Chinese New Year: Impact on Supply Chain and Logistics

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By now, anyone doing business in the Asia markets is well into planning how the continuity of trade will work during the Chinese New Year (CNY) when virtually all business in China, including factories, closes down from one to four weeks. In 2019 CNY will begin on February 5.

All suppliers will start to wind down operations one to two weeks in advance of the holiday. Mass production ceases, even for sample orders, far earlier than many buyers anticipate. Customarily, the Chinese people travel and visit relatives throughout the mainland and celebrate this holiday with loved ones. Some 80 million Chinese workers, most from urban areas along China’s coast, travel back to their rural hometowns.

“This time of year presents many challenges for importers and exporters,” said Guido Gries, Managing Director Dachser Americas. “Container ships, airplanes and other modes of international transportation are still working. Cargo is still moving, but planning your shipments requires a strategy that commences months earlier so that freight is handled seamlessly and without interruption.”

It is typical that freight volumes build just a few weeks before the holidays, as factories will speed up their production, which will not resume until a week or two after the holidays. There are two events that occur during this time, the Official Holiday and the Traditional Holiday, causing some factories to stay closed longer. Some suppliers are off for more than a month. This is also not the time to plan a business trip to most Asian countries.

How your business can be impacted:

  • All business during CNY will face delayed production time, as will quotation requests.
  • Many workers will not return to their workplace immediately after the holidays, which means previously estimated production times might be extended.
  • If orders are placed late, it is possible they will be placed further back in the production line;
  • With more than a month’s worth of orders backed up to start with, factories will favor orders from their preferred partners.

Businesses depending on Chinese sourcing should plan ahead:

  1. Build up adequate inventory, considering a period of up to four weeks after Chinese New Year and even find out if your Chinese source has inventory in non-Asian locations, so you can use other supply chains.
  2. Inform your forwarder about your priority shipments, in case there is limited space.
  3. Book shipments well in advance of CNY.
  4. Reserve space on passenger flights for shipments that cannot be delayed. The rates are slightly higher, but this measure will keep your supply chain running.

Holiday schedule for selected countries in the Asia-Pacific region:

  1. Mainland China – CNY – February 4-10
  2. Hong Kong – CNY – February 5-7
  3. Korea – Lunar New Year Holiday – February 2-6
  4. Singapore – CNY – February 5-6
  5. Indonesia – CNY – February 5
  6. Taiwan – CNY – February 4-8
  7. Vietnam – Lunar New Year – February 2-10
  8. Malaysia – CNY – February 5-6

“We review the critical steps that are needed to prepare for Chinese New Year with our customers well in advance” stated Gries “this helps ensure little to no interruption in their global supply chain.”

(Source: Dachser)

Sea News, January 11