Based on historical trends and new business plans, a supply chain manager knows how much product will need to be shipped during the year​.

Supply chain managers analyze how much product needs to be shipped between which combination of ports, and which carriers operate on those routes​.

Then they negotiate with carriers how to reserve the required space on those routes at the best possible price for the year. ​

That space is called allocation, and freight contracts record the costs and other terms.
When product is shipped, allocation is used.

Companies pay penalties if they do not use their allocated space.
Using too little results in penalty fees.

That is why Supply Chain managers each week closely track how much was used and how much remains on each shipping lane with each carrier.​

Over a year you use the reserved space on each carrier