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Preparing for Chinese New Year: Avoiding supply chain disruption in 2025

Dec 11, 2024 | , , , , , , , , ,

Chinese New Year (CNY) is a time of celebration across China but presents significant challenges for shippers and careful planning is essential to navigate the disruption effectively.

In 2025, the holiday officially runs from 29th January to 4th February, with its effects on production and logistics stretching weeks before and after these dates.

Production and logistics in China begin slowing well before the official holiday period. Workers start taking leave in early January, significantly reducing manufacturing output by mid-month. During the official CNY public holidays, factories, ports, and freight services shut down entirely. Although operations resume after the Lantern Festival on 12th February, it can take until mid-March for production and shipping networks to return to normal capacity.

This extended downtime creates a ripple effect across industries dependent on Chinese manufacturing, including electronics, textiles, toys, and automotive parts. The period is characterised by delayed production schedules, increased freight costs, and severe supply chain bottlenecks.

Key challenges during CNY
1. Severe delays: Factory closures lead to delayed production and delivery schedules, particularly for industries with complex supply chains.

2. Increased costs: Freight rates spike before the holiday due to high demand, often including peak season surcharges. Post-CNY, container shortages and port congestion further inflate costs.

3. Labour shortages: Even after the holiday ends, the staggered return of workers impacts production capacity, causing additional delays.

4. Inventory challenges: Businesses relying on “just-in-time” manufacturing face stock shortages as lead times lengthen significantly.

Mitigation strategies for businesses
To minimise disruption, businesses must adopt proactive strategies to maintain continuity during and after the CNY period.

Plan shipments early: Secure carrier bookings well in advance to avoid delays or last-minute surcharges. Less-than-container loads (LCL) can offer flexibility if full container capacity is unavailable.

Diversify suppliers and routes: Reduce dependency on single suppliers or ports. Consider alternative shipping methods, such as air freight, to mitigate delays.

Optimise inventory management: Build up stock levels for high-demand products before January to account for production slowdowns.

Enhance communication: Collaborate with suppliers, logistics providers, and customers to align timelines and contingency plans. Clear communication ensures all parties are prepared for potential delays.

Post-holiday recovery: Prepare for a gradual return to normalcy by staggering production schedules and allocating resources to handle delayed shipments.

Key dates to consider
22nd January to 9th February 2025: Potential for reduced production.
29th January to 4th February 2025: Official public holidays.
12th February 2025: Lantern Festival; operations typically resume.

Metro’s proactive strategies, powered by our advanced MVT technology, keep your supply chain running smoothly during Chinese New Year.

With our MVT technology, vendor management is seamless and fully transparent down to SKU level. This powerful tool empowers you to monitor every milestone in your supply chain, enabling timely and informed decisions to effectively navigate challenges.

Chinese New Year doesn’t have to disrupt your operations. With Metro’s expertise, global partnerships, and cutting-edge MVT technology, you can avoid delays, optimise costs, and maintain critical inventory levels.

EMAIL Andrew Smith, Chief Commercial Officer, today to discover how Metro can support your supply chain through Chinese New Year 2025.

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US businesses prepare for ILA strike threat and Trump’s China tariffs

Dec 11, 2024 | , , , , ,

Retailers and shippers are bracing for operational disruptions and cost increases as the January 2025 deadline for the International Longshoremen’s Association (ILA) negotiations looms, alongside the threat of new tariffs on Chinese imports from President-elect Donald Trump.

This combination of challenges has led to an extended peak shipping season, as businesses rush to front-load cargo and mitigate potential impacts.

Surge in imports
US ports have seen a significant increase in inbound cargo volumes, reflecting retailers’ efforts to stock up ahead of potential disruptions. October imports jumped by over 9% year on year, exceeding projections, and further increases of nearly 15% are forecast for both November and December. The January 2025 forecast has also been revised sharply upward, with inbound cargo now expected to grow by over 12% compared to the same period last year, up from an earlier forecast of just 2.6%.

This surge is driven by retailers’ attempts to avoid disruptions caused by either an ILA strike or increased tariffs on goods from China. The race to bring goods into the US before the 15th January contract negotiation deadline and the expected implementation of tariffs has led to heightened activity at ports, with shippers working to ensure goods arrive before potential delays or cost increases take effect.

