Archive for the ‘Supply & Distribution’

Despite the Chinese New Year celebration coming to a close, a backlog of Asian freight persists.  Despite heavy demand generated by the recovering global economy, capacity is down between 30-45% from this time last year according to one freight forwarder.  Reports from several Chinese ports suggest ships are sailing above capacity, and experts predict it may take months before backlogs clear.

With limited space, shippers have been forced to pay elevated rates to secure cargo space aboard overbooked ships.  New rate increases as high as 15% took effect March 1, but with carriers eager to recoup loses from 2009, more increases likely loom ahead.

Driven by reduced cargo capacities following the global economic slowdown, the logistical challenges created by the Chinese New Year have shifted from burdensome to problematic.  One freight forwarder reports cargo bookings in Shanghai currently exceed capacity by a rate of nearly 3:1.  Some freight carriers, eager to recoup money  lost in difficult 2009, are refusing cargo unless surcharges as high as 40% are paid.  In some instances, containers already loaded onto vessels have even been removed in exchange for a highest bidder.

It is expected that freight carriers shipping from China will remain overbooked for at least the next several weeks.

Read more on the Chinese New Year headaches from the Journal of Commerce

Glove factories throughout China will close beginning February 13 in observance of the Chinese New Year.  For many migrant workers, the week long break offers the rare opportunity to return home.

For importers, however, the New Year presents challenges, as failure to plan ahead could result in supply shortages.  Even for those planning ahead, the annual closures are often a source of logistical headaches, with Chinese ports jammed as importers and exporters rush to ship product in time to avoid delays.