What Shippers Can Expect from Peak Season 2020
With summer winding down, shippers are getting ready to take on the rest of 2020, starting with peak season, the busiest time of the year for shippers as they start planning for the upcoming holiday season. However, the COVID-19 pandemic continues to impact many industries and supply chains. In fact, Echo has been conducting shipper surveys to gain insight into the changing landscape, and recently 82% of survey respondents have indicated that they are being impacted by COVID-19.* With strong fluctuations in the market, forecasting this year’s peak season has been more challenging than in years past. This peak season, shippers should be mindful of some key factors caused by COVID-19 that differentiate this year from others.
Tight Capacity During Peak Season 2020
Typically, capacity is tight during peak season, and while the situation remains fluid, it seems that capacity will be tight once again this year despite COVID-19. Although many businesses slowed or paused their operations at the onset of the pandemic, there was an influx of shipments as states began to reopen. This surge has continued as companies return to their usual operations and aim to make up for lost time.
Another aspect that is causing tight capacity is a decrease in the truck driver workforce that has occurred during the pandemic. This is due to some carriers going out of business, an increase in insurance rates, and some drivers receiving sufficient income from COVID-related government aid. Because of this shortage of drivers and the high demand for freight transportation, carriers can be more selective with the shipments and rates they choose, which may present challenges to shippers during peak season.
There has also been tight capacity across intermodal rail. Due to the influx of freight that followed the initial downturn at the start of the pandemic, there has been a shortage of available equipment, including containers and chassis, at railroad terminals and ramps across all major metropolitan areas. The congestion from this abundance of freight has led to frequent delays ranging from 24-72 hours in key markets. There is also a shortage of draymen due to organizational restructuring at various drayage companies, including layoffs, furloughs, leave of absences, etc. For these reasons, as well as shifts in consumer spending, intermodal rates have been continually rising to record high levels.
Overall, these factors have resulted in tight capacity, which may only get tighter in peak season and cause continued fluctuations in rates for shippers.
Consumer Spending During Peak Season 2020
Consumer spending plays a key role in peak season every year, but this year, there have been significant shifts in consumers’ usual spending habits due to COVID-19. We initially saw a downturn at the beginning of the pandemic, and some are now describing the economic recovery as “K-shaped” with certain industries thriving while others continue to suffer. This has resulted in disruptions in various supply chains.
As many consumers spend more time at home to prevent the spread of the virus, there has been an overall increase in e-commerce versus brick and mortar shopping. There have also been shifts in the types of products consumers are buying, including an increase in purchases of consumer packaged goods (CPGs) like toilet paper, pantry items, and cleaning supplies, as well as materials for home improvement projects and personal fitness equipment. As many have shifted to working from home, there has also been an increase in purchases of computers, electronics, and general office supplies.
With sudden increases in demand, some sectors that are thriving cannot keep up with consumer needs. For example, the housing sector is going strong, and as the demand for new homes increases, stockpiles of building materials are being depleted. A year ago, companies had warehousing solutions and product on-hand, however the combination of the pandemic and the increase in demand this year has caused a shortage in materials, leading to more just-in-time (JIT) and expedited shipping than usual.
While current trends point to a strong peak season despite COVID-19, the factors caused by the pandemic make this an unusual season compared to other years. This coupled with the uncertainty surrounding COVID-19 makes forecasting a challenge as circumstances can and have changed quickly throughout these unprecedented times. Ultimately, shippers will need to remain vigilant to shifts in the market and be prepared to react immediately should they need to adjust their peak season transportation plans.
At Echo, we’re always here to help you navigate the freight market. Our team of logistics experts will evaluate your unique transportation needs and ensure you get the solutions that are best for you during peak season, the remainder of 2020, and beyond.
Echo services all modes of transportation, including truckload, partial truckload, LTL, intermodal, and expedited. If you are in need of expedited shipping for your freight, Echo offers hot shot ground and air cargo services all over the U.S. for time-sensitive shipments. Drawing on our network of over 10,000 expedited carriers, and more than 50,000 carriers overall, our team diligently monitors your shipments from origin to destination to ensure your freight delivers on time, safely, and within budget.
*Survey data from August 3, 2020.