The Lunar New Year, also known as the Chinese New Year Festival in Spring, is a very important holiday for ethnic Chinese. The celebration focuses on eliminating the bad and the old and starting something new. This festival lasts for about two weeks and is a time when people look forward to going back to their families, relaxing, and traveling after working hard.
However, the festival lasts for about 35-40 days and has a huge impact on the freight forwarder both in the import and export industries, particularly those connected to East and Southeast Asia. Here’s a breakdown of the effects and mitigation measures of this festival.
Challenges and Disruptions
Challenges and disruptions, It is well known to those who are in business that doing business during the Lunar New Year or Chinese New Year is always risky. It is important to plan and know what factors will affect the shipping industry. Here the challenges and disruptions for businesses are as follows:
Factory Closures and Reduced Production
Factory closures and reduced production, many factories in countries that celebrate the Lunar New Year close for a week or more, sometimes even longer. This leads to a halt in production, causing delays in fulfilling orders and replenishing inventory.
Labor Shortages
Labor shortages, as workers return to their hometowns to celebrate with their families, result in labor shortages across industries. This affects manufacturing, logistics, and port operations, further contributing to delays.
Increased Shipping Costs
Increased shipping costs, which require a rush to ship goods before the holiday leads to a surge in demand for freight services. Shipping companies or Freight Forwarder often implement peak season surcharges, increasing costs for businesses.
Port Congestion and Delays
Port congestion and delays, because of high volumes of cargo being shipped before and after the holiday, ports experience congestion, leading to delays in loading, unloading, and customs clearance.
Blank Sailings
Blank Sailings, this is why shipping lines are having to reduce the number of vessel sailings during and after the holiday to adjust to the lower production output, causing further delays and capacity constraints.
Impact on Businesses
The Lunar New Year or Chinese New Year has a huge impact on businesses, especially the import and export industries. If there is poor planning, in addition to delaying transportation, it may also result in higher costs. Freight Ranger recommends groups from the shipping industries that are affected by this festival, including:
Importers
Importers face potential delays in receiving goods, impacting inventory management and potentially leading to stockouts.
Exporters
Most exporters are having trouble securing shipping space and face increased costs, potentially impacting their ability to meet deadlines and fulfill orders.
Manufacturers
Manufacturers have production schedules disrupted, and the availability of raw materials and components may be affected.
Mitigating the Impact
For shipping industries, having a plan in place to mitigate the impact on their business during the Lunar New Year holiday will help them continue to operate and weather the crisis more smoothly. The following mitigation measures will help businesses take action to minimize disruptions:
Plan Ahead
Plan ahead, place orders well in advance of the holiday, and factor in potential delays.
Communicate with Suppliers
Communicate with suppliers, and maintain close communication with suppliers to understand their production schedules and potential delays.
Explore Alternative Shipping Options
Explore alternative shipping options to consider alternative shipping routes or modes of transportation to avoid congestion and delays.
Build Buffer Inventory
Build buffer inventory to maintain a buffer inventory to cushion against potential supply disruptions.
Stay Informed
Stay informed, as keep track of holiday schedules and potential disruptions through industry news and updates from freight forwarders.
Summarize
The Lunar New Year, also known as the Chinese New Year festival, is the holiday that focuses on shedding the bad and the old and starting the new. It lasts for about 35-40 days which has a huge impact on the shipping both in the import and export industries.
Overall, the Lunar New Year creates both challenges and opportunities for businesses involved in international trade. Understanding the potential impacts and planning accordingly such as Plan ahead, Communicate with Suppliers, Explore Alternative Shipping Options, Build Buffer Inventory, and Stay Informed will help businesses navigate this period effectively and minimize disruptions to their operations.