A Guide to Managing Global Shipping Challenges During Chinese New Year 2024
Posted on 26th January 2024 at 13:54
As we usher in the Year of the Dragon during the Chinese New Year of 2024, a festive atmosphere fills the streets of China and extends to several East Asian countries. However, amidst the celebrations, businesses worldwide must gear up for the annual shipping disruption that accompanies this cultural event.
What is the Chinese New Year?
Chinese New Year (CNY), also known as the Spring Festival, is the most celebrated traditional Chinese holiday. It marks the beginning of the Lunar New Year and typically falls between January 21 and February 20. The festivities last for 15 days, with the most significant celebrations occurring on the eve and the first few days of the Lunar New Year.
This year, the CNY will start on February 9 (Friday); the main festival will take place on February 10 (Saturday). The festivities will conclude with the Lantern Festival on February 24 (Saturday).
What Impact Does the Chinese New Year Have on Global Shipping?
Supply Chains Disruption: Chinese New Year has a profound impact on the global shipping industry due to the mass migration of workers who return to their hometowns for family reunions. This migration, known as Chunyun, leads to the shutdown of factories and businesses, disrupting production and the global freight market.
Congestion at Ports: With factories closing, the pre-holiday shipping rush contributes to congestion at major ports. The backlog results in longer transit time, delays, and increased competition for cargo space, affecting shipping schedules worldwide and particularly in the Far East.
Increased Costs: The spike in demand for shipping services during the pre-Chinese New Year period usually results in increased freight costs and fluctuating market demands.
Meanwhile, the ripples of the ongoing Red Sea Crisis mean that the 2024 CNY will be even more challenging for the shipping industry. The limited capacity related to vessel rerouting, coupled with the CNY, will further drive freight rates, influencing not only sea freight but also other transport modes such as Airfreight.
Key Dates to Remember During Chinese New Year 2024:
To successfully navigate the shipping challenges associated with Chinese New Year, it's essential to be aware of the key moments during this festive period:
Pre-Holiday Rush [Mid-January – 25 January]: In the weeks leading up to Chinese New Year, there is a surge in orders and shipments as businesses rush to fulfil their quotas before the factory closures and shipping disruptions.
Factory Closure Period [End of January – 26 February]: Most Chinese factories shut down a week before the actual holiday, with production gradually winding down in the preceding weeks. During this period, it becomes challenging to secure new orders or make last-minute adjustments to shipments.
Post-Holiday Recovery [Starting 27 February]: After the official holiday period, factories slowly resume operations, and shipping gradually returns to normal. However, there may still be lingering delays as the backlog is cleared.
What Shipping Strategies Can I Implement During Chinese New Year?
To mitigate the impact of the Lunar New Year on shipping, businesses can take proactive measures:
Plan Ahead: Anticipate the increased demand and congestion by pre-booking containers or vessel space well in advance. CNY effects might take up to 6 weeks, so consider planning well ahead.
Stock Up: Consider increasing inventory levels before the holiday season to avoid running out of essential products during factory shutdowns and shipping delays.
Diversify Shipping Modes: Consider combining various transport modes – sea – air – land transports to increase flexibility. Having alternative modes can help mitigate risks associated with unexpected delays in another way.
Opt for Various Container Types: In peak seasons, the standard 20ft containers may be in limited supply. To mitigate risks and enhance flexibility, diversify your freight by opting for various container types. Consider using 40ft standard containers, high cubes, or side-door containers when possible. This approach not only helps secure alternative options but may also present cost-saving opportunities with potentially lower rates.
Consider Less-than-Container Loads (LCLs): Break down a large shipment into multiple smaller shipments by opting for less-than-container loads (LCLs). This approach minimizes the risk of shipping delays, as any issues affecting one container or carrier will not impact the entire shipment.
Choose Less Congested Ports and Fast TATs: Instead of relying on major ports such as Shanghai or Shenzhen, which may experience higher congestion, consider exploring less frequented ports such as Lianyungang or Xiamen.
Communicate with Partners: Maintain open communication with suppliers, freight forwarders, and customers to manage expectations and provide updates on potential delays.
Please feel free to contact us if you would like to discuss your global shipping requirements in more detail.
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