6 Ways to Prepare Your Business for the Chinese New Year
Chinese New Year, a major holiday for over a billion people, affects every international supply chain. In previous years, importers started their planning process in May or June in advance of the January holiday. But with shortages and delays in the logistics industry worldwide amplified since COVID, companies can't afford to put off planning for this holiday now.
Here are 6 ways to make sure your business is New Year ready.
Also known as Lunar New Year or Spring Festival, Chinese New Year features food, family, religion, gifts and travel. Most shops close for at least five days – but many businesses shut down for several weeks.
Anyone ordering or shipping goods at this time of year needs to be aware that delays and increased shipping rates are likely to affect the rhythms of their business.
1. Factories close
While the official holiday lasts for a week to ten days, most Chinese factories close for a full month, with delays expected once they open up again in March. Different companies close their doors on different dates. Find out ahead of time when your suppliers will close down for the holiday in order to avoid unexpected delays.
2. Transit time slows down
This is historically the busiest time of the year for shipping. The pandemic has made this season even more challenging. Advance bookings are not always ensured—last year, even priority bookings had the potential of being rolled (ocean freight) or bumped (air cargo) onto subsequent ships or planes.
3. Rates go up
Rates are incredibly fluid. We still have a General Rate Increase (GRI), charged by shipping lines due to limited space on vessels this time of year. However, GRI can rage from $500USD or more per container in addition to charges for port congestion, fuel adjustment, and others. GRI is no longer a reliable way to estimate rates during this season.
4. Wait times increase
Last year saw some of the longest dwell times recorded in West coast ports due in part to blanked sailings and demand. Plan well ahead and discuss how far in advance your shipment should be at port to ensure enough time to load them properly.
5. Be prepared
Don’t be caught off guard by the disruptions to production and deliver over the Chinese New Year.
- Speak with manufacturers in advance of Chinese New Year to understand their required lead times and cut off times for placing orders before the holiday, and to know when they’ll be unavailable due to holiday closures.
- Complete all documentation ahead of time: invoices, packing lists, certificates of origin and export declarations. Do not wait until the last minute or you could risk costly delays.
- Do not make any deposit payments prior to the Chinese New Year. Every year, some of the companies that shut down for the holiday simply go fully out of business then, too. Advance deposit payments made to companies at this time of year are risky. Don’t make them.
- Consider using alternate suppliers located outside of China, or increasing your inventory slightly throughout the year in order to avoid placing a large order just before Chinese New Year.
6. Cole can help
Our professional freight forwarders stay on top of changes and developments that can affect your supply chain. Make sure you sign up for our industry updates and notifications so you’re prepared for any seasonal fluctuations in the shipping industry. And, of course, to get help with this or any of your shipping and logistics needs...
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