As the weather heats up, so does freight shipping across the country.
Produce, beverage freight, camping supplies, grilling equipment — lots of freight surges during the summer months.
And you don't have to ship summer freight to be affected by the capacity crunch.
Learn how these seasonal surges can impact your business, and three ways to mitigate disruption.
Summertime Freight: A Perfect Example of a Seasonal Demand Cycle
As we outlined in our Guide to the U.S. Truckload Market, three main cycles drive market activity: seasonal demand, annual procurement and market capacity.
The first — seasonal demand — is easy to observe and on full display during the summer months.
When Does the Summer Freight Season Start?
Memorial Day is the unofficial start of summertime shipping, but businesses will start to build up inventories before the May holiday, getting products ready for the store several weeks ahead of time.
March is a great time for shippers and carriers to start preparing for the unique set of challenges and opportunities that the summer months will bring.
As the country starts opening back up and the temperatures rise, so will volume.
Let's take a look at some of the consistent trends of the summer shipping months, and three ways for shippers to mitigate volatility in any market.
Food & Beverage Season: When & Where It Happens
As we get deeper into the summer, food and beverage season will take hold of the U.S. truckload market.
Similar to produce season, peak food and beverage shipping begins in the southern regions of the U.S. and migrates north as the weather heats up.
Hotter weather means more parties, picnics and barbecues, which means more cans of soda, bottles of beer, bags of chips, and jars of dip.
May – June
There are a lot of food and beverage production facilities in Mexico, so U.S. cities along the border are focal points early in the summer as retailers place orders to build up inventory. Major cities include: Laredo, TX; McAllen, TX; Nogales, AZ; Calexico, CA.
Wine shipments out of California and the pacific northwest also pick up in late spring and early summer.
Heading into June, as beverage shipments increase, peak produce shipping subsides.
June – July
With summer in full swing, Texas and California will continue to be the driving forces for outbound capacity demand. Beer shipping from the border continues and demand for beef out of northern Texas and the central plains ramps up as the country hits peak BBQ season.
July – August
After the 4th of July, summertime food and beverage demand winds down while back-to-school and retail begin to pick up.
3 Ways Summer Can Impact Your Supply Chain
1. Higher Food & Beverage Volume
Compared to Q1, the average freight volumes from our top 20 food and beverage shippers in Q2 typically increase about 25%.
Increased volume creates opportunities for carriers but can cause capacity disruptions for shippers.
With freight demand surging compared to last year, we still experience seasonal surges — this is especially true for refrigerated truckload demand.
2. Different Times in Different Places
Like produce season, freight surges do not occur uniformly across the country, but are staggered at different times across different locations (see graphic).
Regardless of when and where shipping surges occur, they have a trickle-down effect on the entire nation. Carriers, the ultimate source of mobile production, migrate to surge shipping regions to maximize profit, causing capacity disruptions elsewhere.
3. Spot Rate Instability
As carriers migrate to take advantage of opportunities, spot rates will fluctuate accordingly. For instance, when beverage demand spikes in southern Texas, rates on lanes inbound Laredo will drop as carriers try to reposition their fleets.
Simultaneously, rates out of Laredo will shoot up until the shipping surge passes.
We are currently in an inflationary market, which means carrier capacity will be tight, potentially causing some significant spot rate increases.
Coming off of the most volatile year in truckload market history, and with the country opening back up, there is tremendous uncertainty.
What will my customers' needs be like? Can I get capacity from my carriers? What about materials my vendors?
If the past year has been any indicator, supply chains are learning that flexibility is the key.
When you have surge freight, special projects or rerouted networks this summer that fall outside of your regular commitments, look to providers that can shift with your needs.
4 Ways You Can Limit Summertime Supply Chain Disruptions
1. Follow Spot Quoting Best Practices
Even if you ship most of your freight on contract rates, it's likely at least some of it will hit the spot market over the summer months.
Especially in the current market.
If you follow spot quoting best practices, you can get the most reliable, cost-effective rate every time.
2. Optimize Your Routing Guide
Before demand starts to spike, review your routing guide. In the current environment, make sure you're regularly checking with your providers to see what their current capacity situation is like.
Can they handle a surge in your shipping? If a carrier fails, what are your second and third options?
If you have networks shifts that need to go back out to bid, make sure you take a strategic approach with your RFP process.
Don't lose sight of KPI tracking.
How are carriers performing? If any are rejecting tenders or failing to meet your KPIs, can you rely on them during peak food and beverage shipping as the market recovers? Balance cost and service.
This is a great time to implement or improve a continuous improvement program.
3. Maximize Lead Time
Wherever possible, plan ahead. The more notice you can give your carriers, the less likely you are to experience supply chain disruptions.
4. Prioritize Shipments
Competition for capacity in certain regions at certain times may be intense.
To ensure your most critical shipments reach their destinations on-time, determine which have flexibility, which are truly time-sensitive and prioritize accordingly.
Beat the Heat this Summer
Though the current deflationary market environment will likely limit the impact of any seasonal demand dislocations, shippers that understand the trends and take a few simple steps will be in a better position to out-ship their competition this summer.
You can stay on top of current market trends with our monthly Freight Market Cheat Sheet. Download your copy and save it to your desktop.