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Lunar New Year, Olympics & Covid - A Supply Chain Trifecta in China

February 2, 2022 Kevin Baxter

Lunar New Year Covid Supply Chain Olympics China

With the supply chain still recovering from a crunch that started in 2021, the trifecta of the Lunar New Year celebration, the Beijing Olympics, and Covid-19 lockdowns in China are putting more pressure on shipping across the globe. China's Lunar New Year celebration is an annual "mark your calendars" timeframe for logistics pros, but the country's zero-Covid policy and hosting of the Winter Games on top of that make for a confluence of factors that have shippers and carriers on edge.

Does Lunar New Year affect shipping?

As China is such a major part of the global supply chain, the Lunar New Year is always a key date for logistics professionals to keep in mind. China - and other Asian countries - celebrate with factory shutdowns of multiple weeks as employees head home. This means the flow of goods and products to and from China grinds to a halt. We're in the midst of the 2022 Lunar New Year celebration now, with Lunar New Year's Day occurring February 1, and the Lantern Festival set for February 15 to continue Year of the Tiger celebrations. An added complication in projecting this year's impact, is that it's unclear exactly how strict Chinese zero-Covid policies will affect traditionally heavy domestic travel, and whether possible quarantines will lengthen closures.

Those who didn't prepare ahead for this downtime will be playing catch-up in the coming weeks and months, as shipping demand will outstrip supply as production ramps back up. A survey of shippers in fact, found about half believe the 2022 holiday will cause longer transit times, reduced container availability, and of course, higher shipping costs. In a typical pre-pandemic year, the Lunar New Year period would already cause supply chain stress, but with COVID and the Winter Olympics, experts are bracing for even more impacts.

How do the Beijing Olympics affect supply chain?

The 2022 Beijing Winter Olympics begin February 4, and one known repercussion from the event that's affecting the supply chain is China's greater focus on zero-Covid. The Chinese government hopes to avoid any issues with delays or interruptions to the Olympics, so lockdowns have become especially stringent - with transit to Beijing severely limited from some locations. That not only affects those attending the games, but also transit routes for freight shipments. An additional Olympic complication is cyber attack, as the FBI has warned those associated with the Beijing games to be on the lookout for cyber threats. A successful cyber attack could not only affect the Olympics, but also affect the supply chain depending on its target.

How does zero-Covid policy affect supply chain?

China is among a number of countries that have enacted zero-Covid (or Covid-zero) policies in response to the Omicron variant - with those policies directly affecting important elements of the supply chain. The supply chain effects of zero-Covid in China particularly surround lockdowns and stringent testing and quarantine requirements for workers - and container ship workers arriving - at major ports. In addition, reports indicate drivers are facing restrictions on the ground in China, and pilots face strict quarantine rules, affecting air freight as well. When cases crop up, additional areas have been locked down altogether, including the port of Ningbo in December, and other cities in January. According to reports, up to 20 million people are currently under lockdown, and 

Combine those policies - which have been in place off and on for awhile already - with the aforementioned Lunar New Year shutdowns, and you have a recipe for delays, especially when containers are still piling up at U.S. ports once they finally arrive. Shifl, a digital freight forwarding platform, has transit time from Chinese ports to the U.S. at 44 days, up from 16 days before the pandemic struck. And that time is without factoring in Lunar New Year delays.

How to navigate the supply chain

Whenever supply chain complications pop up, it helps to have an expert in your corner to help your business navigate. At InTek Freight & Logistics, we're happy to bring our many years of experience and individualized service to handle your unique needs. Just reach out to us, and we'll follow up shortly.

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