Chinese New Year (CNY) is quickly approaching, and as with every year supply chains are set for disruption as factories and shipping companies suspend services for nearly a month. However, unlike other years, disruptions are likely to be further exacerbated by additional factors, including increased COVID-19 restrictions, continued electricity rationing measures and the Beijing Winter Olympics — not to mention the fact that Chinese New Year falls a full 12 days earlier than it did in 2021.
1. COVID-zero policy
As far back as November, Bloomberg reported that China’s COVID-zero policy — which brings mass testing, extensive quarantines and snap lockdowns to stamp out any resurgence of the virus — has sailors anticipating longer than usual quarantine periods before they can make their way back on land. In some cases, sailers have been required to serve up to seven weeks in quarantine before being cleared to return home. Plus, with the northern manufacturing hub Xi’an just now beginning to lift some restrictions after a three week lockdown — the largest since the initial outbreak in Wuhan — maintaining this policy will likely bring increased disruption to manufacturing and transportation should the Omicron variant begin spreading in China.
2. Electricity rationing
Electricity rationing aimed at reducing carbon emissions that was introduced throughout many areas of China has already had a significant impact on production — especially in heavy industries such as aluminum and steel — that is likely to continue in the coming months. Other industries like textile production have seen operations cut back to three days a week, and with 24 known iPhone production plants in the areas of China getting hit by the current power crisis, even Apple isn’t safe from the restrictions.
3. Beijing Winter Olympics
The Winter Olympics, scheduled in Beijing from February 4-20, adds an additional layer of unpredictability to the mix. With the country already under the previously mentioned COVID-zero policy, restrictions and precautions are only going to increase in the lead-up to the games, and the country’s exit strategy from the policy — if there is one — is not clear at this point.
4. Early start to CNY
The earlier start to the holiday this year is being felt most strongly in China’s southern manufacturing hub where service is provided by independent shipping companies. Many who would normally have suspended operations just two weeks in advance of CNY had begun winding down business as far back as December. Because of this, some major global shippers, including Ocean Network Express and Hapag-Lloyd, halted new container bookings to smaller ports in South China well in advance of the normal timeline.
How to stay ahead of disruption
So, what can companies do to keep their supply chains running when one of the world’s largest exporters shuts down for nearly a month in the middle of an already highly disrupted market? The bottom line is, have a plan. From there, it’s easier to implement, communicate, and measure success.
Planning and coordination are keys to ensuring your supply chain continues to run smoothly during the Chinese New Year and you have enough of whatever it is you need — from materials to merchandise — to keep your business running during the slowdown. And this means planning around not only the disruptions around container shipments, but also the high demand for domestic logistics in the pre- and post-CNY rush when shipments from China tend to peak.
To help with establishing an effective plan, Shipwell provides access to powerful insights and analytics that allow you to uncover opportunities for efficiency, along with real-time visibility to help you spot and address any challenges and data-driven automation at every step of the way.
To learn more about how Shipwell can help you to create a plan to navigate disruptions in the supply chain, schedule a demo with one of our experts today.