Chinese New Year, also known as the Lunar New Year or the Spring Festival is the most important of the traditional Chinese holidays. The first day of the Chinese New Year 2018, the year of the dog, will be celebrated Thursday, February 15, 2018, until February 21, 2018. As many in the logistics and transportation field know, the holiday has a huge impact on global supply chains originating in China.
Government, construction, and factories shut down during these weeks, while ports and customs usually operate with a skeleton staff focusing on perishable priority items. Many manufacturers treat the holiday as an annual break and close down for two weeks or longer.
“These industries are reliant on migrant labor,” explains Alan Morrell, Senior Trade Commissioner, Austrade Beijing. “Many workers from the poorer inland provinces return to their villages to celebrate the New Year with their families.”
While commerce virtually comes to a standstill in China during those two weeks, companies manufacturing in China must rush their goods out in advance of the holiday, usually at higher quantities to prepare for the lost work week(s). That rush, both before and after the Chinese New year, puts an increased stress on the supply chain, causing congestion and capacity issues for shippers.
Along with the rush, it has become the norm for ocean carriers to omit one to two sailings a week during the most popular deadline date for production. These omissions, creating more demand, create further delays at the port and for shippers who need to secure space on these carriers.
As a shipper, what can you do to mitigate this risk?
Plan Ahead with Suppliers
It is important to be informed of the Chinese New Year dates as you are forecasting. Different manufacturers might have different schedules, so it is best to coordinate with each supplier. Your company might have to order additional merchandise to warehouse domestically to keep up with demand, especially since order fulfillment after the holiday will be in catch-up mode.
Coordinate with your Logistics Company
It is best to submit any request for proposals and bookings as early as your supply chain will allow. General Rate Increases, or GRIs, are also common during this time of year so it is best to forecast freight costs with the full increase.
This year, we expect to see the typical cargo rush beginning mid-December, continuing through the New Year Holiday. Planning and coordination are key to ensuring your supply chain continues to run smoothly during the Chinese New Year and you have enough merchandise for your customers.
Editor’s Note: This blog post was originally published in January 2013 and has been updated for accuracy.
Photo Source: news.xinhuanet.com