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Prepare your supply chain for the impact of Chinese New Year

Chinese New Year (CNY) is coming soon at the beginning of February. Traditionally, it is an important event that influences the global freight market due to the extended national holidays, which means businesses will close, factories will suspend operations, and carriers will reduce capacity in response to lower demand. This year, with the unprecedented challenging market conditions, the impact of CNY is expected to be greater than usual.

Find out all you need to know about CNY, what it means to you and, most importantly, how you can prepare in order to minimize the impact to your supply chain.

• When is Chinese New Year?

In 2022, the Chinese welcome the Year of Tiger on February 1. In mainland China, a week-long public holiday begins on the eve of CNY. Below are the dates of the CNY public holidays across DACHSER’s Greater China locations:

China               January 31 – February 6
Hong Kong      February 1 – February 3
Taiwan           January 31 – February 4

• What will happen during Chinese New Year?

CNY is the biggest festival in China. It symbolizes the end of winter and the beginning of a new year in the Chinese lunar calendar. People make their way back to their hometowns for family reunions and celebrations before the first day of Chinese New Year, and travel back to their workplaces in cities after the holiday to start working again.

Most businesses including government services in China will be closed during the official public holidays as listed above, while some manufacturing facilities may close for a longer period of time or re-open with skeleton staff. Normal production levels will usually resume after four to six weeks.

All customs offices throughout China will only be closed during the national public holidays listed above. For eastbound shipment, if it arrives China during the CNY national public holiday, there will be no Customs declaration or inspection services available.

• What is the impact of Chinese New Year on transport logistics?

While factories operations will be put on hold during CNY, shippers will increase orders to stock up their inventories. Therefore, the impact of CNY can be seen during the pre-holiday period, when factories operate on full capacities to complete orders before they close.

The higher productivity creates extra pressure for transport logistics. At the moment, the congested supply chain is a challenge for almost all industries, and the CNY cargo rush is going to further intensify the heated logistics market.

Coincidently, the 2022 Winter Olympics will be held between February 4 – 20 in the Chinese capital city, Beijing. While no official announcement about transport restrictions has yet been published, it is expected that security inspections will be tightened and restrictions to dangerous goods will be implemented a few days prior and during the event. However, its impact is uncertain for the time being.

Last but not least, the sudden outbreak of Covid cases may cause additional disruption such as road closures, flight cancellations, and manpower shortages when operators or drivers are in quarantine.

Therefore, it is important to work out a long-term strategic plan with your logistics partner to minimize disruption to your supply chain, not only during CNY but throughout the year in 2022 and beyond.

• Market updates leading to CNY

Traditionally, CNY brings a substantial impact to the capacities of all kinds of transport – air, sea, rail and road. The logistics market will be severely challenged during the pre-CNY cargo rush this year. Keeping yourself updated with current market developments will allow you to react swiftly and plan accordingly.

Air
For air freight, it is expected that the current extraordinary peak season will continue from now until end of January, before the CNY holiday starts. Overall, the market is still facing a shortage in capacity, especially under different COVID quarantine policies resulting from the threat of the Omicron variant, leading to more uncertainty and volatility. In Hong Kong for example, many passenger flights are forced to cancel in December due to the crew rotation issues, leading to reduced belly capacity as a result. Also, many freighters are required to undergo maintenance checks in the upcoming few months after being deployed for a long period of time, which will further affect available capacity in the market.

Sea
The current sea freight market is in a similar situation to air. Services from ocean carriers remain disrupted with many blank sailings due to port congestion. Feeder services from South China to and from the Pearl River Delta were suspended from December until the start of CNY, leading to longer transit times via road transportation. Service integrity may remain a challenge or even get worse from January onwards due to expected stronger demand as CNY draws closer, together with continuous issues related to the COVID outbreak and congestions in the market. Thus, capacity and equipment will be under tremendous pressure, and rates have a high tendency to soar in such situations.

Shippers are advised to plan bookings ahead by giving at least 3 weeks’ forecast. Stay connected to your logistics partner in terms of last minute schedule changes, and keep an open mind for alternative sailing options.

Rail
The rail schedule for 2022 is yet to be released. Based on past records, rail services will be available as usual until the last week leading up to CNY. Gate-in schedules might be adjusted as per rail operators' instructions. However, pre-carriage and on-carriage services in China will become a challenge from January 20, 2022 onwards, therefore a general increase in rates is expected. During the CNY national holiday, there will be no rail services.

Based on historical experience and excluding covid uncertainties, trucking services both westbound and eastbound are expected to resume to 80% of normal levels two weeks after CNY and fully resume at the beginning of March.

• What can be done now?

- Create a long-term planning and share with us your order forecast as early as possible, so we can plan our resources early and secure your demand;
- Build up a deeper inventory; factories normally resume their normal production levels four to six weeks after CNY;
- Take consideration of longer transit times in your planning; the global freight market is unprecedently congested already before CNY, so it is important to work out a strategic supply chain planning with your trusted logistics partner;
- Plan departures from terminals in China a few days before the CNY holiday starts i.e. January 28, 2022, and make sure your production schedule meets the gate-in time slots;
- Declare your shipment as soon as the mandatory data is available, and make sure you allow sufficient time to obtain the final Customs release before the Estimated Time of Departure (ETD);
- Get in touch with one of the DACHSER representatives. Our experienced logistics experts will assist you with finding the best solutions tailored to your needs.

