This year’s Christmas peak season has swept the logistics industry

Although from a consumer perspective, Christmas or promotional events such as Black Friday in November are still a long way off, the TSL industry is already starting to feel the Christmas rush. The most dynamic situation is sea freight. This year, the importance lies not only in the distance to the production market, but also in the resilience of the supply chain. Compared to the peak shipping period we are used to, we see a shift of about two weeks. What’s more, some companies started shipping Christmas goods as early as June. The reason is the blockage of the Suez Canal. Ships detoured around Africa, extending shipping time by 10-14 days. Christmas or promotional goods, including electronics, textiles, decorations and toys, mainly come from China, which is the EU’s largest import partner after the UK and the US. According to Eurostat, China accounted for 20.5% of EU merchandise imports in 2023.

Also read: Road freight prices unexpectedly rise on Christmas Eve, first increase in November since 2019

But what about rail from China to Poland?

The situation on the Red Sea has also led to an increased interest in rail transport. This is influenced both by the longer transit times of ships and by the costs. In the past six months, we have seen comparable prices for sea and rail freight, which has further encouraged customers to choose the latter. Ocean freight rates are currently falling, which could lead to mainly urgent cargo being transported by train. Nevertheless, the blockade of the Suez Canal means that some companies have permanently included rail in their mix of transport options in order to enhance the resilience of their supply chains. Despite the decline in ocean freight rates, I think that a portion of cargo will still be transported by rail even after the reopening of the above routes. In addition, there is also great potential for the Central Corridor, which runs from China to Europe via Central Asia, the Caspian Sea and the South Caucasus, bypassing Russia. Due to the complexity of this route, the best solution is multimodal transport, which, by the way, is also becoming increasingly popular in pan-European transport, mainly driven by the need to reduce the carbon footprint.

Cost-conscious shoppers are already planning air travel before Christmas

Airfreight usually starts shipping in late October or early November. However, this year, similar to sea freight, we expect this date to be pushed back as customers are cautious and want to increase the resilience of their supply chains. This is particularly important in South Asia, where air freight is the only alternative to sea freight, unlike China. The decision to bring forward shipments by air freight will also be affected by the natural change in the route network from summer to autumn and winter, which will lead to a reduction in the number of services by about 10%, resulting in a reduction in capacity. In South Asia, the unstable political and social situation in Bangladesh should be mentioned. Multiple riots in July and August led to the blockade of ports, airports and land transport routes. This had an impact on the supply chain, especially the garment industry, which is important for this market. The situation is currently stabilizing, but due to these demonstrations, the local government has introduced some restrictions, including strengthening borders and key transportation points such as airports and seaports. All of this also affects the efficiency of the supply chain.

It is worth noting that the above increase in global freight demand is also significantly affected by China’s Golden Week (October 1-7). During this period, similar to the Chinese New Year, China’s economy slows down significantly, so customers plan their shipments in advance.

Due to the relatively short distances, road transport will begin to feel the pressure at the latest during the upcoming autumn and winter shopping season. It is too early to talk about growth at the moment. However, the logistics system of interconnected ships will certainly respond in due time.

The warehouse is also busy before Christmas

Arriving goods earlier naturally leads to an increase in interest in contract logistics, as we are currently seeing. Warehouses also become busy in the run-up to Christmas or Black Friday by providing value-added services. Many companies from different industries are interested in assembling special promotional product packages or creating displays that will later attract consumers in stores.

Uncertainty is the norm in logistics

Consumption in Poland is growing steadily, although recent market surveys show that consumers are scrutinizing their budgets, especially taking inflation into account and, for example, spreading Christmas spending over two months. Manufacturers and importers are therefore doing their best to prepare for the increase in Christmas traffic. The challenge is, of course, that in recent years we have learned that the only constant in logistics is unpredictability, as the aforementioned crises on the Red Sea or in Bangladesh, or even earlier the coronavirus pandemic, have shown.

Two years ago, during the peak traffic period around Christmas or Black Friday, volumes were much higher than capacity, resulting in congestion and delays. Last year, the situation was the exact opposite. Therefore, it is difficult to draw conclusions about repeatable trends when looking back. Every year is different. This year, we had significantly more volumes during the holiday season than in previous years, both due to the earlier shipment of sales items than in previous years and also due to a slightly better economy. However, many economic indicators now show that we can expect a slowdown in the economy starting in September. This raises the question: Has the market already started to weaken in the last quarter of the year?