Seasonality in the TSL industry is a challenge that requires companies to always be flexible and precise in their planning. While observing the market in recent years, I have noticed how our industry has evolved and demonstrated the ability to survive many crises, including the COVID-19 pandemic. Thanks to my experience and many years of work at ABC Czepczyński, I have some insights and strategies that help our team effectively manage our resources on a daily basis at different times of the year.
Seasonal fluctuations in shipping
Seasonality can occur both in general terms and in the context of specific industries. From my experience, I can say with confidence that in the European market, the demand for transport services (specifically road transport) varies depending on the season, month, and even week. For our clients, the holiday period is usually the so-called dead season, characterised by a major decline in transport activity. At that time, many companies and sectors suspend or limit their operations, which leads to a decrease in demand for shipping services. The situation improves around autumn when demand begins to return to normal, and companies resume full operations after the summer breaks.
During the winter period, I can see a significant increase in demand for transport. It is during this time that logistics activities intensify in connection with preparations for Christmas and the New Year. The number of goods deliveries rises as a result of increased consumer purchases, intensive stocking of stores and warehouses, and logistics operations related to the reduction of inventories at the end of the year. As a result, the shipping industry experiences the highest demand in winter, which requires companies to be highly flexible and able to adapt quickly to meet growing demands and ensure operational smoothness.
When does the off-period become the peak season?
The holiday off-period does not mean downtime for all industries. For example, companies in the FMCG sector experience a major surge in demand in the summer due to the increased consumption of beer and non-alcoholic beverages. This, in turn, leads to an increase in the number of orders and intensification of logistics operations. Similarly, the construction industry is revived in the warmer months, carrying out a number of construction projects, but its activity often declines in the winter when the ability to do work is limited by weather conditions. Therefore, while some face lower activity during the holidays, other sectors may experience peak activity, which translates into more demand for LST services in various market segments.
Spot loads vs. contract freights
Seasonality in the transport industry involves both benefits and challenges. During periods with significant fluctuations in demand, such as summer vacation or holiday peaks, there is an opportunity to generate additional revenues through spot freights. These one-off orders can provide major profits, as they often come with higher rates compared to ongoing contract arrangements.
However, contract freights can become more challenging. If the client places a large number of orders, the company’s CAPACITY may be overloaded, forcing it to look for additional solutions on the spot market. On the other hand, when market demand rises, prices for transport services can increase considerably, exceeding the pre-agreed contract rates. In such cases, price differences can reach several hundred euros, which can seriously affect the profitability and financial stability of the company.
Seasonality management
One of the optimal solutions for effective seasonality management would be to introduce bid pricing that takes into account different periods of the year. Unfortunately, in my experience, I have not seen such a practice with any clients. Therefore, when quoting prices for clients, I do not rely only on data from recent months, but also on data from the previous year, so that forecasting and planning can be more precise.
Another effective way to deal with seasonality is to maintain stable relationships with our subcontractors. Having regular carriers on specific contract routes makes operations much easier. We can then negotiate year-round rates, sign contracts or set remuneration based on kilometres, regardless of the country or route. Good relationships with subcontractors often allow for flexible adjustment of terms of cooperation and finding solutions that can benefit both parties. The same goes for maintaining relationships with clients, ensuring honest communication.
Seasonality is an important aspect of our industry, as it affects demand and logistics operations at different times of the year. Understanding these fluctuations and incorporating them into your company’s strategy is essential for staying competitive. My best advice concerning seasonality? An experienced team of specialists who are able to analyse data and build solid relationships with subcontractors in order to effectively deal with such challenges. The key to maintaining the continuity of transport processes is creating a portfolio of clients who are active at different times of the year – business diversification. A great added value also comes from internal know-how solutions that we successfully implement and develop for our partners.
Małgorzata Pawluczuk – Freight Forwarding Leader at ABC Czepczyński, Bielsk Podlaski Branch
