remain high through October. Air freight hits its highest points of the year October-December to meet the holiday season rush.
Additionally, each country’s specific holidays affect shipping rates and times. Most notably, the Chinese New Year, which effectively shuts down the country for two weeks in late January-early February, causes soaring prices and delays.
General Rate Increases
Ocean carriers may apply a GRI, or general rate increase, to their prices, usually at the beginning of the month. These need to be announced in advance, but price drops, which typically occur mid-month as carriers scramble to fill supply, do not. This means booking during the later part of the month could provide significant savings.
Tariffs, Natural Disasters, and Other Uncertainties
These are the true uncertainties that any shipper faces: new tariffs, extreme weather, carrier bankruptcies, or disasters like the 2015 explosion at the Port of Tianjin. But even though these situations are unpredictable, there are ways to deal with them.
How to time your shipments to save money and avoid delays
With all of these factors in mind, here are nine tips for navigating the choppy waters (#freightjoke) of freight rate fluctuation:
1. Ship during off-peak seasons.
To the extent that you can, plan to ship during non-peak seasons. Think springtime for shipping: March-June are typically the most affordable months, so anything that can be shipped during that time– and won’t cause you exorbitant storage costs– should.
2. If you must ship during peak season, prioritize carefully.
Because peak seasons are so busy, not only do prices go up, but shipments can get delayed as buyers compete for last-minute carrier space– which can drive costs even higher if you have to scramble to fill inventory. Decide which of your shipments are the most important, and let your freight forwarder know to prioritize them in case of limited space. That way you’ll know you have your most important items in stock.
3. Book during the last two weeks of the month.
Because carriers often lower rates as they push to fill supply for the month, it pays – if it’s not peak season – to wait until the last two weeks of the month to book.
4. Allow plenty of time to get documentation in order.
Sometimes a hurricane can unexpectedly delay a shipment. Other times, a paperwork complication can. Paperwork is a hassle, so build an extra week or two into your planning to account for it.
5. Find stable shipping lanes.
Do your research: monitor shipping lanes for fluctuation and choose the ones with more stability. For example, while China, especially in the current trade climate, is very unstable, UK-US is quite stable. If you have a choice about where to source your goods, take trade volatility into account.
6. Divide your shipment
Consider doing some international shipping by air and some by sea. Sea shipping is almost always cheaper, but air freight is faster and less prone to fluctuation. It could be well worth it to use air freight for a small portion of your goods to be sure to have that inventory stocked in advance, or as backup.
7. If you’re an Amazon shipper, consider storage fees.
FBA warehouses can be notoriously expensive. On the other hand, waiting to ship could run you into peak season. One solution: use a non-Amazon storage facility to save and enable advance shipping.
8. Use freight data.
Sign up for logistics reports and newsletters. Take note of tariff announcements. Be aware of extreme weather, and carrier bankruptcies and closures. The more aware you are, the more you can respond effectively and avoid surprise costs.
9. Do your price research
When comparing prices from different forwarders, go deep: Ask for quotes using different incoterms to see where you can save. Ask about hidden fees, such as any handling and consolidation costs, local charges, and warehouse fees not automatically included in price quotes. See if forwarders have relationships with particular ports that allow them to offer better rates. Make sure you understand your quote so you don’t get hit with more fees later.
Freight rates can change, and shipments can get delayed. But planning ahead helps you avoid surprises and save money for your business.
Freightos’ online freight marketplace instantly provides live quotes from leading freight providers for you to compare and select.