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Prepare your supply chain for the impact of Chinese New Year

Chinese New Year (CNY) is coming soon at the beginning of February. Traditionally, it is an important event that influences the global freight market due to the extended national holidays, which means businesses will close, factories will suspend operations, and carriers will reduce capacity in response to lower demand. This year, with the unprecedented challenging market conditions, the impact of CNY is expected to be greater than usual.

Find out all you need to know about CNY, what it means to you and, most importantly, how you can prepare in order to minimize the impact to your supply chain.

• When is Chinese New Year?

In 2022, the Chinese welcome the Year of Tiger on February 1. In mainland China, a week-long public holiday begins on the eve of CNY. Below are the dates of the CNY public holidays across DACHSER’s Greater China locations:

China               January 31 – February 6
Hong Kong      February 1 – February 3
Taiwan           January 31 – February 4

• What will happen during Chinese New Year?

CNY is the biggest festival in China. It symbolizes the end of winter and the beginning of a new year in the Chinese lunar calendar. People make their way back to their hometowns for family reunions and celebrations before the first day of Chinese New Year, and travel back to their workplaces in cities after the holiday to start working again.

Most businesses including government services in China will be closed during the official public holidays as listed above, while some manufacturing facilities may close for a longer period of time or re-open with skeleton staff. Normal production levels will usually resume after four to six weeks.

All customs offices throughout China will only be closed during the national public holidays listed above. For eastbound shipment, if it arrives China during the CNY national public holiday, there will be no Customs declaration or inspection services available.

• What is the impact of Chinese New Year on transport logistics?

While factories operations will be put on hold during CNY, shippers will increase orders to stock up their inventories. Therefore, the impact of CNY can be seen during the pre-holiday period, when factories operate on full capacities to complete orders before they close.

The higher productivity creates extra pressure for transport logistics. At the moment, the congested supply chain is a challenge for almost all industries, and the CNY cargo rush is going to further intensify the heated logistics market.

Coincidently, the 2022 Winter Olympics will be held between February 4 – 20 in the Chinese capital city, Beijing. While no official announcement about transport restrictions has yet been published, it is expected that security inspections will be tightened and restrictions to dangerous goods will be implemented a few days prior and during the event. However, its impact is uncertain for the time being.

Last but not least, the sudden outbreak of Covid cases may cause additional disruption such as road closures, flight cancellations, and manpower shortages when operators or drivers are in quarantine.

Therefore, it is important to work out a long-term strategic plan with your logistics partner to minimize disruption to your supply chain, not only during CNY but throughout the year in 2022 and beyond.

• Market updates leading to CNY

Traditionally, CNY brings a substantial impact to the capacities of all kinds of transport – air, sea, rail and road. The logistics market will be severely challenged during the pre-CNY cargo rush this year. Keeping yourself updated with current market developments will allow you to react swiftly and plan accordingly.

Air
For air freight, it is expected that the current extraordinary peak season will continue from now until end of January, before the CNY holiday starts. Overall, the market is still facing a shortage in capacity, especially under different COVID quarantine policies resulting from the threat of the Omicron variant, leading to more uncertainty and volatility. In Hong Kong for example, many passenger flights are forced to cancel in December due to the crew rotation issues, leading to reduced belly capacity as a result. Also, many freighters are required to undergo maintenance checks in the upcoming few months after being deployed for a long period of time, which will further affect available capacity in the market.

Sea
The current sea freight market is in a similar situation to air. Services from ocean carriers remain disrupted with many blank sailings due to port congestion. Feeder services from South China to and from the Pearl River Delta were suspended from December until the start of CNY, leading to longer transit times via road transportation. Service integrity may remain a challenge or even get worse from January onwards due to expected stronger demand as CNY draws closer, together with continuous issues related to the COVID outbreak and congestions in the market. Thus, capacity and equipment will be under tremendous pressure, and rates have a high tendency to soar in such situations.

Shippers are advised to plan bookings ahead by giving at least 3 weeks’ forecast. Stay connected to your logistics partner in terms of last minute schedule changes, and keep an open mind for alternative sailing options.

