Chinese New Year, also referred to as Lunar New Year or Spring Festival, is one of the most significant Chinese celebrations. According to the lunar calendar, in 2022 the next Chinese New Year will take place on February 1st, and on this occasion, a public vacation of seven days is established between January 31st and February 6th. 

Each year, the period leading up to the Chinese New Year has an impact on the available cargo capacity to and from China and Asia and is considered one of the biggest peak seasons of the year.
 

WHAT WILL BE THE MAIN IMPACT OF THE CHINESE NEW YEAR ON THE GLOBAL SUPPLY CHAIN?

Chinese New Year in 2022 is relatively earlier than in previous years. In addition, as part of China's zero-tolerance policy for Covid infections, some factories, especially those with high pollution levels, have already announced that they will be shut down earlier, around mid-January. As the date approaches, it will be more and more difficult to book space, as all Chinese factories will be working at maximum capacity to finish their productions and deliveries before the Chinese New Year. After the Chinese New Year, they will resume, according to the sectors and regions, gradually, which will mark a decrease in overall Chinese production.

Impacts on sea freight: 
These weeks, shipments from China have already begun to increase. But due to congestion in European and U.S. ports, vessels to China have been reduced. Our teams expect the severe blank-sailings situation in January, which would start as early as the end of December. We can also mention that 3 scheduled shipments have been already canceled on WMED and that THE alliance has only 2 shipments left scheduled on WMED for December as reference.
Please note that if the shipment is scheduled during the Chinese New Year holidays (regardless of the exact day), the cut-off will remain on January 30. After the Chinese New Year, shipping schedules may be readjusted based on the global demand. 

Impacts on air freight:
Our team has observed a relatively good demand for the transportation of general cargo, but the demand for the transportation of PPE (personal protective equipment) remains strong. Air freight has been relatively one of the most affected by the epidemic, and it is very difficult to predict the market for next year. But it is certain that flights in China will be significantly reduced during the Chinese New Year and it will be more difficult to book space as few airline staff will be on duty, there will be few options. 

Impacts on rail freight:
The railroad's original schedule will be changed from December 24, and the new schedules have not yet been released. For now, there are few regular trains available for booking in January, so the announcement of new routes will be essential in January. The train may remain an alternative to maritime transport, however, it will remain difficult to find available space.

Impacts on trucking:
As every year, a labor shortage in the road transport and warehouse logistics sector is expected before the Chinese New Year. It will be difficult to book space in January, and prices will certainly increase. Packing and trucking services must be booked earlier than usual as drivers and operators are not always available during this period.

 

HOW TO MINIMIZE THE IMPACT AND OPTIMIZE YOUR TRANSPORTATION?

In order to cope with the reduced capacity and the price increase due to the peak season before Chinese New Year, our teams advise you to:

> Evaluate your cargo volume and place your bookings as early as possible.

> To commit in the shortest time if the freight rate is within a reasonable range and available.

> For sea freight, accept unexpected space caused by short-shipment (the cargo has entered the port and has completed customs clearance, but for various reasons, it cannot be loaded on board at the scheduled time and therefore frees up last-minute space) as long as there is no trouble for you to advance the delivery date.

> Arrange your non-seasonal cargo shipments with large volumes (with no letter of credit required) after Chinese New Year.

If you have a specific delivery plan, be aware that the earlier you move the delivery date, the less expensive it could be. Even if you accept delivery after Chinese New Year, it is necessary to book in advance, as there we expect a large backlog.

Please also note that China is not immune to a new outbreak of covid-19 contamination which could lead to the closure of major infrastructure or province, as has been the case for example at Nanjing airport or Ningbo port in recent months or to new restrictions by local authorities, especially with the upcoming Winter Olympics in Beijing from February 4th to 20th.

Bansard International is closely monitoring the situation following the covid19 outbreak in Asia, click below to access our latest market updates, updated regularly.



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