How Does the August Peak Season Drive Global Freight Rates?

Every August, the global shipping market enters a silent "storm season", with busy ports, shortage of containers, and soaring freight rates becoming the norm. Data shows that the average increase in freight rates on the Asia-North America route in August can reach 30%-50%, while the difficulty of booking space has increased sharply by 40%. When "peak season surcharges", "fuel adjustment fees", "congestion surcharges" and other names appear one after another, is your profit margin being quietly eroded?

Freight rates fluctuate greatly and budgets are difficult to control: Freight rates fluctuate frequently during peak seasons, making it difficult for companies to formulate accurate logistics budgets.

Space is tight and shipping is difficult: During the peak season, "it is difficult to find a cabin", and companies face risks such as delayed shipments and order cancellations.

Surcharges are complex and costs are opaque: There are many types of peak season surcharges, making it difficult for companies to accurately calculate logistics costs.

For B2B companies and e-commerce sellers, this is not only a peak season for sales and cargo volume, but also a key challenge period for logistics cost management. This article will deeply analyze how the peak season for shipping affects transportation costs from the perspective of international fulfillment service providers, and provide you with coping strategies and solutions.

Reasons for rising costs during the peak season for shipping

Imbalance between supply and demand

The acceleration of global trade activities in August, especially the stocking up before the "back to school season" and "Black Friday" in Europe and the United States, has led to a surge in demand for shipping. However, due to factors such as port congestion, ship delays, and a decline in container turnover, the supply of shipping capacity is relatively tight. Carriers have bargaining power, and basic freight rates are rising. The imbalance between supply and demand directly pushed up shipping costs, forming a market phenomenon of "peak season price increases".

Cost transmission

Fuel price fluctuations, port congestion fees, low-sulfur surcharges...these cost items are further amplified during the peak season. In order to pass on costs, carriers often respond by raising basic freight rates or adding peak season surcharges (such as PSS, GRI, etc.). Although these surcharges have many names, they are essentially the product of market supply and demand and cost transmission.

Port congestion

The efficiency of major European and American ports (such as Los Angeles and Rotterdam) has dropped sharply due to the surge in cargo volume. The ship's detention time has been extended, and the capacity turnover has slowed down, further exacerbating the shortage of space and pushing up all related costs.

Hidden cost surge

The container turnover rate in the peak season has decreased, and the risk of demurrage and port charges has increased sharply; the terminal truck capacity is tight, and the inland transportation cost may increase by an additional 15%-20%.

Route differences

The cost fluctuations of different routes vary significantly. For example, due to the concentration of e-commerce goods on the China-US West Coast route, the freight rate may increase by as much as 30%-50%; while the European route is affected by factors such as port strikes and environmental regulations, and the cost fluctuations are more complicated.

What are the market factors behind the peak season price increase?

Supply and demand relationship: The core contradiction is the surge in demand and the shortage of capacity supply.

Global stocking wave: The European and American markets stock up in advance for festivals such as Black Friday and Christmas, resulting in a surge in shipments.

Cost pressure: Rising costs of fuel, ports, and labor have driven up freight rates.

Port congestion: Port handling capacity is limited during peak periods, delays occur frequently, and storage and demurrage fees are increased.

Policy impact: Policy changes such as environmental regulations and trade barriers increase operational uncertainty.

Market competition: Changes in bargaining power between carriers and shippers affect price trends.

Peak Season Surcharge (PSS): Carriers charge surcharges on top of basic freight rates to cope with operational pressure.

How do peak season surcharges affect global transportation costs?

Peak season surcharges (such as PSS) are fees charged by carriers to cope with additional costs during peak seasons. Its impact is reflected in:

Increased direct costs

The proportion of surcharges to freight rates may be as high as 20%-30%, significantly pushing up total costs. PSS accounts for 10%-30% of freight rates, and a maximum surcharge of $2,000 is added to a 40HQ container (such as the West Coast of South America route). GRI comprehensive rate increased by 600-2000/FEU, and the cost surged after being superimposed with PSS.

Indirect costs

Demurrage: Congestion in US East ports resulted in a detention cost of 55/day per container, and an average increase of 1500/container in the peak season.

Insurance premium: War risk insurance rates increased by 40%, and the cost of high-value goods increased by an additional 200-500.

Budget is uncontrollable

Surcharges are often adjusted with market fluctuations, increasing the uncertainty of corporate logistics budgets.

Global transmission effect

Surcharges are transmitted to end consumers through the supply chain, affecting product competitiveness.

How to arrange shipping plans during peak season?

1. Off-peak delivery + flexible path

Advance deployment: According to sales forecasts, plan shipments at least 6-8 weeks in advance to avoid the most congested window in August. Take advantage of the small off-season in mid-to-late July or after September.

Alternative port options: Consider transiting through US East ports (such as Savannah, Charleston) or Canadian/Mexican ports, which may be more time-efficient and cost-effective than direct flights to the US West.

Multimodal transport solution: adopt multimodal transport (such as sea + rail) to reduce dependence on a single route. Combined with China-Europe Express or air express (for high-value, urgent goods) to disperse the pressure of sea transport.

