Christmas is a busy season for many businesses and consumers, especially those who rely on air shipping from China to get their products or gifts. However, air shipping rates from China tend to surge during this period, making it more expensive and challenging to ship goods across the globe.
There are several factors that contribute to the increase in air shipping rates from China during Christmas, such as:
- High demand and limited supply: The demand for air cargo capacity from China usually exceeds the supply during the peak season, as many shippers rush to meet the holiday orders and deadlines. This creates a situation where carriers can charge higher prices for their services, as they have more bargaining power and less competition. According to Freightos, the average air freight rate from China to the US rose by 66% from November to December 2020, reaching $9.50 per kilogram.
- COVID-19 impact: The COVID-19 pandemic has disrupted the global air cargo industry, reducing the availability of passenger flights that also carry cargo in their belly space. According to the International Air Transport Association (IATA), global air cargo capacity declined by 23.3% year-on-year in 2020, while demand only dropped by 11.8% . This resulted in a severe imbalance between supply and demand, pushing up the air freight rates to record levels. Moreover, the pandemic also increased the demand for medical supplies and personal protective equipment, which added more pressure on the air cargo capacity and rates.
- Fuel surcharges and peak season surcharges: Another factor that affects the air shipping rates from China during Christmas is the fluctuation of fuel prices and the imposition of peak season surcharges by carriers. Fuel surcharges are fees that carriers charge to shippers to cover the cost of fuel, which can vary depending on the market conditions and the oil price. Peak season surcharges are additional fees that carriers charge to shippers during periods of high demand, such as Christmas, to compensate for the increased operational costs and risks. Both surcharges can significantly increase the total cost of air shipping from China during the holiday season.
Impact of increased air shipping rates on businesses
The surge in air shipping rates from China during Christmas can have a negative impact on businesses that depend on air cargo for their operations, such as e-commerce sellers, manufacturers, and retailers. Some of the possible consequences are:
- Reduced profit margins: Businesses that ship goods from China by air may face reduced profit margins due to the higher shipping costs, especially if they cannot pass on the extra costs to their customers or suppliers. This can affect their profitability and cash flow, as well as their competitiveness in the market.
- Delayed deliveries: Businesses that ship goods from China by air may also experience delayed deliveries due to the limited air cargo capacity and the increased congestion at airports and customs. This can affect their customer satisfaction and loyalty, as well as their reputation and brand image. Moreover, delayed deliveries can also result in penalties or fines from customers or regulators, depending on the nature and value of the goods.
- Inventory shortages or excesses: Businesses that ship goods from China by air may also face inventory challenges due to the uncertainty and volatility of the air shipping rates and capacity. They may either run out of stock or overstock their products, depending on their demand forecasting and inventory management capabilities. This can affect their sales performance and inventory carrying costs, as well as their ability to respond to market changes and customer needs.
Strategies for managing increased air shipping costs
To cope with the surge in air shipping rates from China during Christmas, businesses can adopt some strategies to manage their shipping costs and mitigate the impact on their operations, such as:
- Plan ahead and book early: One of the most effective ways to reduce the air shipping costs from China during Christmas is to plan ahead and book the air cargo space as early as possible, preferably before the peak season starts. This can help businesses secure the best rates and capacity, as well as avoid the last-minute rush and premium charges. According to Freightos, booking air cargo space at least 15 days in advance can save up to 62% on the shipping costs.
- Compare and negotiate rates: Another way to reduce the air shipping costs from China during Christmas is to compare and negotiate rates with different carriers and service providers, such as freight forwarders, brokers, and online platforms. This can help businesses find the best deals and options for their shipping needs, as well as leverage their volume and relationships to get discounts and incentives. According to ShipSigma, businesses can save up to 28% on their shipping costs by negotiating their carrier contracts with the help of data and analytics.
- Optimize and consolidate shipments: A third way to reduce the air shipping costs from China during Christmas is to optimize and consolidate shipments, such as by choosing the optimal mode, route, and packaging for the goods, and by combining multiple orders or shipments into one larger shipment. This can help businesses lower the unit cost and the number of shipments, as well as improve the efficiency and utilization of the air cargo space. According to ZhenHub, businesses can save up to 15% on their shipping costs by optimizing and consolidating their shipments.
Alternative shipping options during the holiday season
Besides air shipping, businesses can also consider alternative shipping options from China during the holiday season, depending on their budget, time, and quality requirements. Some of the possible alternatives are:
- Sea shipping: Sea shipping is the most common and economical way to ship goods from China, especially for large and heavy items. Sea shipping can offer lower rates and higher capacity than air shipping, as well as lower environmental impact and fuel consumption. However, sea shipping can also take longer and be more prone to delays and damages than air shipping, as well as require more documentation and customs clearance. According to Easyship, sea shipping from China to the US can take 30 to 70 days and cost $300 to $450 per cubic meter.
