As the Chinese New Year (CNY) approaches, logistics operator Dachser USA has offered advice ahead of one of the most impactful stressors to the supply chain/
The CNY, coupled with pandemic-related disruptions, presents an unprecedented logistical challenge, said Dachser USA.
This dynamic has highlighted the important role that proactive logistics planning and working with right supply chain partner have on successfully transporting cargo within deadlines, especially as businesses play catchup with backorders and customer demand continues to remain unpredictable.
“Planning is key to effectively navigating and managing the challenges that occur during the Chinese New Year, especially now that we have the pandemic factor to take into consideration,” said Guido Gries, Dachser USA Managing Director.
“Our customers are calling upon us like never before for guidance on how to move their cargo during these unpredictable times.”
Gries continued: “It requires a level of seasoned expertise to address the seemingly never-ending pandemic-related disruption coupled with the challenges associated with Chinese New Year shutdowns. On top of the work stoppage, we have the container shortages, so many customers plan to ship after the holiday, avoiding the peak season pricing spikes.”
Known as the Year of the Ox, CNY 2021 begins on the evening of February 11, launching the Lunar New Year celebration in China and other Asian countries, such as Vietnam and Korea.
During this commemoration period, which runs until February 17, there is a complete shutdown of China’s manufacturing infrastructure, whereby virtually all businesses and factories close from one to four weeks.
Asian suppliers start to wind down operations one to two weeks in advance of the holiday. Even though the official holiday only lasts for about a week, most factories close for an entire month and some even longer, with disruption lasting well beyond the closures.
Overall, the holiday impacts about two months of production. Therefore, companies that are dependent upon Asian suppliers must implement a logistics strategy to mitigate delays and retain supply chain fluidity.
Potential impact to businesses of CNY:
All business will face additional delayed production time, and a slower response to quotation requests.
Many workers will not return to their workplace immediately after the holidays, which means previously estimated production times might be extended even further especially as they contend with pandemic-related backorders immediately upon return.
If orders are placed late, it is possible they will be scheduled further back in the production line.
Factories tend to favour / prioritize orders and backorders from their preferred partners.
Businesses must plan ahead of CNY – depending upon Asian suppliers:
Collaborate with a proven logistics provider on the best operational and logistics plan.
Book shipments well in advance of CNY.
Maintain a robust forecast through CNY and beyond to address market unpredictability.
Build up adequate inventory, considering a period of up to 4 weeks after CNY and find out if the Chinese supplier has inventory available in non-Asian locations as an alternate source.
Inform partners/forwarders about priority shipments in case there is limited space in advance.
Reserve space on charter flights for shipments that cannot be delayed. The rates are slightly higher, however, this measure will keep your supply chain running smoothly and unimpeded.
Added Gries: “At Dachser, we have thoroughly reviewed the essential steps that are needed to fully prepare for Chinese New Year with our customers well in advance; this is also especially important as we contend with unprecedented challenges brought on by the pandemic.
“Best-in-class logistics planning requires working with a proven logistics expert such as Dachser, who can ensure minimal disruption to customers, while keeping their supply chain pipeline securely flowing – before, during and after the Chinese New Year holiday.”
