Chinese New Year 2023: How To Prepare Your Business
When it comes to global manufacturing and freight volumes, certain events generally trigger an upsurge in demand and lack of carrier space, Chinese New Year is one of these. Considered by the transportation and logistics industry as peak season, this year also coincides with Omicron cases surging and China’s zero Covid policy. Another point to remember is that the Chinese New Year is also celebrated in countries such as Singapore, Indonesia, Malaysia, Myanmar, Thailand, Cambodia, the Philippines, and Mauritius, as well as many in North America and Europe.
Let's discuss the challenges during the season:
Closed factories:
During the time of the celebration, most manufacturing units are closed in China. They remain closed throughout the week of the public holiday. Production resumes roughly two weeks after the holiday. The delay is the result of two celebrations that take place during this time. The first is the official holiday and the second is a traditional holiday.
Reduced workforce:
Many employees use the New Year’s break to reorient themselves professionally, especially since long-term or even permanent employment contracts are not as common in China. Many factories stop operations for at least two weeks so that their employees have enough time to travel across Asia to join their families and celebrate. In some cases, it might take two or three weeks following the holiday for timeliness and efficiency to return to normal operational standards.
Delays in shipping:
Most ports in the country are shut down during the Chinese New Year Holiday. Therefore, the impact of the port closure spells out considerable trouble for the shippers. The obvious impact is massive delays, hikes in rates, and often both.
For this reason, you need a strategy to minimise the disruption to your operation. Here are a few tips that you can consider:
Be aware of when it takes place. It is always good to have extra stock ahead of time to help you cope with the hustle and bustle of the festivity.
Communicate with your supplier and your logistics provider ahead of time. This way you can place your projected orders early to prepare.
Form a strategic plan with your supplier and if possible create a diverse pool of suppliers.
Strengthen you good relations with your freight company. This will provide you with much-needed leverage when the channels of transportation are jammed because of high demand.
Plan for the Chinese New Year:
Create demand and supply forecasts around Chinese New Year
Check production lead times
Place orders to ship 3 weeks before the festival
Confirm delivery date timelines after orders
Deliver cargo to the port no later than 10 days before the ship date
Order enough products to supply demand during the holiday season
The Chinese New Year can often have negative implications to supply chains originating in China and affects global international supply chain. Making sure that you have the correct procedures and strategies in place to deal with this is crucial to businesses operating and supplying product to their customers over the Chinese New Year period.
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