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Chinese New Year's Impact on Logistics, Shipping & Supply Chains

Joe McDevitt • December 9, 2024

Year of the Snake

Chinese New Year (CNY) is one of the most important holidays worldwide, especially in logistics and shipping. In 2025, the holiday season will affect production and shipping schedules significantly. From factory closures to port congestion, shippers must prepare for disruptions. Here’s everything you need to know about how CNY impacts logistics, and what steps you can take to keep your supply chain running smoothly.

In 2025, Chinese New Year begins on January 29, ushering in the ‘Year of the Snake’. This marks the start of the festivities, which extend from January 22 to February 9. While official public holidays run from January 28 to February 4, many businesses start their preparations earlier and may slow down production weeks in advance. The holiday season impacts factories, ports, and workforce availability, leading to delays in production and shipping.

Chinese New Year's Impact on Logistics, Shipping & Supply Chains

Chinese New Year 2025

Factories in China often close in early January, reducing operational capacity before the official celebrations. The slowdown extends through the holiday period, with the workforce gradually returning to full capacity by mid-February, after the Lantern Festival on February 12. With factory shutdowns and slower production, businesses must account for these disruptions when planning their supply chains for the year.

Chinese New Year creates a massive shift in capacity concerning logistics operations, and these disruptions affect many industries worldwide. Shipping volumes drop off significantly during the holiday, leading to congestion at the start and end of the holiday that impacts the ports and creates delays in both imports and exports. As factories shut down or operate at reduced capacity, businesses experience a backlog of orders, which may not be processed until production resumes.

Increased demand before the holiday pushes up freight rates. Many businesses rush to ship their products before the break, leading to surcharges and a surge in transportation costs. The rush to clear goods before the holiday makes it a peak season for freight, driving up costs for both air and sea shipping.

Key Industries Affected

Several key industries experience significant disruptions due to factory closures and reduced shipping capacity during CNY. The following sectors are typically the most impacted:

Automotive: Raw material, parts shipments and vehicle production suffer due to factory shutdowns.
Electronics: Component shortages and delays in production of finished products.
Textiles and Apparel: Disruptions in the manufacturing and shipping of garments and accessories.
Toys: Delays in toy manufacturing and distribution.

These industries must prepare for delays in manufacturing and shipping as the CNY approaches. Production halts in factories and reduced workforce availability cause order fulfillment to slow significantly.

Inventory levels domestically appear to remain low as shippers have not been ramping up ahead of the Chinese New Year (CNY) yet. The ISM's Imports Index for November recorded a reading of 47.6%, showing a continued contraction, which is actually a slight acceleration from October’s 48.3%. This decline suggests that imports are still cooling, and many businesses are not proactively restocking or building up inventory levels in preparation for the post-CNY surge.

This situation could lead to significant capacity constraints in the logistics and supply chain sectors once CNY concludes. As factories in China slowly resume operations, shippers will likely scramble to meet increased demand by replenishing inventory all at once. This rush could cause a bottleneck in the supply chain, as businesses seek to beef up stock levels to make up for the slowdown during the holiday period.

Additionally, businesses that rely on parts from overseas to run their own production could face difficulties. Since many manufacturers and suppliers operate with a just-in-time inventory model, any disruption in parts availability during or after CNY will force them to either scramble for limited resources or delay production, further tightening capacity. The combination of delayed production, heightened demand, and the concurrent need to replenish inventory could strain shipping and transportation networks, leading to delays, congestion, and even increased costs across the board.

Port Congestion and Shipping Delays

Ports in China face congestion before and after Chinese New Year, as they process a massive number of shipments. This often leads to container unavailability, bottlenecks, and longer wait times. If your shipments are affected by port delays, it can have a domino effect throughout your entire supply chain. Increased dwell times and port congestion add to the complexity of scheduling and moving freight, leading to further delays in reaching your customers.

The rush to clear goods before the holiday can also create a backlog of orders, resulting in delays when shipments finally leave the ports. It’s crucial to plan for these potential disruptions and communicate with logistics partners in advance.

To minimize the effects of Chinese New Year on your logistics, start planning well in advance. Consider alternatives to reduce reliance on specific ports or routes, which may face higher congestion during the holiday period. For example, opt for air freight or intermodal solutions rather than relying solely on sea freight.

Choosing less-busy ports, such as Xiamen, may help avoid the congestion at major hubs like Shanghai. While this might extend transit times, it can help avoid delays, additional costs, and port surcharges.

Securing space with your carriers well in advance is crucial. If you have large shipments, consider using less-than-container loads (LCLs), which reduce the risk of delays affecting your entire shipment. Planning ahead helps ensure you’re ready for the surge in demand while minimizing potential disruptions.

Prepare for Increased Demand

CNY Impact on supply chains and logistics

The weeks leading up to Chinese New Year often see increased demand, as businesses rush to ship their products before the holidays. This heightened demand can create supply chain strain, making it essential to adjust your inventory strategy.

Consider stockpiling critical items before the holiday season to avoid shortages. By ensuring your inventory levels are adequate during this low-production period, you can continue fulfilling customer orders while minimizing delays. Talk with your logistics service providers (LSPs) about their plans for the holiday season and ensure everyone is aligned on expectations, timelines, and costs.

Stay informed, plan ahead, and work closely with your logistics partners to ensure your shipments are delivered on time, even during this busy holiday period. Chinese New Year presents unique challenges for logistics and shipping operations. Understanding the timing and potential disruptions can help businesses prepare for the holiday season. By taking proactive steps—such as adjusting inventory levels, choosing alternate ports, and securing transportation space in advance—you can keep your supply chain running smoothly during the Chinese New Year 2025.

By staying ahead of the curve, you can mitigate the impact of the Chinese New Year's disruption on your logistics, shipping, and supply chain operations.

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