The Lunar New Year, also knowns as the Spring Festival or Chinese New Year, represents the beginning of a new year according to the lunisolar Chinese calendar. It is one of the most important holidays of the year, with 15-days of celebration in China and other communities. During these two weeks of festivities, most manufacturing factories and logistics operations shut down, leading to the single largest disruption in international shipping. The following timeline shows how Lunar New Year is not just a single event but a long period of change in the logistics industry.
6-8 Weeks Before Lunar New Year
- Stable production planning with widespread inland capacity availability.
- Ability to adjust route selection, flight selection, and place inventory under predictable conditions.
4-6 Weeks Before Lunar New Year
- Large-scale shutdowns continue and availability of trucks and railcars decline.
- Timely shipments are still possible for those with stable forecasts due to early agreements.
- At risk are reliable deadlines due to cut-off dates, priority access, and discussions of favorable delivery terms for all parties.
2-3 Weeks Before Lunar New Year
- Most misleading period for supply chain operations.
- Supplies are not running out yet, but flexibility is disappearing.
- Increased costs, limited shipping windows, and high risk of rescheduling.
- Difficult to strategically manage inventory.
Holiday Period
- Beings on a full moon, appearing between Jan 21. And Feb 20.
- Production facilities have been suspended or are operating with minimal staff.
- Cross-border inland transportation is limited, and response times are greatly reduced.
2-4 Weeks After Lunar New Year
- Production gradually resumes but is at high risk of uncertain transit times.
- Production delays at points of departure, congestion on domestic transport corridors, and delays in restoring vessel schedules.
A Magnifier of Global Supply Chain Disruptions
At nearly 30% of global manufacturing output, the Chinese New Year shutdown creates critical global supply chain disruptions. One of the key disruptions is widespread delays across production, transportation, and customs which can occur before, during, and after the Lunar New Year – up to 14 weeks in total.
With an estimated 2 billion people celebrating worldwide, this time period has a significant impact on travel and commerce. It also creates unpredictable timeliness around the return of China’s massive workforce, leading to approximately 15-30% turnover.
The closure of manufacturing facilities, ports, trucking networks, and government offices creates a massive backlog of orders. Common effects include production halts, limited communication with suppliers, poor production quality, reduced port labor, diminished trucking capacity, longer wait times, extended transit times, and post-holiday backlogs. Most supply chains will not reach their full operational capacity until three weeks after the holiday ends.
Plan Ahead for Lunar New Year Disruptions
- Lock in production and quality inspection schedules early to ensure completion well ahead of factory shutdowns.
- Secure freight capacity in advance.
- Build inventory buffers selectively by prioritizing high margin items, long lead time SKUs, and revenue-critical launches.
- Plan for post-holiday congestion by aligning internal teams to account for the delays.
- Identify alternative sources of manufacturing in other countries. Communication suppliers who may have operations in other locations.
While some level of disruption is unavoidable during the Lunar New Year, there are proactive measures that can help alleviate concern. Communication is key to managing customer expectations and keeping them apprised of realistic timelines. In most cases, the international shipping community comes together to overcome business challenges through recognition of this important cultural holiday.