Should we move Christmas to May, or at least order presents earlier?
Have you ever thought what kind of impact events like Christmas or Chinese New Year have on the amount of cargo moving around the world? These are just a few examples of seasonal changes the cargo and load handling industry, as well as the whole logistics value chain, needs to consider. How could the industry adapt to handle fluctuating demand efficiently?
AUTHOR: HENRI PAUKKU
A good overview of the seasonal changes in our industry can be drawn from vessel utilisation rates. Drewry measures utilisation rates on specific global transport routes and as you can see from the image, during some months the utilisation rate goes over 100 percent.
|Vessel utilisation rate and World Container Index (WCI) development|
What does this mean? Is it so that ships can carry more than their estimated maximum capacity, or has some of the cargo been been rolled (i.e. left at the shore), waiting for the next ship come and carry it away? It would be interesting to see statistics for how many containers were rolled, but I doubt if such numbers would be available.
Carriers are not be blamed for this potential discrepancy. The whole industry must take share of this. Namely, we have for years not been able to determine what the actual ship capacity really is. The actual capacity is determined by the type of cargo - size and weight - that a ship carries at any given time. When a customer or season changes, different cargo moves and volume changes. However, the basis for calculating capacity does not follow this change.
But that is a side note. Let’s assume that the measurement is correct. Consequently, during some months there is too little cargo to be transported which leads to blanked sailings (vessel does not call port to which it is scheduled to). At other times - in practice, around Christmas and other transportation peaks - capacity falls short.
How can we shift the weight of transporting from overbooked times to other parts of the year? Could high seasons be evened out? Since it is most probably not possible to move Christmas or the Chinese new year - or even events like Black Friday and Cyber Monday to other parts of the year - the realistic option is to think if some of the cargo can be sent earlier than now.
As an example, can part of Christmas gifts be bought and sent a month or two earlier than now? As the transportation cost follows high and low trends, sending gifts earlier would also make it a cheaper option.
Would storage costs then kill that alternative? In the present situation there is always the risk that gifts and goods that move during the busiest global cargo transport months may miss reaching their recipients in time. Nobody wants that.
Additionally, to achieve the above we must increase grow the trade transparency on the trade. The fundamental reason for the under capacity which we see on the table is lies on the fact that there isn’t early enough visibility to transportation needs.
If we could realise any of the ideas mentioned above, we would also help the nature, as the utilisation rate would likely increase, decreasing the CO2 per carried TEU. The needed capacity for each trade would also be easier to optimise, thereby decreasing the total environmental effects.
What are your thoughts?
Is ordering and sending peak season items well in advance really a viable option? Are there underused ways in which to make use of the undercapacity of low seasons? Share your thoughts and join the discussion on social media with the hashtag #smarterbettertogether.