The earlier-than-usual Lunar New Year celebrations may cause more disruption than normal, according to shipping experts.
Lunar New Year took place between January 22nd and February 5th 2023. The festival is well-known for causing shipping delays and supply chain disruption. The effect this year, however, may be exacerbated.
Not only have factories been affected since early January, but there has also been several Covid outbreaks causing factory lockdowns.
Normally staff begin taking leave a couple of weeks before so they can travel home. This means even late December saw a chaotic rush of exports and manufacturing. According to a survey of supply chain professionals, almost three quarters (73.5%) thought the festivities would cause delays.
The survey, conducted by Container xChange with 2,300 respondents, with 55% saying they had planned ahead for New Year.
The factory closures are predicted to continue for some time, well beyond the end of celebrations in China.
The previous decrease in demand meant there had been several blank sailings from Asia. This is when an ocean freight operator cancels or alters routes.
However, the combination of New Year, Covid and the already disrupted supply chain could limit shipments able to leave China.
Compared to previous years there is a lot of inventory currently. This leads to a whole array of other issues, including port congestion and capacity management. Usually there is a small surge pre-empting New Year, which hasn’t really occurred this time around.
Freight rates are the lowest they have been since 2019, and
prices to the East Coast are 83% lower than last year.
Many supply chain professionals are concerned there will be a second wave of shutdowns after New Year. Since so many people are gathering and meeting, there could be enough infections to once again halt production.
Further down the line this would add to the workforce shortages affecting the already congested ports.
Much of the stock is sitting in the port for a prolonged time, and while plenty of containers are available, there are fewer transport trucks.
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