Black Friday and Cyber Monday are well known for their savings potential. Customers from across the US flock to stores, and many retailers count on these sales to bolster their yearly numbers. On the production side of things, though, costs tend to go up in anticipation of these events – not only must more product be made available for these major sale days, but these days herald the beginning of a season of high demand. Unfortunately for many who have overseas manufacturing partnerships, this holiday weekend also represents a time of year in which air freight rates tend to reach their peak.
If you look at things from the courier’s perspective, it should come as no surprise that Black Friday and Cyber Monday tend to draw higher prices. If you boil it down to basics, the issue is one of simple supply and demand – more producers want their products shipped from overseas manufacturing facilities, but ocean freight may not be fast enough, and there is only a limited amount of space per plane. Rates go up because each business is willing to fight for that space in order to make sure that they can make these ever-valuable sales, and most are willing to pay top dollar to get the goods to the shelves on time.
The higher rates might also be thought of as a tax on those companies that are under prepared. No one simply accidentally runs into the “problem” of overseas manufacturing – businesses know in advance when they need their products and roughly how long they will take to ship. Smarter businesses work with their overseas partners to make sure that their goods are on the boat or plane far before these high rates go into effect, while their less-prepared competitors are forced to deal with unexpectedly high shipping costs during one of the most profitable seasons of the year.
So what can a business do to fight the rates? If you can, you should always make sure that your shipping is done far before these peak times. If you can avoid peak air rates, you can save quite a bit of money as you go into the holiday season. If you absolutely must use air freight during this window, though, your best bet is to make sure that you allow for extra shipping costs in the budget. This does little to save you money, but it can help with your holiday numbers once the costs are paid.
If you work with overseas manufacturers to produce your goods, don’t forget about shipping. It’s not only a daily cost that you must factor into your budget, but a cost that can seriously eat into your holiday profits. This is no reason to avoid manufacturing in China, but it is a good reason to make sure that you are prepared for rates to change when it becomes least convenient for your business. With a little bit of foresight and early preparation, you can ride out any changes in ocean or even air freight rates and make sure that your profits remain high during the holidays.
For any questions about shipping, contact ITI today. This isn’t our first holiday season, we know the ropes.