If you import from China by Ocean Freight, the world’s hub in manufacturing, then you’re most likely familiar with their national holiday, Chinese New Year (CNY). Chinese New Year (aka the Lunar New Year or the Spring Festival) is the most important holiday season for the Chinese people. Each year, the country closes down production to allow hundreds of thousands of workers to travel home for the celebration. This year, Chinese New Year is on Friday, February 16th.
Generally, Ocean Carriers consider January to February as peak season for Chinese New Year. Although the holiday officially lasts one week, many factories & businesses typically shut down about 10 days prior to the holiday & don’t reopen for approximately 2-3 weeks. This results in limited to no ocean cargo movement in all of the major shipping routes from China, as well as delays a few weeks post-CNY as volumes return to normal.
Carriers tend to raise the rates during this time with what is called a general rate increase (GRI) or peak season surcharge (PSS), forcing the market back in their favour, making up for any losses incurred during the lower demand months. In addition, Carriers routinely pull vessels out of rotation to restrict ocean cargo capacity & drive prices higher for heavier volume routes. When there is high demand due to the lack of vessels servicing these routes, rate increases are inevitable.
GRI or PSS increases can range from $100-500 per TEU or $10-15 per CBM. Carriers are also known to roll cargo booked at lower rates to the next available sailing to accommodate those shipping at higher rates. Having a booking confirmation is not necessarily a guarantee to be on a particular vessel at a scheduled time, since Carriers often overbook vessels to ensure they’re at full capacity. It is important for Shippers to project these increases in freight costs, port delays due to increased volumes & potentially longer transit times during peak season.
It is critical to communicate expectations with Suppliers well in advance of Chinese New Year in order to cope with the supply & demand of space on the vessels. Shippers trying to beat the rush prior to Chinese New Year should try & have their cargo on the water by December. It is important to consider your complete timeline from pick up at origin to delivery at destination in order to avoid disruptions to your supply-chain.
Contact Cargo Spectrum should you require any assistance or more information on how to avoid the stresses associated with shipping cargo during Chinese New Year.
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