What’s In Today?
- During the Lunar New Year businesses should oversee factory closures, congestion of ports, and surging logistical costs this upcoming March.
- Delays and stock shortages in retail, automotive, electronics, and apparel.
- What should you do? Order early, diversify suppliers, and adjust forecasts to avoid disruption.
Chinese New Year 2025: How to Prepare Your Supply Chain
Every year, the Lunar New Year throws global supply chains into temporary chaos. 2025 will be no exception. With factories shutting down across China, port congestion mounting, and logistics costs fluctuating, businesses relying on imports from Asia must brace for impact. If you’re not preparing now, expect delays, stock shortages, and increased costs that could stretch well into March.
How Big Are the Disruptions?
Lunar New Year is the largest human migration on earth every year, with over 400 million people traveling across China alone. For companies, that translates into an economic slowdown with ripples that reach far beyond Asia. Production nearly comes to a close as upwards of 80% of Chinese factories shut down for at least two weeks, some for a full month. That’s what happened last year when container volumes at Shanghai and Ningbo jumped by more than 35% in the two weeks ahead of the holiday amid serious congestion, while shipping rates on key transpacific routes can jump 20-40% as firms scramble to move inventory ahead of closures. Regular shipping times from China to the U.S. extend in Q1 due to backlog and port delays, with a usual increase of 7-14 days on average.
Industries Most Affected
Just about every industry experiences disruptions during Lunar New Year, but some are affected more than others. For most retail and e-commerce businesses, this period is riddled with post-holiday shortages that contribute to stockouts and extensive delivery timelines. The automotive industry relies on China for over 30% of the world’s auto parts exports, and even minor delays in production schedules set them back. Electronics companies are similarly stretched with semiconductor and consumer tech supply chains getting squeezed on everything from smartphones to industrial equipment. Apparel and footwear brands, dependent on China for over 40% of global textile exports, also face delays in restocking if they do not secure enough inventory in advance.
Is it China that Affects the Market?
It’s not just China that slows down. Neighboring manufacturing hubs, such as Vietnam, Malaysia, and Thailand, also see reduced operations as workers take time off. This reducing effect means shipping delays will continue for weeks post-holiday, demand for alternative suppliers surges, and customs processing at major ports slows down as backlogged shipments flood in all at once. These are challenges that compound, leaving businesses racing to fill inventory gaps and manage higher costs.
What Can You Do As a Business?
Smart businesses do not wait until it is too late. The main solution to this could be placing critical orders at least 8-10 weeks in advance of the holiday. This will assist in avoiding last-minute surges in freight rates. Thus, you’ll mitigate the risks of overreliance on one region by diversifying suppliers outside of Asia.
Although more expensive, we recommend air freight as it is a viable alternative to ocean freight for critical shipments. What’s more important is overseeing free trade zones and bonded warehouses to adjust demand forecasts for extended lead times and maintain inventory stability.
So…
Every year, companies underestimate the might of the Lunar New Year and then scramble as shipments get delayed and costs surge. This year, be different. A little proactive approach, like placing orders in advance, securing alternative suppliers, and planning for post-holiday slowdowns, will make all the difference.
Need Expert Help? Polo 4PL provides supply chain optimization services to enable your business to navigate seasonal disruptions and keep operations running smoothly. Reach out today to strategize your Lunar New Year logistics plan!
FAQ
1. How long will the disruption in the supply chain last due to the Lunar New Year?
Factory closures usually occur for two weeks, but the complete recovery can take up to six weeks as production backlogs, congestion of ports, and labor shortages hamper it further.
2. Can I avoid increased shipping costs?
The sooner you ship, the better. The shipping rates go up during the weeks leading up to the holiday, so getting shipments placed ahead of time will prevent surges in shipping costs.
3. Will suppliers from other countries be affected too?
Yes, factories in Vietnam, Malaysia, and Thailand slow down due to a shortage in the workforce, and this ripples through the global supply chain.
4. How can I avoid stock shortages?
Plan your inventory level and line up alternative suppliers as well as bonded warehouses to hold merchandise in stock and ready for distribution.