Rail
The rail schedule for 2022 is yet to be released. Based on past records, rail services will be available as usual until the last week leading up to CNY. Gate-in schedules might be adjusted as per rail operators' instructions. However, pre-carriage and on-carriage services in China will become a challenge from January 20, 2022 onwards, therefore a general increase in rates is expected. During the CNY national holiday, there will be no rail services.

Based on historical experience and excluding covid uncertainties, trucking services both westbound and eastbound are expected to resume to 80% of normal levels two weeks after CNY and fully resume at the beginning of March.

• What can be done now?

- Create a long-term planning and share with us your order forecast as early as possible, so we can plan our resources early and secure your demand;
- Build up a deeper inventory; factories normally resume their normal production levels four to six weeks after CNY;
- Take consideration of longer transit times in your planning; the global freight market is unprecedently congested already before CNY, so it is important to work out a strategic supply chain planning with your trusted logistics partner;
- Plan departures from terminals in China a few days before the CNY holiday starts i.e. January 28, 2022, and make sure your production schedule meets the gate-in time slots;
- Declare your shipment as soon as the mandatory data is available, and make sure you allow sufficient time to obtain the final Customs release before the Estimated Time of Departure (ETD);
- Get in touch with one of the DACHSER representatives. Our experienced logistics experts will assist you with finding the best solutions tailored to your needs.

We hope the above information can facilitate your logistics planning towards CNY. If you have any questions, please feel free to get in touch with us.

Coronavirus pandemic: Impact on operational processing in the USA

As can already be seen from various press releases, the US authorities have enforced a ban with effect from 13 March 2020, 23:59 h, which prevents all entries from Europe into the United States, in addition to the already existing entry ban for visitors from several Asian countries.

This leads to a large number of flight cancellations on routes between Europe and the United States. However, the affected passenger routes also represent a significant portion of the available cargo capacity and therefore there is a massive impact on available cargo space and freight rates.

Our team of experts continues to work hard on alternative options and routes that will allow us to carry urgent cargo and we are committed to providing our customers with priority access to available capacity. As with the successful implementation of our charter program between China and Germany, we are now exploring similar solutions for transportation between Germany and the USA.

Our teams around the world will stay in touch with you, but please do not hesitate to get in touch with your contact at the respective DACHSER branch to discuss your particular situation and make further arrangements for your freight shipments.

Brexit-Update: What you need to know

While the trade negotiations between the UK and the European Union continue to make slow progress, the month of June provided the last opportunity for the British government to extend the transitional period, which is currently limited to 31 December 2020. With no request for extension having been made, the focus is now on a gradual introduction of customs controls in the United Kingdom from January 1, 2021. The transition period is designed to allow traders to recover from the effects of COVID-19 and prepare for the new requirements. The United Kingdom will be subject to full customs control at its borders by 1 July 2021.

Earlier this year, the UK government took steps to eliminate certain customs facilitations, including the Transitional Simplified Procedures (TSP) and the Import VAT (PVA) shift. However, the British government has recognized that customs relief will also be necessary, at least temporarily, on January 1, 2021.

Thus, the possibility of shifting the import turnover tax is to be reintroduced. In addition, for a transitional period, there will be a customs procedure which will allow the imported goods to be declared by entering them in the accounts within a period of six months, rather than immediately upon importation. This procedure is called "Deferred Declaration".

An EU summit meeting for final talks between Great Britain and the EU will take place from 17 to 18 October 2020. Finally, on 19 October 2020 the results of a "deal or no-deal" scenario should be available. 

Regardless of the outcome of the talks, it is expected that from January 2021 onwards all goods exported to and from the UK will require tariff treatment, albeit during the transitional period described above as part of a process graduated by product group.

The following link will take you to a tool that outlines the required measures: https://www.gov.uk/transition

The UK government has also published details of preparation as an importer and exporter from/to the UK, which can be viewed via the links below: 

https://www.gov.uk/prepare-to-import-to-great-britain-from-january-2021

https://www.gov.uk/prepare-to-export-from-great-britain-from-january-2021

Further information can be found in the download document below.

If you have any further questions, please do not hesitate to contact your local contact at the relevant DACHSER branch.

Shipping buses from Indonesia to Bangladesh

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