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When 1.3 billion people go on a holiday simultaneously, indeed some consequences emerge. As those in the logistics industry, we witness the impact on the global supply chain as production and transport come to a halt for a week.

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A National and Traditional Holiday: Chinese New Year

Like other retail-driven holidays rush such as Christmas, Black Friday and so on, the Chinese New Year comes with its own potential. Determined by the lunar calendar, every year, the Chinese New Year falls on a different date. This year, the world joins China in welcoming the new year on the 12th of February. Most production sites start to close down a week before the festival and resume a week after it, which impacts global manufacturing as well. Moreover, people migrate back to their hometowns and villages, making it one of the biggest annual migrations.

Due to coronavirus pandemic, the movement was restricted this year. This year the Chinese New Year was different as compared to previous years. The effect of the container and space shortage has caused many factories to stockpile. Many wish to remain open, hoping to push the stockpile as soon as containers are available. At the same time, the demand from UK/European consumers has drastically reduced post-Christmas. With the situation of sea freight, forwarders are leaning on air freight.

From a logistics point of view, there are many steps that companies take up to safeguard their shipments. Planning and preparation are central to the days leading up to the Chinese New Year. Most companies inform their customers beforehand to prevent any unforeseeable disruptions. At the ports, the shipments are required to arrive at least 10 days before the festival; otherwise, there may be excessive delays. The ports reopen a week after the Chinese New Year, which must be accounted for.

Global Supply Chain Plans and Prepares for Chinese New Year

Many a time, ill preparation can lead to delays of up to a month. Blank sailings are also reported during the Chinese New Year, creating a bottleneck and shortage of space, affecting the freight prices. Interestingly, this year far fewer blank sailings took place compared to previous years. This is also due to lack of space, where carriers were grabbing any available tonnage. Experts predict that the container and space shortage will continue after the Chinese New Year as well. During the Chinese New Year, the routine process is to keep inventories stocked to cover the holiday period. Finally, companies also prioritize shipments and reserve space on passenger flights for any emergency bookings. Combining transport options can open more opportunities.

It is also a common practice for the carriers tend to remove vessels out of rotation, which drives the prices higher. This hike also significantly causes air freight to bump up its prices, due to the demand. Some horror stories include the manufacturers pushing low-grade material during the rush, which can be troublesome. Many suggest having thorough inspections regardless of the time of the year. Therefore, planning is the holy word for this event. New Silk Road Network hopes that your businesses had a smooth Chinese New Year and wishes that the year of the Ox, brings peace, prosperity and stability to all of us.

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