The Chinese New Year Effect: Why Supply Chain Managers Are Freaking Out

Chinese New Year is around the corner and supply chain professionals are already preparing for the annual three-week shutdown of the world’s largest economy.

The weeklong celebration — which is based on the lunar calendar and can fall anywhere between January 21 and February 20 — this year begins on the eve of Feb. 8.

The holiday officially lasts one week, but factory workers start leaving as early as two weeks prior. With literally hundreds of millions of people jumping on buses and trains to head home for the holidays, it is the biggest human migration on earth.

For U.S. retailers and importers, orders need to be made in advance and inventories need to be built up in preparation for 10 days of radio silence from Chinese suppliers and manufacturers.

Tips for shippers:

  • Book shipments at least two weeks in advance 
    • Shipping lines work the same way as airline — they overbook to ensure ships run at full capacity. If space runs out, your container(s) could get bumped to a week after CNY.
  • Settle payments before CNY starts
    • No payments can be sent to or from China or Hong Kong during the weeklong holiday.
  • Communicate with suppliers
    • Planning ahead and good communication will help minimize effects on cash flow and inventories.
  • Be ready to pay more 
    • As workers head home, staff shortages can make transporting goods in China significantly more expensive. Shipping lines will also charge General Rate Increases (GRI).

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