Chinese New Year, or Spring Festival, is the main traditional holiday for Chinese people, and is also celebrated by other East Asian people. It marks the beginning of a new year and is also known as Lunar New Year because it happens at the beginning of the Chinese lunar calendar. People celebrate this holiday for two weeks with family time, gift-giving, the color red, feasting, and other festivities.
Chinese New Year profoundly impacts the global supply chain, as factories temporarily close and workers have time off. As the holiday falls in the middle of the month according to the Gregorian calendar that the business world generally follows, it can cause factory production delays and transportation disruptions. However, these delays are often preceded and followed by periods of increased traffic as manufacturers and shippers compensate for the long holiday.
This pattern can cause boom and bust periods in cargo capacity across airfreight and ocean transportation. There is often a 12% to 15% surge in trade, and then there can be a drop in volume of as much as 88% due to holiday closures in observation of the holiday itself. These shifts create massive disruption and uncertainty for shippers. There is also a reduced availability of labor due to workers taking off, leading to further delays in production and transportation. These issues can lead to an increase in the cost of goods and supplies as companies attempt to meet production schedules.
It’s important for companies that rely heavily on Chinese-made goods and services to be aware of how CNY could potentially impact their supply chain management. Nonetheless, companies and shippers are not entirely at the mercy of the holiday. They can plan ahead and communicate with suppliers to minimize risks associated with the holiday and ensure that their supply chain remains intact. Freight audit services provide support to help shippers navigate the complex landscape of Chinese New Year on the supply chain.
As companies near CNY and plan for shipments from China, airfreight has the potential to help them avoid long delays. That’s because airfreight provides fast shipping that could possibly help companies get ahead of the expected time taken off by workers and the factory closedowns.
Nonetheless, it’s important to know that the combination of high demand and market capacity associated with Chinese New Year presents challenges for the air cargo industry. The holiday requires a high volume of freight in order to meet an increased demand for goods and services in China. CNY sees a large increase of parcel shipments as people send each other gifts to celebrate the holiday, and there is also increased factory production before and after holiday time off.
However, during this time, the number of flights is significantly reduced due to a long holiday break, which leads to capacity constraints. The limited capacity creates high demand, which inflates air cargo prices. Due to the difficult situation, many businesses are unable to meet the necessary demand for goods in a timely and cost-effective manner. The result is delays, missed deadlines, and sudden rerouting as air carriers struggle to maintain profitability amidst the capacity constraints they’re facing.
To address these issues, airlines and other air cargo service providers must plan ahead and take steps to ensure they have the capacity to meet the increased demand of this time of year. Shippers can also be prepared for these kinds of problems and find strategies that help them adapt and respond.
While shippers are struggling with airfreight capacity, they may turn to shipping by sea. Unfortunately, they will find similar snags in this area of logistics, as the Chinese New Year impacts both airfreight and ocean transportation at the same time. The combination creates a more complex situation that shippers need to be prepared for each year.
CNY is a major factor that impacts ocean cargo capacity this time of year. As Chinese factories and ports close for two to three weeks, a significant drop in imports and exports creates a backlog in the supply chain. What results is higher freight rates and limited space on vessels.
Many factoriess are not properly prepared for the holiday, which creates an increased cargo space demand and an inability to meet customer expectations. This year, this problem will only be exacerbated with the effects of China’s turnaround on its “Zero-COVID” policy. Making matters worse is the decreased staff in ports, which contributes to slower operations and more delays.
All of these factors significantly disrupt the flow of global trade and cause a decrease in ocean cargo capacity. This happens at the same time as the limited capacity in air cargo.
Shippers can adapt to the uncertainties surrounding CNY, and preparation is key to being ready for anything. Freight audit services providers and software show the way forward, as they help shippers navigate the complex landscape of Chinese New Year in three ways:
Business intelligence acts as a game-changer for shippers attempting to manage the up-and-down capacity issues during Chinese New Year. Leveraging actionable analytics allows shippers to identify potential capacity issues before they arise. This way, they are prepared to proactively adjust their strategies in response as a way to ensure uninterrupted supply chain operations.
Shippers can use enhanced business intelligence and analytics to predict future capacity levels and uncover hidden trends in ocean cargo and airfreight. This strategic way of doing business enables shippers to adjust their methods to create maximum efficiency and more consistent results. These tools help shippers ensure that their shipments arrive on time and that their customers receive the goods they need when they need them.
Network optimization harnesses the power of cloud-based technology to help shippers navigate the kinds of capacity crises that occur in airfreight and ocean cargo during the Chinese New Year. Modern data-driven technology helps shippers identify the most efficient and cost-effective routes for their goods. Optimized networks allow these insights to easily be communicated across supply chains. Shippers can create logistics system interoperability that brings together data from different systems and parts of the network, making a cohesive and efficient way to gain visibility and insights.
Network optimization platforms provide real-time insights into capacity availability and pricing trends. This information is invaluable to shippers who are striving to quickly adjust their plans and identify alternate routes. Shippers can use these tools to negotiate the complexities of the CNY season while minimizing delays and maximizing savings. Shipping becomes streamlined and flexible.
Streamlined freight payment services also help shippers handle the changing capacity surrounding CNY. This strategy allows shippers to integrate payment services into an easy-to-use, cloud-based logistics platform so they can ensure payments are made on time. When freight payment solutions and transportation spend management solutions are integrated into a cloud-based logistics platform, shippers gain the insight they need to manage these areas ahead of the Chinese New Year.
Previously, shippers would carry out freight auditing manually in an effort to catch issues on their bills. Now, technology helps shippers move beyond simply catching errors. Technology creates a more optimized transportation spend management system overall. Integrated freight payment solutions give additional benefits of tracking carrier performance and creating a more optimized logistics network. Shippers can better track and analyze the data that’s included in freight payments to help them gain important insights and make better decisions. They can use this kind of information to guide them through the rough waters of holiday seasons like the Chinese New Year.
Chinese New Year becomes a threat to logistics, in part because it creates capacity problems with airfreight and ocean transportation. Shippers don’t have to be at the mercy of these problems, as freight audit services providers like Intelligent Audit provide a solution. Freight audit services and software allow shippers to adjust as needed to the challenges of an uncertain time through enhanced business intelligence and analytics, network optimization, and freight payment solutions.
By partnering with Intelligent Audit, shippers gain these solutions. Intelligent Audit’s freight audit software provides:
Gain control over the unpredictable nature of holiday times like the Chinese New Year by using technology that helps you prepare and adapt. Start a conversation with Intelligent Audit today.
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