It’s the time of the year again to prepare for the Chinese New Year (CNY). It is a marvellous time to be in China, but we recommend not to misjudge the festive atmosphere and be prepared for some obstacles that you will face right from the outset of 2024.
The national “holiday mood” often comes at odds with the tremendous pressure felt by foreign managers, who are compelled to adjust to the changing business pace. Put bluntly, from a logistical standpoint, the CNY poses challenges to almost every company doing business in China, foreign or local.
Here is an overview of logistical challenges around CNY 2024 and a recommended tip-list for early preparations.
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What to expect for Workforce availability
Usually, on CNY, local employees travel around the country to reunite and celebrate with their families. This massive “migration wave” starts before the holiday and continues at full force throughout the festivities. As a result, the workforce and output of domestic companies shrink dramatically. Usually, employees get a 7-day vacation, also known as “the Golden Week”, although the vacation can sometimes stretch to over 15 days, starting before Chinese New Year’s Eve and ending with the Lantern Festival.
The 2024 New year’s holiday runs from Saturday, February 10th through Saturday, February 17th, spanning eight days in total. Since the first day of the holiday falls on a Saturday in 2024, the vacation is extended by one day compared to a typical seven-day Golden Week.
Long holiday season means expecting a bottleneck
Production and shipping processes in China are accelerated way before the “real” holiday starts. Manufacturers and exporters rush to produce and ship as much as possible before the Golden Week period, which causes bottlenecks in customs offices and ports. However, in the last several years, many ports have adapted to this issue by implementing a digital and automatic system to manage their output, so you can expect a fundamental improvement.
In 2024, you should prepare for a slowdown in manufacturing around February 1st, as factories will gradually stop production, making January relatively slow. Factory workers will start leaving for holiday little by little in early February and right up to the holiday on February 10th. Operations will return to full form on February 25th.
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Rates are higher
The race to complete orders has also resulted in an astounding cost rise in several components of supply chain management in China. For instance, the growing demand for plastic, silicon, and steel around CNY is demonstrated in a 10%-50% increase in the prices of raw materials.
As for the cost rise of shipments from China – Due to the demand. In Shanghai port, one of China’s five most important ports, container loading rates typically rise by approximately 12% in the period leading up to the CNY compared to the rates from 10 weeks prior.
Our best recommendations for a smooth logistics operation in CNY
Here are some tips to help you prepare, and avoid delays, cancellations, and headaches throughout your supply chain:
- If possible, we recommend ordering sufficient inventory for Q1 to reduce the impact of the supply chain disruptions.
- Check carefully all the stages of your production, shipping, and handling of your products around the Chinese New Year dates.
- Split your shipments into urgent and non-urgent categories and prioritize accordingly.
- Make early shipping reservations by 10 days at least.
- Prepare at least half of your inventory for shipment after the quality control inspection.
- Document all orders and agreements with employees and suppliers in writing.
- Plan orders and shipping schedules for after the holiday, so that employees can resume work immediately.
- Utilize a professional and trusted service provider in China who could support and promote your logistical operations and local interests.
Prepare Your Supply Chain for the Chinese New Year Holiday
As 2023 is coming to an end, and hopefully your plans are almost in place for 2024, we would like to wish you all a happy new year and remind you that there is still some time before the Chinese New Year (CNY), leaving you with a window of opportunity to refine those plans. We wish you a happy new year ahead and good luck with the Chinese adventure!
