Chinese New Year 2024 – Impact on logistics II
As Chinese New Year (CNY) approaches, businesses close, and people take time off work to celebrate with their families. This event has a significant impact on local and international logistics. In order to navigate this, it is crucial to stay up to date with developments in the industry and make necessary adjustments, especially for businesses that depend on Chinese suppliers or have operations in China.
Multiple carriers are releasing a blank sailing schedule, cancelling and skipping usual ports and routes. That means the average capacity will reduce by approximately 10%, mainly impacting China to Europe and the Mediterranean trade route in February.
We see that the freight rates are being affected. The Shanghai Container Freight Index (SCFI) shows a slight reduction compared to last week. However, Shanghai to the US East Coast (SHA-USEC) and Shanghai to the US West Coast (SHA-USWC) keep increasing by approximately 2%.
Another notable event is that the Chinese carrier Cosco and its affiliate OOCL won’t accept cargo set through the Red Sea area.
Due to the events happening around the Red Sea, there is an increasing number of inquiries for air freight options. While shippers are looking for airfreight solutions, the situation is not converting into an actual export volume. The pricing remains vastly higher for sea and rail freight; this results in no dramatic increase in freight level. Specific trades such as Shanghai – Singapore (PVG-SIN) and Dubai (DXB) operate close to total capacity. Mainly, time-critical demand has been high. Prices on Shanghai to US (PVG-US) and EU (PVG-EU) trades continue to increase.
The coming month is typically a peak season. However, the volume is lower than expected. It is foreseeable that there will be flight cancellations due to the approaching CNY.
Many local trucking and courier companies are preparing for its impact on national transport. Fewer drivers will be available because, traditionally, people will travel home to their families around two weeks before CNY. The travel rush around CNY (also known as Chunyun) will impact the logistics industry. That means arranging containers and national trucking will be more challenging, and courier services will be slower. We expect this situation to return to normal around two weeks after CNY.
If you are looking for assistance in navigating your logistics, feel free to contact us!