How Should I Prepare for Chinese New Year (CNY)?
During Chinese New Year, factories close down and supply chains are disrupted. If you're shipping from China around this time, find out how to prepare.
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When is Chinese New Year?
Chinese New Year, also known as the Lunar New Year or Spring Festival, is the biggest Chinese celebration of the year. It’s always around the end of January or early February of the year (Lunar Calendar).
How will Chinese New Year closures impact LCL shipping?
Factories will be closed for the entire week of Chinese New Year. Most factory workers will travel a long way to spend the holiday with their families, so there will be additional closings, delays, and disruptions on supply chain before and after CNY. All in all, factories are closed and/or operating at diminished capacity for at least 4 weeks.
In anticipation of Chinese New Year, ocean freight and airfreight rates will increase significantly; we expect to see these higher rates as early as mid-December of last year. Rates should begin decreasing 1-2 weeks after Chinese New Year.
Additionally, space will become more difficult to secure, and carriers will be overbooked earlier than usual. Truckers will be also difficult to secure before CNY, and their services will be more expensive. Before Chinese New Year, we will see challenges for FCL because cfs cut off caused by warehouse closures, while after Chinese New Year, we will see OMIT LCL sailings caused by blank sailings.
How much will freight rates increase?
Ocean carriers will announce General Rate Increases (GRI) as the holiday approaches.
Carriers will launch their blank sailing programs in late December of last year / early January of this year. They will likely make this announcement as late as possible to retain unpredictability in the market, in an effort to make GRI/PSS stick. Depending on the strength of the market, carriers may add additional capacity to match demand.
We are working very closely with our partners, and with the carriers, to stay in the loop; we’ll be sharing updates as additional information becomes available.
How will ocean freight space be impacted?
In advance of Chinese New Year, ocean freight space will be tight and most freight services will be full.
After Chinese New Year, carriers will have more blank sailings in order to better align capacity to demand. This will mean fewer voyages and services available in a week or two after CNY.
Chinese New Year 2021 will be different than years past due to the special circumstances in the current market. Due to the effects of COVID-19 accelerating the development of e-commerce in the US and consumer purchasing behaviors changing, overall demand remains very strong. Carriers have not announced the amount of blank sailings that they usually would before CNY to accommodate the demand in the market. Demand is not anticipated to slow down post-CNY, therefore space will be tight up to CNY and post-CNY as well.
How can I prepare for Chinese New Year?
The best strategy is to plan ahead and work closely with your supply chain vendors. You should plan to book your transportation (especially ocean) at least 3-4 weeks prior to Chinese New Year; the earlier, the better. If possible, share a forecast with your vendors.
Check in on Cargo Ready Date. Follow up closely with your suppliers on the Cargo Ready Date -- these can shift frequently in advance of Chinese New Year, since factories are running on maximum capacity.
Multiple containers: If you are shipping multiple containers, we recommend splitting these among several bills of lading. This way, if your shipment is rolled, it won't impact all of your containers.
Think about air and LCL Premium service: Another option is to consider shipping by airor LCL Premium service -- especially if you have a strict deadline from a retailer or are running out of stock. Keep in mind, though, that air or LCL capacity can be tight before Chinese New Year, too, so you won’t want to leave that decision to the last minute (especially given the strength of the air freight market).
Longer transit time: If you aren’t able to plan ahead, another strategy is to choose a service with a slightly longer transit time. In general, the fastest transit-time services are more likely to be overbooked; if you select a transit time that’s longer by, say, a couple of days, your cargo is less likely to be rolled to the following week.
Port of Discharge:
- If your cargo is traveling inland, another option is to be flexible about the port of discharge. This is also likely to result in a slightly longer transit time, but will allow for more options when choosing a sailing.
- If your cargo is destined to travel into an inland rail ramp, be mindful of the congestion at the USWC ports. For example, LAX/LGB are the most congested ports at the moment and this is impacting rail operations as well, delaying transit into the US inland rail ramps. There is an increasing number of COVID-19 cases at the LAX/LGB docks amongst the terminal laborers, which will in turn potentially impact labor efficiency. Due to the circumstances,consider the transload option from LAX/LGB ports after discharge.