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Chinese New Year and Red Sea crisis disastrous for traffic

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Chinese New Year and Red Sea crisis disastrous for traffic

The Chinese New Year commences on Saturday, 10 February 2024 and lasts until Saturday the 17th. Chinese business traditionally comes to a complete standstill at this time. In combination with the ongoing issues in the Red Sea, the closure of Chinese suppliers, agencies and manufacturers will have a major impact on the already strained container market from Asia. This will most definitely put additional pressure on both your schedule and your rates. What will you need to consider?

 

 

China is at a complete standstill for a while

During Chinese New Year, the whole country traditionally observes mandatory days off. In addition, many Chinese people take additional days off, both before and after the festivities. As a result, staffing levels at many companies are low during this period. No work is carried out during the festivities.

 

As factories are closed for over a week, cargo supply is always low after Chinese New Year. For this reason, shipping companies generally cancel several departures. These are the so-called blank sailings. This measure should help reduce delays and also increase the reliability of the remaining sailing schedules. Unfortunately, since late December, there has been even more pressure on available capacity due to problems in and around the Red Sea.

 

 

Rates shoot up due to Chinese New Year & Red Sea issues

In the third week of January, shipping a 40ft container from Shanghai to Rotterdam was about 25% more expensive than the week before. Prices are obviously not quite yet similar to those during the COVID-19 pandemic. However, if we look back at last year’s container market, rates have already increased almost twice as much compared to 12 months ago.

 

The demand for containers is high, with companies having made every effort to have their cargo at sea before the Chinese New Year kicks off. This is not unusual for this time of year. However, the Red Sea crisis has added an extra hitch. Since the start of January, the shipping route via the Cape of Good Hope has become the world’s busiest shipping route. About 90% of shipping companies currently prefer this route over the usual route through the Red Sea.

 

 

What does this mean for your shipments?

Keep in mind that importing from China can take considerably longer than usual. Based on a one-way trip, the delay involved in diverting via South Africa is around 7 to 11 days. Longer journey time means that shipping companies end up using their ships and containers less frequently. This results in a shortage of empty containers in Asia. Currently, these shortages are mainly occurring in northern China and are also expected to affect major ports, such as Shanghai and Ningbo, within 2-3 weeks. This also creates additional pressure on rates.

 

To compensate for the longer travel costs, shipping companies have also introduced additional surcharges. You will encounter these as a contingency adjustment surcharge, transit disruption surcharge, rate restoration initiative, etc. Ritra Cargo has opted to include such charges in its ocean freight rates so that they are easier to monitor.

 

Do you have any questions about your specific shipment? If so, please contact your regular contact person. He or she will be happy to help you find the right information. Wondering when other days off will be happening in 2024? True to tradition, Ritra Cargo is again releasing the calendar of public holidays in Asia. The big difference this year is that the calendar has been given a whole new, sustainable look!

 

 

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