Chinese New Year is fast approaching
As part of the celebrations, almost all Chinese offices and factories will shut their doors on February 5th and will not officially open again until the 20th. This will have a huge impact on procurement, production, and logistics for Amazon FBA sellers all around the world. With our tips below, however, you should be able to prepare your logistics and be ready to avoid the usual challenges of Chinese New Year for Amazon sellers.
Bottlenecks before and after Chinese New Year
Prepare for challenges and delays before and after the festivities. Many Chinese employers grant their employees time-off before February 5th so that they can travel to their families. The resulting lack of staff therefore often leads to operational restrictions starting 10-15 days before CNY.
The effects are still noticeable long after the 20th of February. Since many companies also hand out their annual bonuses during this period, only 70% – 80% of employees return to work after the Chinese New Year.
Often, the situation doesn’t stabilize until mid-March.
Delays and rising freight costs at all stages of the supply chain
The effects of the festivities are felt in all areas of business.
To avoid the chaos, large manufacturers ship their goods as early as possible, leading to significantly higher shipment volume before CNY. In addition, bulky summer goods such as garden furniture are also shipped during this period (which is now). And the volume will only continue to increase. As a result, higher demand is causing freight costs to skyrocket.
The greater number of shipments to be processed leads to so-called “rolled” containers, i.e. containers that are not shipped on the original ship due to overbooking. Freight forwarders have no other option so that delays of about one week are common.
In general, the combination of higher volumes and staff shortages inevitably leads to further delays and increased waiting times.
Unfortunately, there is nothing you can do about this. But if you take the following tips on board, you can at least minimize the negative effects you experience as a result of Chinese New Year.
How to prepare your logistics for CNY
Develop a precise plan to avoid being out of stock
The extent of the effects of CNY take even seasoned logistics experts by surprise — despite chaos breaking out every year.
As an Amazon FBA seller, it is important that you are aware of CNY and its effects and plan accordingly. In the end, nothing is more heart-wrenching than being on the edge of ‘out of stock’ and desperately trying to send products to Amazon warehouses by air freight.
Make sure to plan very conservatively, even if that means paying higher storage fees for the month of February. You can also reduce your storage fees during this period by using an intermediate storage provider such as FreightHub. Simply store your products there and quickly send them to the Amazon warehouse when needed.
To ensure that your goods leave China before the chaos, you should start transporting them as early as the beginning of December.
Tips and tricks to bypass common problems
Especially before CNY, many companies try to transport their goods out of the country as quickly as possible. This is why ships with faster transit times are usually overbooked, leading to rolled containers.
You can prevent this if you book options with longer transit times and divide shipments of several containers into several Bills of Lading. Shipowners only roll consignments based on the bill of lading — by splitting them into several bills, you can increase the probability that at least some of your goods will make it out of the country.
While the Incoterms generally have no direct influence on the delivery speed of your shipment, you can save some time by using the Incoterms FOB (Free on Board). In this case, your supplier will take care of transporting your goods to the port of departure. Most suppliers have good connections to local transport companies and can thereby guarantee fast shipment despite tight capacities.
To be on the safe side, your goods should arrive at the port 7 – 10 days before the planned loading date.
Use rail or air freight to receive goods on time
Despite sea freight being the cheapest option, it may be useful to consider rail or air freight during these desperate times.
Shipping goods from China to Germany takes about 30 days — compared to 18 days via rail and only 2 days with air freight.
Faster transport costs more, especially since demand is also increasing during CNY: In August 2017, 1kg of air freight from Hong Kong to Europe cost around USD 2.20. In December of the same year, the price rose by 40% to USD 3.10 per kilogram and was still stuck at USD 2.45 in March 2018.
We hope that these tips and tricks can help you avoid the logistical chaos of Chinese New Year!
Guest Article by Sophie Holthaus — Account Managerin FBA at FreightHub
FreightHub is a shipping company for Amazon FBA sellers and offers Amazon-compliant preparation of your products, helpds with importing, warehousing and even expansion into the US. You can book and manage your shipments directly online, while your contact from their FBA team will answer all your questions directly.