Chinese New Year – navigating choppy waters

February 2018 saw China welcome The Year of the Dog amidst three weeks of celebrations.

One of the most important events in the retail calendar, Chinese New Year is also a period of heavy disruption. Extensive forward-planning is essential to for retailers to guarantee continuity of service, meeting demand while delivering the service and experience consumers demand.

Chinese New Year has been described as ‘the world’s biggest mass migration’, with people finishing work days – often weeks – before festivities begin, making long journeys to visit their families. With the workforce severely depleted, delays and bottlenecks naturally occur within the supply chain.

Imported goods must ship before factories close, which creates a series of challenges for logistics partners.

The first is the spike in demand for air and sea services in the run up to the festivities, resulting in cargo space shortages and an increase in freight rates. To avoid falling victim to space limitations, importers must ship cargo into China weeks or months in advance, incurring additional storage charges at the end destination.

To limit the commercial impact of this, retailers must plan well in advance. Production should be staggered so that cargo begins shipping 3-4 weeks prior to the start of Chinese New Year. Retailers should steer clear of shipping the week prior to shut-down, and the week after – if goods are shipped during this time, space limitation will often lead to cargo being ‘rolled’, with the next available shipping not sailing until a full week or even a fortnight after Chinese New Year.

Space protection is essential for long-term contracts, while accurate forecasting will ensure that the process is managed closely to avoid any errors that could cost the retailer.

Good logistics partners never underestimate the value of strong working relationships and collaboration with suppliers and shipping lines. Securing an experienced and reliable logistics partner is key to navigating the challenges around Chinese New Year, as well as taking advantage of the opportunities. The market softens after Chinese New Year, so this is the best time to negotiate before the market strengthens for the summer peak.

An experienced logistics partner will take care of freight arrangements, avoiding delays that inevitably affects shipping both before and after Chinese New Year, preventing supply chain disruption.

ASCG’s global freight division is dedicated to providing the most time-efficient and cost-effective solutions to our customers’ international transport requirements, with vast experience in air freight, sea freight and international road transport.

Our experienced team can help you to plan-ahead for Chinese New Year and make the most of opportunities to negotiate reduced rates once the festivities are over.

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