Atypical Chinese New Year Season Challenges Strained Supply Chains
An atypical era continues to buck typical trends. The annual Chinese New Year (CNY) slump in manufacturing and shipping may not play out as usual in 2021. China’s efforts to continue economic recovery after coronavirus shutdowns could mean far fewer blanked sailings and continuous factory operation throughout the Lunar New Year celebrations. Without the regular volume drop-off, U.S. ports and supply chains may not get any needed reprieve.
In routine years, global logistics operations plan around CNY as a singularly disruptive event. Factories shut down and container vessel sailings are reduced as China and its citizens pause to celebrate for up to two weeks.
But the year ahead is already proving to be far from routine.
Differing from Previous Years, Sailings Unlikely to Decrease
Freight forwarders, container lines, and supply chain experts are indicating that the industry will not see nearly as many blanked sailings as is usual during Chinese New Year celebrations.
According to FreightWaves, blanked sailings are down significantly compared to the last two years. Historically, the Asia-West Coast route has seen a capacity reduction of about 20 percent around Chinese New Year. Capacity reduction is currently sitting around 2 percent for this year’s holiday.
The implications are serious for U.S. ports that desperately need a pause in volume coming from China. Record imports through the second half of 2020 have caused serious delays — especially at west coast ports. Port operators, freight forwarders, and others further down the supply chain had hoped a CNY pause would offer a chance for ports to clear the bottlenecking.
In particular, the Ports of Los Angeles and Long Beach continue to struggle with historic congestion. A total of 33 vessels were reported at anchorage on Monday, January 4. The Ports are bracing for persisting challenges without the chance to catch up during Chinese New Year.
Continued sailings may be a boon to Chinese ports, however. American Shipper reports that the situation could prevent the container shortage from worsening if demand persists and even alleviate pressure if demand subsides like usual.
Factory Shutdowns Staggered, Some Likely to Stay Open
Factory closures around Chinese New Year are deviating from the norm as well.
Per The Loadstar, factories throughout China are moving their closure and reopening times. Some have even indicated that they will stay open to restrict mobility amid COVID-19 concerns and clear out inventory. These measures stray from the usual nationwide closures that often slam the brakes on supply chains. As a result, the flow of goods from Chinese factories to ports is likely to continue throughout the Lunar New Year celebrations.
Tracking Chinese New Year Updates with Scarbrough
Scarbrough International is paying close attention to developments around the upcoming Chinese New Year on February 12. We are ready to pass on news and updates as they arrive. If you have questions or concerns about cargo coming out of China near the holiday, reach out to your Scarbrough representative.