DACHSER at ACMA Automechanika seminar in Delhi

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.

Update on DACHSER Air & Sea Logistics operations

With this update DACHSER would like to inform about the current DACHSER Air & Sea Logistics operations across the regions APAC, EMEA and Americas. In the attached document (see download below) it is listed whether a country organization of DACHSER is operational or, if only limited or not at all, why this is the case. Since the situation in the countries may change rapidly, the attached document will be updated on a regular basis and published on our website.

We sincerely regret any inconveniences caused to our customers due to the pandemic. At DACHSER, we have contingency measures in place and will offer our customers the best alternative solutions to keep the supply chain running. Anyhow, the situation at ports, airports or customs authorities might cause delays. Furthermore, the capacity situation on the global airfreight market is very tense as there are basically no passenger flights operating at the moment.

At the same time, DACHSER has installed strict hygiene measures (e.g. home office) to ensure a safe working environment and to do our part in stopping the spread of the virus. DACHSER is trying to keep the impact of these measures as low as possible, however, together with the official measures by the governments, the precautions may lead to some delays in the operations.

In case of any questions and/or queries, please feel free to contact your local DACHSER representative.

Hard Brexit: Important measures beforehand

Even though there are some movements in the negotiations between EU and UK, still the “No deal” Brexit at the October 31st, 2019 cannot be excluded.

The consequences of a withdrawal without a deal on 31st October, especially for the movement of goods to and from the UK, are well known. First and foremost, longer waiting times would be expected due to border controls and customs clearance of all goods in accordance with WTO rules.

DACHSER will take appropriate measures to ensure that all goods arriving/leaving the UK after 23.00 GMT (00.00 CET) on 31st October are cleared and taxed accordingly.

With this letter we would like to summarize again the most important points and measures to keep the effects and delays in delivery for our customers as low as possible.

In case of Hard Brexit, the following information and documents must be available for customs clearance before the goods are collected:

• Consignment note
• Commercial invoice / pro forma invoice
• Packing list / delivery note
• Export accompanying document (can be issued by us if necessary)
• Preference documents and other product-specific documents, only if possible and required

Please make sure that these documents contain the following information: Sender with EORI number, recipient with contact details, importer if different to recipient with contact details, sequential invoice number, Incoterms, number and type of packages, description of goods, country of origin, Taric code, value of goods, currency, gross/net weight.

Please pay attention to a high data quality of the information - the documents must fit definitely to the respective physical transmission.

If the documents are made available to us in electronic form, they should correspond to a resolution of 300dpi if possible.

In addition, we need the contact person for customs including the contact details of your consignee/importer (e-mail address) so that we can contact them in order to obtain the necessary customs power of attorney. We need these in order to be able to carry out the necessary customs clearance. Without the power of attorney we can not do the customs clearance.

Please do also note, that we also will need more detailed shipment information like number and type of packages, description of goods, value of the goods, if you have got shipments to Ireland via UK territory, as we will have to issue a transit procedure through UK. For the beginning we also recommend that you add a T2L to those shipments as we are not yet sure, if Ireland customs will accept T2 as a proof for goods in free circulation of EU after transit via UK. 

Within our eLogistics application the possible incoterms will be changed due to the customs. At the beginning only FCA/EXW or DAP are possible in eLogisitcs in order to ensure the process. Also the EDI information regarding the incoterms have to be adapted, the responsible person from your branch will contact you in order to align the necessary changes.

We ask for your understanding and cooperation so that DACHSER can make your flow of goods as efficient and trouble-free as possible in this exceptional case of hard Brexit.

The most important measures for preparation we have stated additionally in our Brexit checklist.

Please do not hesitate to contact your DACHSER branch if you have any further questions.

The will to get ahead

If Murat Kayki and his colleague Swapnali Kurale planned to meet in person, that would take time. A lot of time. More than seven hours in the air separate Nîmes in the south of France, where Kayki lives and works, from the Indian metropolis of Mumbai. They may come from different continents and different cultures, yet the two DACHSER employees have a lot in common. Both of them live and work in the city where they were born. It’s 38 years since Kayki came into the world in Nîmes as the son of Turkish immigrants. Today, he is head of DACHSER’s Nîmes and Avignon offices, and, like Kurale in Mumbai, has had quite a remarkable career.