How does the Lunar New Year affect the transportation industry?
Many people know the Lunar New Year as a time for celebration, but the annual event also signifies a breakdown in production cycles and disruption in the transportation industry. However, with some understanding and preparedness, you can take steps to lessen any disturbance in your transportation lead times.
What is the Lunar New Year?
Also known as Chinese New Year (CNY), the Lunar New Year is the largest public holiday in China and in varying countries with large Chinese populations. This year the Lunar New Year takes place on Sunday, January 22, although officially the Chinese public holiday is 7 days in length. This means that all workers, including those at factories and ports, typically get these days off from work.
Each year is signified by an animal in the Chinese culture, cycling through a 12-year cycle, with 2023 being the year of the rabbit. Many traditions are associated with the holiday, including lighting off fireworks, giving red envelopes of money to family and friends, and staying up late the night prior, similar to the Western New Year tradition. Although these customs may seem similar to those in North America, some differences may affect your business if you’re not prepared for them.
Things to know
As you prepare to ship freight around the Lunar New Year, there are some important details to consider.
The impact of the Holiday lasts for more than a month
Though the holiday itself officially lasts for 7 days, following the Lunar Calendar rather than the traditional one, those who celebrate receive between 7 and 15 days off in China. It is also the largest annual human migration, with hundreds of millions of people traveling home to visit with family and friends. This travel extends the holiday for most to about one month in length.
And because it’s the most significant and longest public holiday in China, production significantly drops each year — pausing while employees are off work and taking about 6 weeks for factories to return to their pre-holiday production levels. This means that your business can be affected, and you likely won’t see a return to normal production schedules before the 6-week mark. The Lunar New Year ends with the start of the Chinese Lantern Festival, this year on February 5th, which is when you will begin to see a more steady and normalized production schedule.
Backlogs can happen before and after the holiday
Because this event happens annually, companies across the globe try to lessen the impact of the holiday’s schedule on their production cycle, ramping up production both before and after the Lunar New Year celebrations. This causes a backlog of sorts pre- and post-event, which leads to the accumulation of cargo ship containers from overseas at American ports, spiking prices for drayage and extending lead times. It is best practice to prepare for the holiday to prevent any disruption in your transportation timeline.
Covid may add to the delays
In the past two years, Chinese New Year has caused major delays and companies have seen major price increases due to the duality of Covid and the holiday. Drayage has begun to ease this year at U.S. ports, so transportation delays and costs should be down from 2020 and 2021. However, with lockdowns still rampant in parts of China, your freight could be affected.
Tips for navigating shipments during Lunar New Year
Navigate the Chinese New Year with ease with these tips:
Plan ahead
It is vital to come up with a plan before the holiday to ensure no disruption occurs with shipments. Familiarize yourself with the dates of CNY and work with your logistics provider to plan out your shipments before and after the holiday. Ports in China are busiest between one and three weeks prior to the holiday, which may mean rate increases due to a lack of available equipment. Try to plan your shipments before this busy period to keep your costs down.
For future years, consider diversifying your suppliers with countries that do not celebrate CNY, if possible. This will help keep your business running with less disturbance year over year.
Communication is key
Though Chinese New Year happens every year around the same time, it’s important to set proper expectations with your customers, overseas vendors and transportation providers. Keeping an open line of communication with all parties will help mitigate any confusion. When you do reach out to your suppliers, make sure it is a few weeks before Chinese New Year occurs, as you will have a better chance of communicating with them ahead of time.
Air is always an option
If all else fails and you are in need of expedite services, air is an alternative to consider. Sending shipments via air will work for last-minute shipments before and after the holiday while avoiding drayage deficiencies and port backlogs.
May knowledge bring you success
With a better understanding of the Lunar New Year and its effects on the global transportation system, make this year of the rabbit your best year yet. Plan ahead, communicate, and if needed, utilize air transportation to assist in the smooth transition toward the new year. And remember to wish your overseas partners a happy New Year!
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