We all wish that shipping was a simple, easy-to-predict line item on a final invoice. Unfortunately for those who have worked in the industry, you are fully aware that freight pricing is never that simple. On top of getting a grasp on the various line items involved in an international shipping transaction, prices fluctuate throughout the year due to a variety of factors. One of which is “Peak Season Surcharges”.
Peak Season Surcharges: How They Affect Freight Costs
Peak season surcharges are one of two types of rate adjustments that ocean carriers can apply to international freight rates (the other being GRI – General Rate Increase). They can be a real hassle if you aren’t expecting them, but being educated on where they come from, their necessity, and when to expect them can help prepare you to better handle the rate increases.
Where do Peak Season Surcharges Come From?
Peak season surcharges are a result of increased demand for shipping space. In other words, the market defines how much an ocean carrier charges for space on their vessels. As that demand goes up, so does the amount shippers are willing to pay. Ocean carriers will then adjust their rates higher to make extra during certain times of the year. These cost differences aren’t huge, but they definitely make a difference on your freight bill. As you might imagine, these happen during busy shipping times of the year.
Some of the more popular times of year that peak season surcharges (PSS) will happen are:
- Black Friday
- Chinese New Year
Of course, accounting for shipping time means that the peak season surcharges may start several weeks to a month in advance of these holidays.
How to Handle Peak Season Surcharges
Obviously, there’s nothing you can do about how much an ocean carrier is going to charge you, but what you can do is actively plan ahead of time to either deal with the costs or avoid them through strategic planning. Here’s how:
Start by having a conversation with your freight forwarder. They’re dealing with thousands of shipments per year and probably have a really accurate forecast on when peak season surcharges will happen.
You can avoid detrimental peak season surcharges by actively planning ahead of time for shipments. If you know you will need “x number of units” to “x country” at a certain date, make sure you ship extra beforehand. Obviously, there will be extra costs associated with shipping in advance since you’ll have to deal with inventory. Talk with your customer/buyer as well as your freight forwarder to figure out if the cost savings of avoiding peak season surcharges will be worth it in the long run given the additional costs associated with inventory!
Help with Planning
If you need help with planning your shipments to get the most out of every dollar, it’s wisest to talk with someone who deals frequently with these types of scenarios. At Interlog USA, we help shippers not only with their present-day shipments but also with future rate forecasting in order to give them the best strategy possible. After all – that expertise is what a freight forwarder is there for. If your freight forwarder isn’t offering expert advice on how you can be saving time and money, it’s probably time to dump them and move on.
Reach out to our team with any questions you might have!