Rising inventories
The rush to import goods has resulted in a notable increase in retail inventory levels. The US retail inventory-to-sales ratio rose to 1.42 in September, up from 1.27 in August. This level, last seen in early 2023 and 2021, is among the highest recorded since the pandemic began. Retailers are stockpiling goods not only to prepare for potential supply chain disruptions but also to shield themselves from the anticipated cost impact of higher tariffs on Chinese products.

Labour negotiations
ILA negotiations with the US Maritime Alliance (USMX) have stalled, with automation emerging as the primary sticking point. The ILA strongly opposes the introduction of semi-automated equipment, such as rail-mounted gantry cranes, at marine terminals. With no agreement in sight, the likelihood of a strike after the January 15 deadline has increased, adding uncertainty for retailers and logistics providers.

While the October three-day strike was resolved with a temporary pact, the breakdown of talks in November has heightened concerns. Retailers are closely monitoring developments, knowing that a prolonged strike could severely disrupt supply chains and lead to higher costs for both businesses and consumers.

Tariff uncertainty
President-elect Trump’s promise to impose tariffs exceeding 60% on Chinese goods is also driving the import surge. Although it remains unclear whether the tariffs will be implemented immediately or phased in, retailers are taking no chances. Many have accelerated their efforts to source goods from alternative suppliers, building on years of diversification away from reliance on China.

Retailers have used recent earnings calls to emphasise the progress made in reducing exposure to Chinese imports, but for some, the impending tariffs will still have a significant impact. The race to import goods before January reflects both the uncertainty surrounding the tariff timeline and the anticipated financial strain they will impose.

Preparing for 2025
As the new year approaches, businesses are facing a perfect storm of challenges in the supply chain. The combined threats of port labour disruptions and tariff hikes are driving unprecedented levels of front-loading, resulting in increased strain on logistics networks and rising inventory levels.

Retailers and shippers are implementing strategies to manage these uncertainties, from diversifying supply chains to stockpiling inventory. However, the potential for delays, higher costs, and operational disruptions will require ongoing agility and preparation to navigate the year ahead. The outcome of the ILA negotiations and the implementation timeline for tariffs will be key factors shaping the supply chain landscape in early 2025.

With disruption and tariff uncertainties redefining the market, Metro’s proactive solutions are essential to keeping your supply chain strong and adaptable.

Our expert team continuously monitors the shifting landscape, offering strategic guidance to help you navigate regulatory changes, optimise shipping routes to avoid disruption, and control costs effectively.

EMAIL Andrew Smith, Chief Commercial Officer, today to discover how Metro can protect and future-proof your North American supply chain.

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The potential impact of the new US administration on global trade

Nov 27, 2024 | , , , , , , , , , , , , ,

As the United States, and the world, braces for potential shifts in trade policy, new tariff proposals and ongoing supply chain challenges are reshaping the global logistics landscape.

President-Elect Trump’s threatened trade tariffs, along with geopolitical and operational pressures, are driving significant changes in import patterns, freight rates, and supply chain strategies.

Protectionist policies
President Trump’s first administration was marked by aggressive trade policies, and his second term is marked by a resurgence of tariff-based strategies targeting China and other major trading partners. Proposed tariffs include a universal rate of 10-20% on all imports to the US, with an additional 60-100% on imports from China, together with another 10% above any additional tariffs, on all products, until the supply of the illegal drug fentanyl ceases. 

These measures could significantly raise consumer costs for goods such as apparel, toys, furniture, and household appliances. In 2023, tariffs on Chinese apparel cost U.S. companies and consumers $1.3 billion, with forecasts estimating that consumers would pay between $13.9 billion and $24 billion more annually due to the proposed tariffs.

Additional tariffs could reduce trans-Pacific shipping volumes, while supply chains may diversify further to Southeast Asia, India, and Latin America. These shifts would alter global shipping patterns and potentially lower container shipping demand from Asia.

Surge in imports ahead of tariffs
The prospect of new tariffs is expected to accelerate import activity, as businesses aim to pre-empt the potential cost increases by expediting shipments, placing substantial demand on vessel space. This surge, if realised, would exacerbate pressures on an already strained logistics infrastructure, particularly during peak seasons.