2. Scale integration to reduce costs and increase efficiency

Full container (FCL) priority: try to ship in full containers to avoid paying high LCL operation fees and surcharge sharing.

LCL optimization: if LCL is necessary, choose to cooperate with professional fulfillers to strive for better LCL contract prices and priority through their large-scale stable cargo volume.

Warehousing buffer strategy: establish a reasonable inventory buffer in overseas warehouses or regional center warehouses to avoid out-of-stock due to single transportation delays, allowing the selection of more economical transportation solutions.

Win-win cooperation: establish long-term cooperation with fulfillment service providers to obtain priority space and preferential freight rates.

3. Precise control of digital tools

Dynamic rate monitoring: use professional logistics platforms to track the quotes and surcharge changes of various routes and carriers in real time to capture the best booking time.

Supply chain visualization: Track the status of goods throughout the process, warn of port congestion or delays in advance, quickly adjust the response plan, and avoid high demurrage fees.

Flexible adjustment: Flexibly select the port of departure, destination or transit port according to market dynamics.

Chinadivision's response strategy

Intelligent prediction and dynamic pricing

Chinadivision monitors the dynamics of the global shipping market in real time and provides customers with accurate freight rate forecasts and dynamic pricing solutions. By locking in space and freight rates in advance, it helps customers avoid the risk of price increases during the peak season.

Diversified logistics solutions

In response to the needs of different customers, Chinadivision provides multimodal transport services such as sea, air, rail, and truck transportation. By optimizing the transport combination, the risk of cost fluctuations of a single mode of transport is reduced. For example, for goods with low timeliness requirements, the "China-Europe Express" solution of sea + rail can be adopted, which has lower costs than pure sea transportation and faster timeliness than pure rail.

Global network and localized services

Chinadivision has a wide logistics network and localized service team around the world. By establishing in-depth cooperation with local ports, customs, and carriers, we are able to provide customers with one-stop services such as priority space, fast customs clearance, and last-mile delivery. This not only improves logistics efficiency, but also reduces additional costs caused by delays, port detention, etc.

FAQ on peak season costs

What does the peak season surcharge specifically include?

Peak season surcharge (PSS) usually covers additional costs caused by increased operating pressure during the peak season, such as fuel surcharges, port congestion fees, overtime operation fees, etc. Different routes and carriers have different charging standards, and some routes even charge according to the proportion of box type or cargo value.

How to avoid the impact of peak season freight fluctuations on the budget?

It is recommended that companies establish long-term cooperation with fulfillment service providers and lock in some space and freight rates by signing annual contracts or framework agreements. At the same time, use intelligent forecasting tools to plan shipping plans in advance to avoid peak season price increases.

Peak season surcharges are complicated, how to reduce additional costs?

Chinadivision's team of logistics experts can provide customers with surcharge analysis and optimization suggestions. We help customers reduce surcharge costs by properly choosing the mode of transport, the port of departure and the port of destination, and by leveraging our global network advantages.

How far in advance do you need to book to be safe? How do you guarantee space?

Booking during peak season requires "double advance": booking in advance (6-8 weeks is recommended for the US line and 4-6 weeks for the European line) + supplier selection in advance. By working with service providers such as Chinadivision that have direct customer contracts with core carriers, you can obtain guaranteed space allocations (SpaceAllocation); priority loading rights; and more stable freight rate validity periods. This is far more reliable and economical than temporary bidding in the open market.

Why do freight rates still rise even if you book in advance?

Shipping companies usually adopt a dynamic pricing mechanism. Even if you book in advance, if market demand continues to rise, the original price may be adjusted or cancelled, especially on popular routes such as Asia to Europe and the United States.

How does Chinadivision reduce transportation costs during peak season?

Chinadivision helps customers achieve cost control and stable performance during peak season by integrating high-quality route resources, locking space in advance, optimizing fulfillment processes and intelligent warehousing systems.

Chinadivision recommends starting from the following aspects:

Plan the shipping plan in advance

According to sales forecasts and holiday nodes, lock in space 2-3 months in advance. Give priority to full container shipping (FCL) to reduce unit costs.

Optimize fulfillment paths and warehouse layout

Use Chinadivision's overseas warehouse network to achieve nearby shipment and distribution. Reduce transit links and improve fulfillment time.

Transparent freight structure

Sign a fixed-cycle contract with Chinadivision to lock in the peak season freight rate cap. Get a detailed list of fees to avoid hidden surcharges.

Flexibly adjust the mode of transportation

For urgent orders, consider air or rail transport to avoid ocean shipping delays. Small batches of goods can use LCL services to reduce the cost of a single ticket.

In the peak shipping season in August, Chinadivision is willing to be your most reliable logistics partner. We not only provide low-cost and efficient ocean shipping services, but also help you cope with peak season challenges and achieve cost reduction and efficiency improvement through intelligent forecasting, diversified solutions and global network advantages. Contact Chinadivision now to start your peak season logistics optimization journey!