Supply chain disruptions are making headlines every day, and with Chinese New Year (CNY) fast approaching, companies can expect even more complications down the road. That’s because annual holiday closures will bring a temporary halt to manufacturing and distribution not just in China, but across many countries in the Asia-Pacific region, including Vietnam, South Korea, Thailand, Cambodia, Malaysia, Indonesia, Brunei, Singapore, Japan, and the Philippines.
In 2022, CNY will run from Feb. 1 to Feb. 15, but factory closures and delays can in some cases extend well beyond the official dates. Between Feb 1 and Feb. 7, DHL Express pickup and delivery service will be suspended in China and other countries that celebrate CNY. In addition, ongoing power shortages in China, along with the upcoming Beijing Olympics, will contribute to manufacturing and transportation bottlenecks in the weeks ahead.
Your business has no doubt already taken steps to adapt to pandemic-driven supply chain interruptions by searching for alternative products, manufacturers and transport options. Now, it’s time to plan for CNY. Here are some important steps:
Understand Supplier Plans
If your suppliers have operations in countries where CNY is celebrated, you must understand their exact plans for closing and reopening around the holiday. Stay in contact, know when suppliers will stop accepting orders in advance of shutdowns, and understand how their operations will come back online.
Some factories will resume on their stated reopening date while others may ramp up operations with limited staff. Since Chinese workers often use the holidays as a way to move on to new jobs, some manufacturers might miss their back-to-business deadlines altogether and could be short-staffed when they resume operations. Based on assessments of future demand, place orders for additional, extra products in advance of the manufacturing shutdowns. But remember, your competitors will be ordering in advance as well. A short-term surge in production demand may create delays, so it is critical to start early and work closely with suppliers.
Seek Alternatives and Flexibility
Supply chain flexibility and resiliency need to be part of your business plan. In preparation for all the Chinese New Year holidays ahead, including this one, and to keep your business moving regardless of world and weather events, your company should build redundancy into your manufacturing and supply network. Look for supply and distribution partners located in a variety of regions around the globe. Your flexible supply chain should consist of multiple manufacturing points, resilient shipping options, and warehousing that is properly distributed from a geographic standpoint.
Prioritize Logistics and Shipping
As CNY approaches and orders move into high gear, shipping demand, already strained by the pandemic, will reach peak levels. As a result, Customs clearance agencies in the Americas, China and across Asia face will face mounting pressure, delaying cross-border shipments. Your company needs a robust logistics plan and an experienced international shipping partner that can help you navigate complex and changing border clearance requirements. At DHL Express, our trade experts educate customers about tariff rules and regulations, compliance measures, and how to avoid delays and penalties.
Prepare for Post-Holiday Competition
After the Chinese New Year, your company will face competition and the continuation of high transportation volumes, so it is critical to be prepared. Communicate now with your suppliers and understand when and to what degree they will resume distribution. Many facilities may resume production on a limited scale and start-back times may vary from manufacturer to manufacturer. As a result, continuing delays into the month of March should be anticipated.
What’s your CNY strategy for 2022? Let us know on Twitter @DHLUS.