Commentary

Opinion: Everything you need to know about Chinese New Year and shipping

With Chinese New Year rapidly approaching have you done enough to combat its impact on your importing and exporting efforts, asks Jan van Casteren, VP Europe at Flexport

You probably know Chinese New Year (CNY) – also known as the Lunar New Year or Spring Festival – as the biggest Chinese celebration of the year. But you might not be aware that it also marks a whole week where factories in China are closed. And if you manufacture your goods in China, this can put a real dampener on your importing and exporting efforts.

Chinese New Year, which takes place this year from 16th to 21st February, often comes with supply chain difficulties. Factory workers travel a long way to spend time with their families, causing additional closures, delays and disruptions that take place in the weeks before and after CNY. If you’re shipping goods from China, it’s natural to fear rising freight rates and endless transit times.

However, if you properly prepare your shipments, there’s no need for your supply chain to be phased by CNY disruption. Here are some ways CNY closures could impact your business and why planning ahead can help prevent a potential worst case scenario.

What impact will closures have?

If you’re planning on shipping freight from China, be warned. In anticipation of CNY, ocean and air freight rates have already begun to increase significantly, making the overall shipping process more expensive.

Further, space on carriers will become more difficult to secure in the run-up to CNY. Carriers will be overbooked much earlier than usual, so it pays to be prepared. And the end of CNY won’t be the end of tight space: carriers will have more blank sailings – that is, cancelled shipments – in order to better align capacity to demand. This means that there will be fewer services and voyages available in late February to early March.

The risk here is that high rates and lack of available space leading up to CNY could potentially result in carriers ‘rolling’ your cargo. This means that your cargo won’t be loaded onto the vessel it was scheduled to sail or fly on because the vessel ran out of capacity. You then leave yourself at risk of late shipments and angry customers.

Also, if you ship with original bill of lading and your cargo is scheduled to arrive at destination during Chinese New Year, make sure you pay the factory before they close down for the holiday. Otherwise it will be very hard to obtain the release for your cargo resulting in storage at the terminal and delayed delivery.

The best way to avoid any conflicts is to start preparing today. You should plan to book your transportation, especially if your cargo is travelling by ocean, at least three weeks prior to CNY.

If you’re working with a freight forwarder, give them as many options for shipping as possible so that your cargo is more likely to get where it needs to go. Here are a few options to consider as part of your strategy.

Option 1: Longer transit times

Speed isn’t everything. If you’ve planned ahead, you might be able to avoid the tight space and the high rates by considering a slower transit time. In general, the fastest transit-time services are more likely to be overbooked. So, if you choose a transit time that’s longer by a day or two, then your cargo is less likely to be rolled to a ship leaving the following week.

Option 2: Split your shipments

Carriers most often roll cargo in origin ports based on bills of lading. Splitting your cargo across multiple shipments can prevent an entire lot of several containers from rolling to a following vessel.

Option 3: Alternative ports of discharge for inland shipments

If your cargo is travelling inland, it’s worth being flexible about the port of discharge. Again, this means a longer transit time, but more options mean your cargo is more likely to get to where it needs to be.  Being open to shipping through say, Rotterdam instead of Hamburg or Antwerp, means your forwarder can consider more possibilities and your cargo is less likely to be rolled.

Option 4: Ship by air

If these options aren’t fast enough for you, if you have a strict deadline from a retailer or if you are running out of stock, consider shipping by air. Air freight typically is faster, safer, and more reliable than ocean, but it’s also a lot more expensive. Again, don’t leave this until the last minute – air capacity will be tight before CNY, too. Consider non-direct flight options, and make sure your connecting flight is outside of China.

You might not expect Chinese New Year to have such a strong impact on your shipping strategy, but letting it catch you off guard can really put your plans off kilter. Therefore, it’s vital to be prepared. The more reliable and flexible you can be regarding shipments, the smoother your business will run over the CNY period – and that’s a cause for celebration.

Jan van Casteren, VP Europe, Flexport

Image credit: Flexport and Fotolia