The Chinese New Year (CNY) is the world’s greatest human migration, with more than 1.3 billion of people going on vacation at the same time.
Workers traditionally go back home to see their family (most of the time in the countryside), which leads to important perturbations for any business relying on Chinese (and more globally Asian) logistics and supply chain. For this reason, ASI Logistics offers you some insights on what to expect as an international company when CNY is approaching, and on what are the good techniques to minimize the side effects of the celebrations.
What Is to Expect from CNY Logistics & Supply Chain Wise
The Chinese New Year itself will officially take place on February 5th 2019, and the festivities will last from Feb. 5th until Feb. 19th. However, the festivities and thus the perturbation usually extend beyond these 2 weeks to reach a 4-week period.
- Jan. 28th – Feb. 4th: the Little Year is when the preparations for CNY take place.
- Feb. 5th – Feb. 15th: Spring Festival.
- Feb. 16th – Feb. 19th: Lantern Festival.
As such, and for at least two weeks, China practically shuts down, including its logistics and supply chain. Regarding the logistics, expect increased freight costs, slower transit time and movement of parcels. The administration also being impacted, customs prioritize their work and focus on perishable items.
If your business relies on importing goods produced in China, note that some factories might close before the official holiday, some of them for even a month. Those which do not will usually increase their production in advance as to meet their schedule and compensate for the holiday, as such expect a surge of freight. Being aware of this is detrimental for companies relying on Spring and Summer seasons.
Normal production will usually resume two weeks after the holiday. It is however estimated than about 30% of the workers will not return to work (as it is traditionnaly the chosen period to switch jobs). This can have repercusions for a period up to 4 weeks after CNY.
For these reasons, it is important for businesses operating with China to plan in advance when CNY is approaching.
How to Effectively Prepare for CNY
Planning in advance is key.
First step would be to forecast your needs by analyzing last year’s flows of goods both in and out of China. As such, you can anticipate production and logistics needs.
Then, inform as soon as possible your manufacturer and logistics partner of the production and shipments needed. This would ensure according planning and booking from their part.
Planning for alternative options, in case the ones you first thought of are not available anymore, is also a good way of avoiding last minute issues.
Keep in mind that it could take some time after the end of the celebrations for the production to go to normal, because of the high employee turnover. Building enough stock is a great preventive measure.
The key when it comes to CNY is thus to plan in advance and communicate effectively with your logistic partner (and local manufacturer if you are importing from China).
As your key logistics partner all around the world, and more particularily in China, ASI Logistics provides you the support and advice you need to help you run your operations smoothly before, during and after CNY!