Posted January 2017

The Chinese Lunar New Year is the monster that lives under your logistical bed and creeps up, Kruger-style, in your nightmares. CNY creates roughly 10 days of radio silence from an entire country including your suppliers, agents, and partners. Why is this time of year the least planned for and one of the most hated, at least for U.S. importers? Because importers are unaware of the circumstances that make shipping at the end of January through mid-February a risky gamble.

 

First, let's not go pointing fingers at China for being the sole perpetrator of our logistical pains. The majority of problems around this time of year come from strategic steamship line maneuvers. But, I must preface that it is a necessary evil. To be honest, the imbalance of supply and demand in 2017 is only increasing, making overcapacity an even larger global reality. Just don't ask me why they are ordering new mega-vessels. With the impending P3 (Maersk, MSC, and CMA-CGM) and competing G6 (APL, Hapag-Lloyd, Hyundai Merchant Marine, MOL, NYK Line and OOCL) alliances, it is becoming more evident that carriers are strategizing together to gain a profit. The enemy of my enemy is my friend, right? In essence, profits are low and carriers are desperate to keep their head above water. (Get it?)

 

What happens next is simple. Carriers pull vessels out of rotation to restrict demand and drive prices higher. What happens if you're not paying top dollar or shipping 10K+ TEUs a year? Most likely, your container will be rolled to the next available vessel because of space issues. But, you've already received a booking confirmation? Yes, it's not really a guarantee since carriers overbook vessels to make sure they are packed like a proverbial sardine can. Sounds a bit like the airline industry over a holiday season, right? Oh, and let's tack on longer transit times to save on fuel costs. Air will also see a spike in volume to get those desperate products into the U.S., .... at a steeper cost, of course.

 

So, what is an importer to do?

 

You know what I'm going to say, so here it is. Plan ahead! This happens every year, literally. In fact, here are the dates of CNY for the next 3 years for your calendars. Go ahead and use a Sharpie to create a giant shipping black hole of time.

 

 

 This year, it falls on 1/27 and lasts through 2/03. When planning strategy for peak (holiday) season, be sure to buffer for the CNY. Two weeks for bookings and then another one week for ETA in case of delays. Also, expect a few weeks of bottlenecking post-CNY, though volumes should get back to normal by 3/1.