Chinese New Year to have 'significant impact' on supply chains

20 January 2023

The Chinese New Year is expected to disrupt supply chains already suffering in the wake of Covid restrictions, according to a survey.

Almost three-quarters (73%) of supply chain professionals said they expect the holiday, which begins on 22 January, to disrupt supply chains and shipping freight. This up from 66% who expected disruption in 2022. 

New year celebrations can last weeks, causing major disturbances to global supply chains and manufacturing. 

The annual Chinese New Year survey by Container xChange involved 2,300 respondents from the supply chain industry.  

G Sun, director and general manager of freight company CNTRANS, speaking during a webinar on the survey findings, said disruptions caused by the new year were occurring earlier this year, from 15 January, and he expected them to last into February.

“In my opinion, this time is difficult for businesses. I think companies can prepare better by controlling costs, better forecasting, and efficient information flow.” 

The survey found supply professionals anticipated port congestion was going to be most impacted from the celebrations. Last year, capacity issues and high freight rates were considered the most pressing issues. 

Christian Roeloffs, co-founder and CEO of Container xChange, said: “There are added and new complexities ahead coupled with Chinese New Year, where at one end we see China coping with the Covid infections, and on the other end we see a continued dip in demand. 

“We cannot see Chinese New Year in isolation but in combination with all these challenges. The biggest concern is the reduced production and port capacity due to the infections in China. Also, the rates are low, capacity management is still a top priority for carriers and blank sailings are prominent. Amidst this, in the coming weeks, we foresee prolonged factory closures and bearish market conditions.”

Cathy Morrow Roberson, founder and president of Logistics Trends & Insights, said: “It’s not what we’ve been accustomed to in the prior years when there was demand leading up to the Chinese New Year.

“There is a lot of inventory with retailers and manufacturers. Inflation and fear of recession continue to impact demand. And therefore, the spot rates have started to fall off the cliff.

“There are a lot of unknowns and preparing with better data, information and visibility into the supply chain is the way to navigate through these unforeseen times.”

The survey comes as tensions between Taiwan and China affect semiconductor suppliers. 

Doris Hsu, CEO of Taiwan-based semiconductor company GlobalWafers, said customers have “a lot of concerns” about China's intentions in Taiwan, which have led the firm to a semiconductor plant in Texas.

“Some of our customers do have quite a lot of concern about the overall security in Taiwan. They want us to be more diversified,” she told Sky News. 

“In 20 years we have never been asked so frequently as we have recently, so many customers saying, 'Hey Doris, what if anything goes wrong? What's your contingency plan?'”

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Insight Executive Group
London (Central), London (Greater)
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Insight Executive Group
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