Readying For The Year of The Rat

Having just finished celebrating the arrival of 2020, global managers are concentrating on retaining “supply chain fluidity” amid Chinese New Year (CNY) shutdowns set to begin January 25.

According to Guido Gries Managing Director, Dachser Americas, the Lunar New Year (“Year of the Rat”) is also celebrated in other Asian countries such as Vietnam and Korea also at the same time.

This is typically a time when Asians travel and visit relatives to celebrate the festivities with loved ones. For instance, some 80 million Chinese workers, most from urban areas along China's coast, travel back to their rural hometowns.

“Proactive planning and preparation are key to effectively navigating and managing supply chain issues that could occur during this time,” says Gries. “This ensures that freight is handled consistently and without interruption.

It is typical that freight volumes build just a few weeks before the holiday period, as factories will speed up their production, which will not resume until a week or two after the holidays. There are two events that occur during this time, the Official Holiday and the Traditional Holiday, causing some factories to stay closed longer. In fact, some suppliers remain shutdown for more than a month.

Dachser Americas offers these views on how your business may feel the impact:

• All business during CNY will face delayed production time, as will quotation requests.
• Many workers will not return to their workplace immediately after the holidays, which means previously estimated production times might be extended.
• If orders are placed late, it is possible they will be placed further back in the production line.
• With more than a month's worth of orders backed up to start with, factories will favor orders from their preferred partners.

And here are some tips on sourcing and planning ahead:

• Build up adequate inventory, considering a period of up to four weeks after Chinese New Year and even find out if your Chinese source has inventory in non-Asian locations, so you can use other supply chains.
• Inform your forwarder about your priority shipments, in case there is limited space.
• Book shipments well in advance of CNY.
• Reserve space on passenger flights for shipments that cannot be delayed. The rates are slightly higher, but this measure will keep your supply chain running.

“This proactive preparation helps to ensure that there is minimal disruption to their global supply chains.” Concludes Gries.

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