Chinese New Year is almost upon us, and despite being one of the most predictably disruptive annual occurrences in logistics, it always seems to sneak up on us. This year’s official festivities will run from February 5-19, kicking off the Year of the Pig. Chinese New Year is the most important holiday for the world’s most populous nation, during which people typically return to their hometowns in humanity’s largest migration. The holiday has a tremendous impact on the global economy, since factories shut down for its duration, and often longer.
For importers, the time to start preparing for Chinese New Year is months in advance, so you have sufficient stock to see you through the break. In calculating how much inventory to have on hand, it’s important to plan not just for the dates of the official holiday, but several weeks before and after. A significant number of workers never go back to their factory jobs after the trip home, so production outputs remain deflated for some time. Shippers who are unfamiliar with doing business in China often fail to realize that during this time, not only are factories dark, but their suppliers are unreachable, so emergency shipments simply cannot be procured for any amount of money. Ports and customs remain open for all but three days of the holiday, but their hours and productivity are limited.
Part of preparing for Chinese New Year means having a working understanding of Chinese culture. In the build-up to the holiday, factories are routinely overwhelmed by more orders than they can handle, so they prioritize customers with whom they have strong and consistent relationships. Getting the basics of gifts, letters, and general courtesy right with your Chinese supplier can help put your order closer to the front of the line. Managers may be reluctant to flatly turn down an order, even one they have no way of filling, so shippers need to have a realistic sense of how important their business is to an individual factory. By the same token, quality control often suffers as managers leave for the holiday and factories race to complete orders, so shipments often need an extra layer of oversight to ensure they are complete and correct.
This has been a particularly challenging year in which to implement a sound planning strategy for Chinese goods, given that shippers have already been front-loading cargo for months to get ahead of the Trump Administration’s tariffs. According to JOC, January spot rates are up an average of 30 percent year-over-year for freight from Shanghai to the U.S.. Some carriers are now offering “premium services” to guarantee berth for shippers willing to pay for them. This may end up being a wise investment, given that there are always cancelled sailings at this time of year, especially as carriers try to turn a profit by keeping capacity tight. Another way to ensure shipments arrive on time is to reserve space on passenger jets, though this can be a very costly option, depending on the size and weight of your cargo. For most shippers, the dice have already been cast for 2019’s Chinese New Year, and you’ll have to weather the holiday with whatever inventory is on hand or in the process of being shipped. But it’s never too late to learn from shippers who are experienced with doing business in China. Likewise, it’s never too early to mark next year’s dates on your calendar so the Year of the Rat can’t sneak up on you.
Red Arrow Logistics has the scale and scope to meet the budget and schedule requirements of the largest and smallest companies alike. If we can be of assistance, please email me at liz.lasater@redarrowlogistics.com or give us a call 425-747-7914
