Understanding the Peak Season in Shipping and Logistics: Challenges and Mitigation Strategies

Peak shipping season in logistics is a critical period, typically occurring between late summer and the end of the year, as companies rush to meet demand for back-to-school supplies, holiday shopping, and end-of-year inventory stock-ups. This period is characterized by heightened shipping volumes, strained capacity, and surging freight rates. Recent events, such as labor strikes at major ports and disruptions from global geopolitical tensions, have only exacerbated these challenges. While the peak season brings opportunities for increased sales, it also presents numerous challenges for companies that ship products. To ensure that businesses can capitalize on this period without succumbing to the pressures, it’s essential to understand the potential pain points and adopt strategies to mitigate them.

Common Pain Points During Peak Season

1. Capacity Constraints During peak season, carriers experience overwhelming demand. For example, during the 2023 holiday season, the collapse of several trucking firms due to financial struggles left retailers scrambling for transportation. Shipping lines, trucking companies, and air freight providers often reach full capacity, leaving shippers struggling to find available slots for their products. This leads to delayed shipments, unsatisfied customers, and potentially lost sales.
2. Skyrocketing Freight Rates Due to the supply and demand imbalance, freight rates surge significantly. For instance, the fallout from the Russia-Ukraine war has led to increased fuel prices, further pushing up the cost of freight, especially for sea and air shipments. Spot market rates can climb to unsustainable levels, pushing up the cost of transporting goods. For smaller shippers with limited bargaining power, these inflated rates can quickly eat into profit margins.
3. Port Congestion Ports, especially major international hubs, become highly congested during peak season. The pandemic-induced backlog at the Port of Los Angeles in 2021 resulted in massive delays for shipments arriving from Asia, with waiting times stretching into weeks. More recently, strikes at key European ports, like the port of Antwerp, have further disrupted supply chains. This congestion extends to railroads and trucking companies responsible for moving goods inland.
4. Customs Delays Increased shipping volumes mean customs authorities face a higher workload, leading to longer processing times. The introduction of post-Brexit customs regulations between the UK and the EU has created significant delays in recent years, as businesses struggle to comply with new documentation requirements. Delays in clearing goods through customs can lead to inventory shortages, backorders, and missed delivery deadlines.
5. Increased Risk of Damage and Loss With the increase in volume, there is often a corresponding uptick in damaged or lost shipments. Overloaded warehouses and transportation networks may lead to improper handling, misplaced goods, or damage due to inadequate packaging. In 2022, a surge in theft from unsecured cargo at key transshipment hubs was reported in both the US and Europe, adding another layer of risk during the peak season.
6. Labor Shortages The logistics industry frequently struggles to secure enough labor, particularly truck drivers, during peak season. In recent years, there has been a growing shortage of qualified truck drivers across the US, compounded by the retirement of older drivers and fewer new entrants into the profession. This shortage exacerbates delays and reduces the overall capacity to move freight. The ongoing truck driver shortage in the UK, a consequence of both Brexit and the pandemic, has only worsened during peak seasons.
7. Inventory Shortages and Stockouts Poor demand forecasting or insufficient preparation for the peak season can result in inventory shortages, stockouts, and lost sales opportunities. In 2021, the semiconductor shortage, which affected industries from automotive to consumer electronics, caused significant disruptions as manufacturers failed to secure enough components to meet holiday demand. Retailers who underestimated demand risk leaving shelves empty during the busiest shopping periods of the year.
8. Increased Lead Times Longer lead times are a hallmark of the peak season. It takes more time for goods to travel from origin to destination due to capacity shortages, congestion, and longer processing times. The rise in e-commerce demand has also overwhelmed last-mile delivery providers, with companies like FedEx and UPS struggling to meet delivery expectations during the 2023 holiday rush.

Mitigation Strategies for Peak Season Challenges

1. Early Planning and Forecasting One of the most effective strategies to mitigate peak season challenges is early planning. Companies should leverage historical data, current market trends, and predictive analytics to forecast demand accurately. For example, Amazon has successfully invested in demand forecasting technology to prepare for the surge in holiday season orders. By placing orders and booking freight early, businesses can avoid the last-minute scramble for capacity and secure more favorable rates.
2. Diversifying Carrier Networks Instead of relying on a single carrier or mode of transportation, shippers should diversify their carrier networks. The collapse of the freight firm Yellow in 2023 serves as a warning of the risks of overreliance on specific carriers. Working with multiple providers—across trucking, air, sea, and rail—can provide more options for moving freight. Additionally, leveraging third-party logistics providers (3PLs) can help companies tap into a broader range of capacity options.
3. Negotiate Long-Term Contracts Rather than depending solely on the volatile spot market, businesses should negotiate long-term contracts with carriers ahead of the peak season. This strategy has been widely adopted by large retailers like Walmart, which locks in rates with its transportation providers months in advance of peak demand periods. Locked-in rates can help companies avoid price spikes and secure guaranteed capacity.
4. Utilize Flexible Shipping Methods Flexibility in shipping modes is essential during peak season. During the height of the 2021 supply chain crisis, companies like Nike shifted to air freight to avoid delays caused by ocean freight bottlenecks. Businesses can also use intermodal shipping to balance costs and lead times, depending on the urgency of the shipment and available capacity.
5. Leverage Technology for Real-Time Visibility Real-time visibility solutions give shippers the ability to track their shipments across the entire supply chain. After experiencing delays in 2020, many companies, including major retailers like Target, invested heavily in transportation management systems (TMS) to improve visibility. By knowing where goods are at any given time, companies can make informed decisions and reroute shipments if necessary.
6. Buffer Inventory To prevent stockouts, companies should consider holding buffer inventory at strategic locations. This strategy was used by Apple during the semiconductor shortage of 2021, allowing the company to maintain product availability during the critical holiday shopping season. While holding excess inventory can increase storage costs, it ensures products are readily available when demand spikes.
7. Streamline Customs Procedures Working with customs brokers or trade compliance experts can help businesses navigate international shipping complexities. During the initial phase of post-Brexit customs changes, companies that worked closely with customs brokers were able to avoid significant delays. Streamlining paperwork and ensuring compliance with regulations can expedite the clearance process.
8. Enhance Packaging and Handling Procedures To mitigate the risk of damage or loss during transit, companies should invest in better packaging materials and establish strict handling procedures. In 2022, major shippers like UPS implemented stricter handling protocols to reduce claims related to damaged goods during the peak season.
9. Collaborate with Supply Chain Partners Collaboration with key partners in the supply chain, including suppliers, freight forwarders, and 3PLs, can improve overall preparedness for the peak season. In response to pandemic-driven supply chain disruptions, many companies in 2021 established closer partnerships with logistics providers to ensure more responsive supply chain solutions.
10. Optimize Warehouse Operations Warehouse efficiency becomes critical when the volume of orders skyrockets. Companies like Walmart and Amazon invested heavily in automation technologies, such as robotic pickers, to manage the 2022 holiday surge. This helps ensure that shipments are dispatched accurately and on time.

The peak season in shipping and logistics presents both opportunities and challenges for businesses. While demand and sales surge, so too do the risks of capacity constraints, delays, and increased costs. By understanding the common pain points and taking proactive steps to mitigate these challenges—such as leveraging technology, diversifying carrier networks, and optimizing supply chain operations—companies can navigate the complexities of the peak season more effectively. Recent global events, such as labor strikes and port congestion, further highlight the importance of strategic planning. With the right strategies in place, companies can turn the challenges of peak season into an opportunity for growth and customer satisfaction.