Chinese New Year 2024 and Red Sea Crisis

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The Year of the Dragon is coming facing difficult logistic challenges

Chinese New Year, or Spring Festival, is a traditional Chinese holiday that celebrates the start of the new year. Based on the lunar calendar, it does not have a fixed date. 2024 will be the Year of the Dragon which is the 5th in the 12-year cycle of animals associated in Chinese zodiac with the New Year.

Chinese New Year 2024 falls on Saturday, February 10th, 2024, and celebrations culminate with the Lantern Festival on February 24th, 2024.

Celebrations last up to 16 days, but only the first 7 days are considered a public holiday (February 10th–February 16th, 2024).

However, factories could close 2 full weeks earlier, meaning actual production is likely to stop in mid-January.

During the holidays, production slows, operations and capacity are limited, schedules are disrupted, and transportation is delayed, leading to significant supply chain disruptions.

As companies around the world rush to get their goods out of China ahead of the holidays, major Chinese ports are expecting a spike in shipments resulting in increased demand and shipping costs.

Some Chinese ports could be congested and transit times could become longer.

Probable congestion at some ports could make delivery times longer.

Considering these assumptions, it is best to plan purchases in advance while remaining in close communication with your Chinese suppliers.

Chinese New Year and Red Sea crisis

The logistic challenges coming from the Chinese New Year must deal also with the current Red Sea crisis situation which is hardly impacting the international transport scenario.

Most maritime carriers have rerouted their vessels around the southern tip of Africa to avoid Houthi attacks in the Red Sea.

This involves some important changes on the transport front:

  • extension of journey durations by 15-20 days for shipments originating from Far East
  • sea freight rates tripled
  • increase in the cost of insurance
  • Shortage of ship’s hold and empty equipment: the delay caused by the alternative route will not allow the first ships involved to return to China before Chinese New Year. This should generate a decrease of approximately 40% in the hold and will generate a significant lack of equipment for both import and export.
  • Possible interruption of the voyage in the Western Mediterranean: to optimize the T/T, companies could decide to terminate the voyage of ocean-going ships in Spanish and Italian ports, opting for the use of feeders to reach the Eastern Mediterranean (including the Adriatic Sea). This possible choice could generate congestion in the aforementioned ports, causing further serious delays.

 

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