Chinese New Year's Impact on Shipping
on Thursday, January 11, 2024
in
Company News
In the US, the New Year’s holiday is behind us, but in China and other countries that observe the lunisolar new year, New Year's celebrations are yet to come in 2024. Read on to find out more about how the Chinese New Year affects the global supply chain and global shipping.
What Is Chinese New Year?
China—as well as several other Asian countries—celebrates the new year based on the lunisolar new year. That means the exact date of the celebration changes every year. In 2024, the Chinese New Year will take place on February 10.
The New Year’s festival is one of the largest celebrations of the year in Chinese culture, with festivities lasting for several days. It’s a time when many Chinese people take time off work and travel to visit their families in rural towns or villages, an annual migration known as chunyun. All in all, more than 415 million workers took time away from work to see their loved ones and celebrate the start of the new year in 2019, and that number is expected to be the same or even larger in 2024.
Source: Statista.com
How Chinese New Year Affects the Global Economy
This huge celebration has effects throughout the global economy, and they extend beyond just the time of the celebration. TMC Vice President of Logistics David Bennett, who has almost a decade of experience in global freight forwarding, says, “It’s a seven-day celebration with 20 to 40 days of impact.”
With so many workers taking time off to visit their families, factories often come to a standstill for the celebration, and some close for even longer as workers take time to travel back to the cities where they are employed.
This has a profound effect on the global supply chain. Many factories try to compensate for this expected slowdown during Chinese New Year by increasing their production during the weeks before the holiday, leading to increased shipping demand and higher freight rates during that time. “There’s a mad rush to get a ton of freight out before Chinese New Year,” Bennett says.
And even after the holiday, there can also be a lag as factories try to return to full capacity. “It takes a while to get the machine moving again,” Bennett notes. This can lead to significant delays in receiving orders from China.
Effects of Chinese New Year in the US
Because of the time it takes to transport freight from China, the impact of Chinese New Year is slightly delayed in the US. “You’ll see most of the impact in mid-to-late February,” Bennett advises. Customers might notice delays in getting their expected shipments, as well as price volatility in shipping costs. Some may also encounter extra fees if their cargo has to wait at ports while workers are off for the holiday.
If you’re working with companies in mainland China, be sure to take these delays into account and plan ahead to allow for them. Bennett agrees, saying, “A lot of it comes down to planning. You have to make sure orders are in well in advance, building around Chinese New Year. It’s important to plan with your supplier. So much of supply chain management is planning.”
How TMC Logistics Can Help You Meet Your Logistics Challenges
TMC’s team of seasoned logistics professionals can help you find transportation solutions to meet the challenges that Chinese New Year brings. Get in touch with us today to learn more about how we can help you find the right logistics and transportation solution for your business needs.