Driven by the exponential growth of imports into the U.S. from Asia over the last three decades, “Peak Season” has come to dominate the planning calendars of logistics professionals around the country. With consumer-oriented imports fueling the Trans-Pacific Eastbound (TPEB) trade, importers have to be ready for Back-to-School and shortly after that, be stocked up for Black Friday, Cyber Monday and the entire Holiday Season.
Because most Asian manufacturers operate a build-to-order model, U.S. companies start placing purchase orders for categories such as fashion, consumer electronics and computer gear in the March timeframe, with “in-house” dates starting in July and running through October. This Peak Season period explains why U.S. ocean carriers and freight forwarders negotiate ocean freight contracts with importers in March/April and then sign twelve month agreements that run from May to May.
While recognizing that the FTL market is heavily dependent on U.S. manufacturing, truckers also play a major role in the domestic movement of imported goods throughout the year and in particular, during Peak Season. Although imports from Asia have always been somewhat unpredictable, everybody knows that import-driven FTL moves are much higher in the second half of the year than in the first, thus allowing FTL shippers and carriers to plan accordingly.
Fast forward to 2022 and all bets are off in terms of TPEB imports being anything that remotely resembles predictable. Through a combination of increased demand for imported goods and what are now infamous “supply chain issues”, importers have little faith in their Asia inbound lead times. The result of this phenomenon has caused U.S. companies to not only order merchandise sooner, but to place larger POs on their overseas vendors (known as “frontloading”).
First discussed in a recent Emerge blog on how U.S. importers are shifting to a multimodal shipping model, the above change in containerized imports has had a profound effect on how companies manage their inbound cargo throughout the year. Essentially, Peak Season isn’t as well defined as it once was because U.S. companies are now receiving inbound goods earlier and earlier in the calendar year, thus spreading greater volumes over a longer period of time.
In addition to a Peak Season that is now stretched to the point of being unrecognizable, importers find themselves trying to avoid congestion at W. Coast ports by using East Coast terminals at facilities such as Savannah and Norfolk. Already a complex exercise, these same companies have to engage in new tactics like transloading containers at nearby warehouses because ocean carriers won’t allow containers to be moved to the interior of the U.S.
Whereas this mess sounds like a problem for the maritime community, the trickle-down effect on FLT shippers and carriers is far reaching. For one thing, the fact that importers are using more ports of discharge means that they now must have access to both drayage and long-haul FTL capacity out of multiple ports. It also means that they have to be tuned into competitive trucking rates throughout the year, as opposed to what used to be a shorter Peak Season.
The process of converting inbound ocean freight to domestic drayage and FTL shipping has never been easy, but the goings-on of the last two years has put an additional burden on importers that is very difficult to manage. This is especially true when companies have to work three times as hard to move freight, all while doing so with logistics teams that have been worked to the point of exhaustion.
In the spirit of helping to relieve some of these challenges, here are some suggestions on how importers can use the Emerge Freight Procurement Platform for the FTL and drayage components of their inbound supply chains:
Conduct mini RFPs throughout what is now an extended Peak Season. One of the biggest advantages of the Emerge Freight Procurement Platform is the flexibility it gives shippers to conduct multiple RFPs throughout the year. For importers dealing with an extended Peak Season and higher container volumes, the ability to manage the ups and downs of the FTL market on a short-term basis is a big boon to their operations.
Use mini RFPs on a regional level for different ports of discharge. With importers now using multiple ports of discharge, companies that use the Freight Procurement Platform can conduct mini-RFPs on a port-specific basis. Given the differences in market dynamics between ports at different periods in the year, and the need for access to competitive and pre-vetted FTL carriers across the country, a regional mini-RFP strategy is ideal for importers of all sizes.
Benchmark FTL rates throughout the year. The latest addition to the Emerge lineup of features, companies can benchmark rates on a lane-specific basis at any time. So, whether an importer just started using the port of Charleston and needs FTL rates from a transload facility to a DC outside of Atlanta, or an importer is now terminating containers at the NY/NJ port complex for final destination Mechanicsburg, PA, insights on lane-specific pricing are now just a few keystrokes away.
Access port drayage capacity via the Emerge partnership with EDRAY. Routing import loads through different ports means that companies have to organize drayage to/from terminals that they don’t have a lot of historical experience with. By using the port logistics platform of the Emerge partner, EDRAY, importers gain immediate access to local capacity and full visibility, all while benefiting from competitive rates during the entire year.
When it comes to the transportation industry, no one knows for sure if things will ever “get back to normal.” One thing is for sure, though…importers in the U.S. have had to make major adjustments to their models, one of which is the extension of Peak Season to a nearly year-long cycle. Although practices like “reshoring” and “nearshoring” offer a long term alternative to Asian imports, it will be years before those models take hold, so the challenges associated with extended import lead times from Asia will be here for a long while.
Because containerized import shipments often find their way into the U.S. Full Truckload network, companies will also have to make changes to the domestic leg of their international supply chains. At its core, the success of any import program will depend on flexibility in moving containers via multiple U.S. ports, with a corresponding need to quickly on-forward a portion of those loads via Full Truckload carriers.
Whether an importer uses the ports of Seattle, New York/New Jersey, Houston or Baltimore for their inbound containers, shippers that on-forward goods via FTL can maintain the required level of control, cost sensitivity and capacity by using the Emerge Freight Procurement Platform!