- Rail shipping: Rail shipping is a relatively new and emerging way to ship goods from China, especially to Europe and Central Asia. Rail shipping can offer faster and more reliable transit times than sea shipping, as well as lower rates and carbon emissions than air shipping. However, rail shipping can also have limited coverage and availability, as well as higher security and safety risks than air and sea shipping. According to Shipa Freight, rail shipping from China to Europe can take 18 to 20 days and cost $4,000 to $5,000 per 20-foot container.
- Express shipping: Express shipping is a premium and specialized way to ship goods from China, especially for small and urgent items. Express shipping can offer the fastest and most convenient delivery times than other shipping options, as well as provide tracking and insurance services. However, express shipping can also be the most expensive and restrictive way to ship goods from China, as well as have higher customs duties and taxes than other shipping options. According to Parcel Monkey, express shipping from China to the US can take 1 to 3 days and cost $50 to $100 per kilogram.
Planning ahead: Preparing for the Christmas shipping surge
To avoid the potential problems and challenges of shipping from China during Christmas, businesses can plan ahead and prepare for the shipping surge, such as by:
- Forecasting demand and supply: Businesses can use historical data, market research, and customer feedback to forecast their demand and supply for the holiday season, as well as adjust their production and procurement plans accordingly. This can help them avoid inventory shortages or excesses, as well as optimize their order fulfillment and delivery processes.
- Communicating with suppliers and logistics partners: Businesses can communicate with their suppliers and logistics partners in China to understand their capabilities and constraints, as well as coordinate their expectations and requirements. This can help them secure the best rates and capacity, as well as mitigate the risks and issues that may arise during the shipping process.
- Informing and engaging customers: Businesses can inform and engage their customers about their shipping options and policies, as well as provide them with accurate and timely information about their orders and deliveries. This can help them manage their customer expectations and satisfaction, as well as increase their loyalty and retention.
Negotiating with shipping carriers for better rates
To reduce the shipping costs and improve the shipping performance from China during Christmas, businesses can negotiate with shipping carriers for better rates, such as by:
- Using their shipping volume and frequency: Businesses can use their shipping volume and frequency as leverage to negotiate better rates with shipping carriers, as carriers prefer customers who can provide them with consistent and predictable business. Businesses can also consolidate their shipments or use third-party logistics providers to increase their volume and frequency, as well as get access to lower rates and better services.
- Exploring various modes and routes: Businesses can explore various modes and routes for shipping from China, such as by using sea, rail, or express shipping, or by choosing direct or indirect routes. This can help them find the best balance between cost, time, and quality, as well as take advantage of the different rates and availability offered by different carriers and service providers.
- Negotiating, negotiating, then negotiating some more: Businesses can negotiate, negotiate, then negotiate some more with shipping carriers, as rates are not fixed and can vary depending on the market conditions and the carrier’s situation. Businesses can also compare and benchmark rates from different carriers and service providers, as well as leverage their relationships and reputation to get discounts and incentives.
Managing customer expectations during peak shipping times
To ensure customer satisfaction and loyalty during peak shipping times from China, businesses can manage customer expectations, such as by:
- Offering multiple shipping options and prices: Businesses can offer multiple shipping options and prices to their customers, such as by using air, sea, rail
- or express shipping, or by choosing direct or indirect routes. This can help them cater to different customer preferences and needs, as well as provide them with transparency and flexibility in their shipping decisions.
- Providing clear and accurate shipping information and policies: Businesses can provide clear and accurate shipping information and policies to their customers, such as by stating the expected delivery time, the shipping cost, the tracking number, the customs duties and taxes, and the return and refund policies. This can help them avoid confusion and misunderstanding, as well as reduce the number of inquiries and complaints.
- Updating and communicating shipping status and issues: Businesses can update and communicate shipping status and issues to their customers, such as by sending email or SMS notifications, providing online tracking tools, and offering customer service channels. This can help them keep their customers informed and reassured, as well as resolve any problems or delays that may occur during the shipping process.
- Leveraging technology for efficient shipping and tracking: Businesses can leverage technology for efficient shipping and tracking from China, such as by using cloud-based software, artificial intelligence, blockchain, and internet of things. This can help them automate and optimize their shipping processes, such as by selecting the best carriers and routes, managing the inventory and orders, monitoring the shipment status and performance, and detecting and preventing fraud and errors.
- Collaborating with suppliers and logistics partners: Businesses can collaborate with their suppliers and logistics partners in China, such as by sharing information and data, aligning goals and incentives, and establishing trust and transparency. This can help them improve their coordination and cooperation, as well as reduce the costs and risks of shipping from China.
Conclusion
Shipping from China during Christmas can be a challenging and costly task for businesses, as they face the surge in air shipping rates and the limited air cargo capacity. However, businesses can adopt some strategies and alternatives to manage their shipping costs and mitigate the impact on their operations, such as by planning ahead and booking early, comparing and negotiating rates, optimizing and consolidating shipments, using sea, rail, or express shipping, preparing for the shipping surge, negotiating with carriers, managing customer expectations, leveraging technology, and collaborating with suppliers and logistics partners. By doing so, businesses can ensure a smooth and successful shipping experience from China during the holiday season.
