As Chinese New Year approaches, the supply chain management teams around the world face a unique set of challenges. Chinese New Year requires shipping companies to adjust to the festivities, holidays, and shutdowns that accompany the celebration.
Chinese New Year, also known as the Spring Festival, has been celebrated in China for more than 4,000 years. Traditionally, Chinese New Year is celebrated for 15 days.
The Chinese New Year celebrations will begin on February 9th and conclude on February 24th.
During this time, supply chain teams must manage the disruption of supply and demand, labor availability, and other factors, all while meeting customer expectations. With thoughtful planning and effective communication, supply chain teams can successfully navigate the challenges of Chinese New Year and ensure that operations continue to run smoothly.
How will supply chains be affected?
As is traditionally the case, production begins to slow down in Chinese factories at this time of the year ahead of the festivities.
Chinese suppliers begin closing their operations “one to two weeks before the holiday,” and adds that although the official celebration only lasts a week, most factories “remain closed for a whole month, some even longer”.
The [Red Sea] crisis hits as China faces its seasonal export surge before factories close for the week-long Chinese New Year holiday starting February 10. With fewer vessels available, this rush will strain capacity. Repositioning empty containers back to China has also been disrupted,
explains Mike DeAngelis, Head of International Solutions at FourKites.
Here’s a total overview of problems and solutions for this time, so your supply chain stays a few steps ahead.
How does Chinese New Year impact global logistics and supply chain?
As China is such an important player in the logistics industry, the period around Chinese New Year has a major impact on the supply chain and shipping sector as a whole. Here are some of the main challenges faced by the industry before, during and after this annual holiday:
- Increased demand for containers before holiday week: As everyone scrambles to get out their last orders before factories shut down, the demand for containers shoots up. This leads to drastically inflated container prices, as well as container shortages.
- High port congestion: Along with an increase in demand for containers and a flurry to get shipments out in time, comes port congestion and bottlenecks at major ports. With this, you can expect major delays in the movement of cargo between factories, ports and distribution centers.
- Factory closures lead to supply disruptions: With factory closures in China and other East-Asian countries, we see a decrease in the supply of a wide variety of products (including shipping containers) around this time. So if you need containers or other products, we suggest ordering them well in advance of CNY.
- Decreased workforce: Between mid-Jan and the end of February, a large portion of the Chinese and East-Asian workforce heads home to spend time with family. This leads to a shortage of staff in factories and ports, meaning limited capacity. With a much smaller workforce, you can expect slower movement of goods through ports and terminals in this part of the world.
- Customs delays: Due to the limited workforce, customs procedures may be delayed. Some customs offices may even close completely over this period. Keep this in mind and plan ahead to account for slower customs clearance processes.
- Increased freight rates and peak season surcharges: Rising demand, but a decrease in supply results in increased freight rates. There are likely to be additional peak season surcharges applied too.
2024 CNY Shipping Services – Mark Your Calendars for These Dates
How you can prepare your supply chain for Chinese New Year 2024 closures
Preparing and planning is the key to managing your logistics and supply chain operations to minimise the effect of the Chinese New Year on your business. Following a proactive approach becomes essential. Here’s how you can prepare your business during peak seasons while keeping your supply chain agile:
- Evaluate your logistics partners for reliability and resources
Assess your logistics partners’ experience, reliability, and track record in handling shipments during the Lunar New Year. Choose carriers with a history of successfully delivering freight in peak seasons and holidays with the highest efficiency and transparency. Check that your logistics service provider has the resources to handle the CNY 2024 demands and emergencies. - Plan ahead and communicate your needs clearly
Keep the dates for the 2024 Chinese New Year in mind when planning your shipments. Talk with your logistics partners to understand their services, any potential causes for disruptions, and plan of action in case of delays. Ensure everyone is on the same page regarding your shipping needs, expected timelines, and freight charges. - Pre-book containers or vessel space
Gauge your shipping requirements and secure vessel/container space with your carrier at reasonable freight rates well in advance. With high demand for transportation services around the holiday season, booking vessel space early can ensure your cargo gets prioritized. - Leverage data for effective inventory management
Analyze past customer behaviors and historical order patterns during the Lunar New Year season. It can guide your inventory planning, helping you anticipate demand and ensure you have extra inventory to cater to your customers in case of shipping delays. - Opt for smaller, multiple shipments instead of a full container load
When dealing with a substantial volume of goods around peak season, distribute your bigger shipment into multiple less-than-container loads (LCLs), each package with its separate bill of lading (BoL). This way, you can reduce the risk of shipping delays, as any delays affecting one container or carrier will not impact the entire shipment.
Tips to prevent shipping delays during Lunar New Year 2024
In preparation for CNY, delays in shipping are a major concern. But, with the right strategies, you can minimize disruptions and ensure a smooth flow of goods. Here are a few tips to maintain a reliable and efficient supply chain during the Chinese New Year 2024:
- Consider shipping through various types of containers
While 20ft containers are frequently used for shipping, it is also one of the lesser-available containers during peak seasons. So, diversify your freight by using different container types. You can choose 40ft standard, high cubes, or even side-door containers whenever feasible. These alternatives may provide cost-saving opportunities due to potentially lower rates. - Diversify your modes of shipping
Instead of shipping only via sea, consider multiple transportation modes for freight – like air, sea, and land transport – and consider alternatives. This flexibility allows you to switch shipping modes, if one way faces unexpected delays during the peak season in Lunar New Year 2024. - Choose ports with lower congestion and faster TATs
During peak season in CNY 2024, avoid shipping from the bigger ports (like Shanghai or Shenzhen), as they may have higher congestion and longer turnaround times. Discuss alternate routes with your logistics provider and ship from lesser-frequented ports (like Lianyungang or Xiamen), even if it requires slightly longer transit times. - Manage your employees’ holiday schedules
If your operations involve regions celebrating the Lunar New Year, consider the availability of your workforce. Some employees may take time off, impacting the production and supply chain of your business. So, account for the holidays in advance, move faster, and stay on top of your shipping game. - Maintain a contingency Chinese New Year shipping budget
Due to shipping delays, operational costs may add up quickly, like demurrage and detention. Also, cargo damage or container loss is frequent during peak seasons. So, always allocate some extra budgets as emergency funds during these times. This can help you address unforeseen issues without significantly impacting your operations or profitability.
Looking ahead
Preparing your supply chain for the Chinese New Year 2024 is necessary to ensure smooth operations during this major holiday season. Proper planning and preparation, clear communication, and contingency plans are your allies. With the tips and strategies mentioned above, your business can survive and thrive during this festive period and sail smoothly!
At Flash, we help you manage your supply chain and logistics by making it more accessible, more efficient, and more secure. So, while you take care of your business growth, we take care of shipping.
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