Volatility in sea freight rates
Tariff-driven demand spikes are poised to push freight rates higher, especially on trans-Pacific routes. Companies, wary of increasing costs, are likely to explore alternative sourcing locations outside China, though this has been complicated further as the US president-elect said he would sign an executive order imposing a 25% tariff on all goods coming from Mexico and Canada, after being inaugurated on 20 January 2025. The impending early Chinese lunar new year in late January 2025 further compounds the uncertainty, as shippers rush to secure capacity.

Heightened supply chain challenges
Labour disputes continue to threaten North American supply chains, with the potential for an International Longshoremen’s Association (ILA) strike if negotiations do not conclude positively by January 2025. Concurrently, recent lockouts at Montreal and Vancouver ports have disrupted trade flows, with ripple effects expected at other ports, including Halifax.

A second Trump administration may prioritise renegotiating or withdrawing from international trade agreements to favour US interests, including potential revisions to WTO agreements. Such moves could disrupt North American trade flows and create further uncertainty for global shipping stakeholders. Additionally, heightened geopolitical tensions could impact critical maritime routes and alliances, particularly in the South China Sea.

The combination of tariff uncertainties, labour disputes, and shifting sourcing strategies signals a challenging period for global trade. Rising costs and operational complexities could challenge shipping in the long term, with broader implications for economic stability.

As the situation in the United States develops we will continue to provide regular updates, but if you have any concerns or questions about how these events might impact your shipments, please reach out to us.

EMAIL Chief Commercial Officer, Andy Smith today to learn how we can safeguard your supply chain during challenging periods.

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FTSE 100 firms identify supply chain threats as a principal risk

Nov 22, 2024 | , , , ,

A recent study by the Boston Consulting Group, reveals that 72% of FTSE 100 companies now identify supply chain threats as a principal risk to their operations.

This heightened concern follows significant disruptions such as the Suez Canal blockage, the COVID-19 pandemic, and the Red Sea shipping crisis, which have exposed vulnerabilities in global supply chains.

Despite widespread acknowledgment of these risks, only 54 of the FTSE 100 companies have provided shareholders with detailed information on their mitigation strategies. This lack of transparency underscores the need for more robust communication regarding risk management practices.

To address these challenges, companies are implementing various strategies:

  • Supplier engagement: Regular meetings with suppliers to monitor and share potential risks.
  • Risk documentation: Compiling and updating ‘risk registers’ to document supplier-specific risks.
  • Inventory management: Maintaining higher levels of ‘buffer’ stock to mitigate short-term crises.
  • Diversification: Expanding supply chain streams to prevent business interruptions.

Technological solutions are also being leveraged to enhance resilience. Companies are implementing robust cybersecurity measures, utilising artificial intelligence for supply chain design and monitoring, deploying algorithms to identify high-risk raw materials, and conducting comprehensive assessments of suppliers’ financial resilience and infrastructure.

Supply chain risks have now reached the boardroom, with discussions taking place within executive and audit committees. This elevation in priority reflects the critical importance of supply chain stability to overall business operations.

The findings emphasise the necessity for businesses to prioritise transparency, technological innovation, and strategic planning in their supply chain management. As risks continue to evolve, proactive risk management has become a vital component of corporate governance.

Metro’s advanced supply chain technology

Metro’s proprietary cutting-edge supply chain technology has been conceived and designed to enhance visibility, control, and efficiency. The AI-driven solutions provide real-time insights into supply chain operations, enabling companies to anticipate disruptions and respond swiftly. Features include comprehensive purchase order management, multi-modal track and trace capabilities, and consignment management tools. Additionally, the MVT ECO platform allows shippers to forecast, measure, and offset global supply chain emissions, supporting sustainability goals. By integrating these technologies, businesses can strengthen their supply chain resilience and maintain operational continuity in an increasingly complex global environment.

Metro is leading the industry in developing the technologies and platforms that simplify and support the development of resilient, agile and adaptable supply chains.

Visibility, control, environmental, and customs modules, blend together with integrations of critical digital trade documents, to provide an unparalleled supply chain platform.

EMAIL Ian Powell for further Information on our digital capabilities and how we can protect and enhance your global trade and business growth ambitions.

Category: International Trade

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