Whale Knows - How Importers Can Prepare for Chinese New Year Disruptions

Whale Knows - How Importers Can Prepare for Chinese New Year Disruptions

The Chinese New Year (CNY) of 2019 starts on Tuesday, February 5th, and lasts officially for 7 days. However, did you know that the holiday causes disruptions of up to 3 weeks before and 2 months after the one week celebration? In this article, we go through some crucial information for shippers and importers to know and avoid disappointment leading up to CNY.

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1. Factories close 2-3 weeks before New Year.

While the official holiday only lasts for around a week to ten days, most factories are closed for an entire month. With severe delays to be expected once they open up again in March.

All suppliers start closing their production lines two to three weeks prior to Feb 5, with some parts of the production closing earlier, therefore affecting supply chain down the line.

It is important to get confirmation from your Chinese factory on when the official closing date will be, and budget even more time for any important shipping arrangements that need to be done beforehand.

If you are planning to have your cargo shipped before factories close, you must book your shipment with the shipping line at least 1-2 weeks ahead of closing date. This allows ample time for your supplier to dispatch and organise your shipment to be exported.

Tip: Do not put down a deposit on any order leading up to the Chinese New Year Period. During the 2-3 week lead up, most if not all factories do not accept new orders. Some factories even halt and close down permanently on Chinese New Year. Don't expect your order to be expedited after the factory gets back on track just because you have paid a deposit.

2. All factories close doors up to 20 days in the Chinese New Year Period.

During Chinese New Year, workers go back inland to their home and celebrate the holiday with family, with some taking weeks off in advance and weeks after New Year's day.

Production therefore halts for at least 2 weeks after the 7 day Chinese New Year period, from approximately Feb 5 to Feb 18. All factories throughout China mainland will be closed, with no exception. No cargo will be shipped during this time if your cargo is Exworks.

It is best to not order any new samples or start production in the weeks leading up to this period. The latest suggested date to put in your order for production is late November to early December, to ensure your order is shipped well and truly before disruptions start to occur. Quality control will also be easier the earlier you put in your order. Try to have a minimum 2-week buffer between the end date of the production, and the date they close.

3. Significant delays can occur for production to get back to normal.

As a shipper if you are wanting your cargo to be shipped after Chinese New Year, be prepared to have significant delays in dispatch. The reason is that even after the 2 week halt, workers are not guaranteed to come back in time, and production may not get back to speed right after. Some workers simply don't return, without prior notice, and as a result new workers have to be hired, trained, and brought up to speed.

Quality control will be a huge focus for shippers around March, April, May as these new workers may not be used to the standard of your production prior to Chinese New Year. Expect to have these delays and discuss with your supplier ahead of time to make sure your cargo makes the shipping date.

4. Expect increase in transport prices during this peak period.

Shipping lines book weeks if not months ahead of time of the busy Chinese New Year period. China is the world's largest exporter and companies book shipments months ahead to avoid running out of stock (and losing out on customers) due to the disruptions. As a result, container space becomes extremely limited and equipment is booked in advance.

To avoid disappointment, have a clear timeline of your exporting process from China, including your order date, dispatch date, shipping date, before approaching a freight forwarder. Freight forwarders commonly have arrangements with the shipping lines prior to secure space for their clients, and they can leverage economies of scale to maximize your transport savings.

Remember to book your shipment at least 3 weeks before expected dispatch date, and make sure to have all your documents on hand and ready for clearance so no further delays can occur.

5. Disruptions can also occur in other countries celebrating the Lunar New Year.

Including Vietnam, Laos, Korea, Singapore, and many other Asian countries. Check with your factory and local area news on previous years to plan ahead and avoid disruptions in your exporting area.

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