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Ocean Freight Peak Season – Or Perhaps More of a Valley

Updated: Jan 19, 2023

Bottom Line Up Front

In 2022, we didn’t see the normal peak season, shipping volumes and rates have been on the decline for most of the year, and are now near pre-pandemic levels. Many healthcare suppliers instituted freight related price increases over the last several years. The question now, if and when increases will be rolled back given the many other inflationary elements in the supply chain (fuel, labor, etc.).

Additional Detail

Ocean freight peak season is typically the time of year when demand for shipping goods by ocean freight increases significantly. This phenomenon is caused by a combination of factors, including increased consumer demand for goods during certain times of the year, such as the holiday shopping season, factory shutdowns in Asia, and shipping lines implementing "blank sailings" to balance supply and demand. The amount by which ocean freight volume increases during peak season can vary depending on a number o

f factors such as the specific trade lane and the state of the global economy. Typically, ocean freight volume increases by around 20-30% during peak season, but it can be more or less depending on the circumstances.

With the global supply chain recovering from the COVID-19 pandemic over the past 12 months, inventory levels in general are higher than normal in the US. This caused an onslaught of cancelled orders, which in turn caused demand on ocean freight to decrease. We would typically see an increase in activity in the August to November timeframe (peak season) as businesses stock up for the holiday season and have orders shipped ahead of Lunar New Year, however, that was not the case in 2022.

Instead, we have seen a steady decrease in demand and ocean freight spot rates have reduced to near January 2020 levels (ie pre-pandemic). The reduction in freight rates will eventually trickle down to the end consumers of goods but this takes time, particularly when stateside inventory levels remain elevated.

Across healthcare, many suppliers instituted freight related price adjustments on certain products, particularly those that have a disproportionately large size or weight, as these products have a disproportionately higher % of cost due to freight. Good news for hospitals/health systems, you should see relief at some point in the near future. When that occurs depends on a number of factors given the inflation we are experiencing, particularly in fuel and labor.

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