We hope the above information can facilitate your logistics planning towards CNY. If you have any questions, please feel free to get in touch with us.

Market info update on Brexit: Phase 3 of the UK Border Operating Model

Last year, the British government presented how the import of goods should proceed after the end of the transitional phase of the Brexit. With the so-called "Border Operating Model" guide, a three-stage plan for the introduction of customs controls was concretized.

With the entry into phase 3 of the guideline, the UK customs procedures set in motion as part of the Brexit take another important milestone. DACHSER is continuously adapting to these changes in customs and transport procedures so that goods are transported across the border largely smoothly. From January 01, 2022, border controls will be strengthened. In the future, an electronic export declaration will then be required at the border. In addition, a new IT system for goods movements to and from the UK, the Goods Vehicle Movement Service (GVMS), will be introduced. 

The manual EIDR (Entry Declarants Record) procedure, which allows goods to be moved across the border using the trader's EORI number, will no longer be permitted from 01 January 2022. Instead, an electronic Simplified Customs Declaration Process (SCDP) must be followed. The GVMS is already used for transit movements. However, starting January 01, 2022, the customs declaration will be assigned to a Goods Movement Reference (GMR) created in GVMS, automating the border control process. The Automatic Number Plate Recognition (ANPR), in turn, links the customs declaration and GMR, so that vehicles no longer need to stop at the border. 

Unless you instruct us otherwise, DACHSER will take care of linking the customs declaration and GMR. If you wish to take care of the customs declaration yourself - either in-house or via an external customs service provider - please inform DACHSER of the customs declaration number for import clearance. DACHSER enters the so-called Import Release Reference (IRR) into GVMS so that the goods can cross the border.

In addition, from 01 January 2022, imports of products of animal origin (POAO) and certain animal by-products (ABP) from the EU into the UK must be pre-notified via the “Import of products, animals, food and feed system” (IPAFFS). These product categories, as well as plants and plant-based products, do not need to be physically inspected until 01 July 2022. Their inspection will be gradually introduced for each product category from 01 July to 01 November 2022. Please refer to the attached document for details. Please inform DACHSER if you would like to use the above additional services for your products. Should you wish to make the customs declaration for POAO, ABP or plant or plant-based products yourself, you are also responsible for the declaration in IPAFFS.

Over the course of 2022, additional changes will gradually come into effect. Of particular note are import safety and security declarations, also known as ENS, beginning July 1, 2022. As implementation approaches, more information will be required on ENS and inspections on POAO, certain ABP, and plant and plant-based products.

This information provided applies to network shipments carried on our groupage service and part and full trailer load movements. In order to be prepared for the new control procedures, the DACHSER network has collectively reviewed its processes and adapted them where necessary. HMRC, the UK's HM Revenue & Customs, has set up a hotline for questions about customs and international trade: Call 0300 322 9434 for help with imports, exports and customs reliefs. The hotline is staffed from 8:00 a.m. to 10:00 p.m. Monday through Friday and from 8:00 a.m. to 4:00 p.m. UK time on weekends.

Useful links

You can send HMRC your import and export questions at the following link. You will also find a webchat function here.

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/customs-international-trade-and-excise-enquiries

HMRC has set up a dedicated support service for exporting traders to help them with practical questions about exporting from the UK to Europe:

https://www.gov.uk/ask-export-support-team

HMRC's YouTube channel also features other helpful videos and webinars on customs procedures.

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/customs-international-trade-and-excise-enquiries

Air freight market update | April 2021

Air freight volumes continue to grow strongly, driven by the stabilization of world trade, which is further stimulated by large-scale economic recovery programs such as the one recently announced by the U.S. government.

To illustrate just one example with figures - Frankfurt Airport (FRA), Europe’s largest air cargo airport by volume, reported its most successful 1st quarter ever, with 553,600 air freight tons and a YOY increase of 23.7% (source: fraport).  In addition, the tight ocean freight market is driving rapid growth in air freight tonnages.

The disruption of global supply chains due to capacity and equipment shortages has dramatically worsened with the blockade of the Suez Canal at the end of March.

• Ever Given – Impact on the air freight business

Four weeks ago, the container ship Ever Given blocked the Suez Canal for one week. During this time, a queue of about 450 container ships was formed to pass the canal. This incident also affects the development of the oil price with an increase by 6% m-o-m April. In addition, the already existing sea freight departure delays will be extended by further weeks.

This incident has implications for the entire global transportation market, especially for the air freight business. The already tight market for air freight capacity will become even tighter, including air charter capacities.

Transpacific air freight rates increased in early April, despite the impact of the Ever Given Suez Canal blockade. An analysis of the Baltic Exchange Air Freight Index (BAI) indicated a 20.5% increase in air freight rates from Hong Kong to North America. The severity of the impact of the Ever Given grounding is yet to be observed, while sea and air capacity will remain disrupted in the coming weeks.

• Supply & Demand Indexes and Oil Development

Please click the button below to read the latest Indexes on Supply & Demand and Oil Development

In case you need any additional information related to DACHSER’S air freight services and the current market development, please do not hesitate to contact your local DACHSER Air & Sea Logistics sales contact.