Disruptions owing to Covid outbreaks in China and the Chinese New Year factory closures, as compared to the last year, are expected by 73% of supply chain professionals, and a large percentage of freight forwarders.
According to an annual Chinese New Year survey carried out by online container logistics platform Container xChange, 2300 respondents from the supply chain industry, are sharing their opinions and views about how they view Chinese New Year and Covid outbreaks in China have an impact on global supply chains.
As compared to some 66% in 2022, there was an increase in the percentage (73%) of supply chain professionals expecting Chinese New Year to further disrupt the shipping industry this year. This comes in contrast to industry reports where a lot of analysis talks about lessening the impact of disruptions in China on the global supply chains, as Container xChange explains. Out of the 73% saying that they do foresee an impact, 65% were freight forwarders and the rest were supply chain professionals in general.
During a webinar organised by Container xChange on the Chinese New Year analysis and predictions, the Founder and President of Logistics Trends & Insights LLC, Cathy Morrow Roberson, said that “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.”
From his side Mr. Sun Director / General Manager of CNTRANS, commented in the webinar that usually they expect a cargo rush in January and February, but this year, as he says, the Chinese New Year is earlier. “The situation will have a significant impact on the domestic supply chain from January 15 to February 6, 2023. In my opinion, this time is difficult for businesses. I think companies can prepare better by controlling costs, better forecasting, and efficient information flow. This is where technology can help greatly,” as he said.
The survey highlighted the fact that in the coming weeks most of the respondents agreed that there will be “an increase in port congestions and delays” and “delayed container journeys” soon after China reopens. One respondent elaborated, “I think an increase in port congestions and delays, and delayed container journeys will be the possible result, as it makes sense to me that once they all ship out again, that means more ships leaving closer to one another for the same destinations which may cause backups for a short time.”
“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,” says Christian Roeloffs, cofounder and CEO, of Container xChange, an online container logistics platform that offers an ecosystem for booking and managing shipping containers.
One of the questions also of the survey was how the industry is planning for the closures.
In the survey it was asked the question:“In planning for the 2023 Chinese New Year factory closures, have you ordered inventory/placed bookings earlier this year?”
As it is mentioned in Container xChange survey, last year 59% said ‘yes’ and this year, 55% said yes. While the majority planned advance bookings, there is a drop of 4%. Another change the survey noticed this year was, while 65% of international freight forwarders said they expect Chinese New Year closures to impact supply chains, only 47% have made advance plans to deal with the same.
“One possible cause of the dip in preparing in advance could be still high inventory levels—and the market being bearish in general, as demand continues to fall and transportation capacity supply increases”, as Container xChange explains.
Source: Container xChange
