Chinese New Year, airfreight capacity cuts and Covid disruptions signal supply chain chaos

Scenario

Chinese New Year, the largest mass movement of people in the world, always presents serious challenges for the supply chains and this year we are expecting it to be compounded by personnel challenges as Covid continues to disrupt.

risk

With so many variables at play, critical shipments could be significantly delayed and prices will rise. 

Solution

It is important to have a local team with local knowledge, that can monitor flight schedules, check road freight availability, and manage local issues likely to cause further disruption. 

Spring Festival challenges include:

• Chinese New Year – Many drivers return to their hometowns and villages which leaves a shortage of road freight capacity to deliver to airports. Those who have stayed to work over the festive period will still be due their holiday, and may take this from 20^th February, resulting in a lengthened shortage of supply. 
• Covid-19 infrastructure restrictions within China - China is applying localised restrictions on roads and quarantine measures, meaning that some drivers may be stuck outside of major cities or forced to quarantine on their return.
• Customs delays - To add to the personnel challenges there has been a reduction in customs staff at major airports which is extending times for shipments selected for manual customs inspections.
• Reduced airfreight capacity - Alongside these human challenges, many airlines have already cut flights. This reduction in capacity will cause further stress and will drive up airfreight rates.
  

The most valuable part of any supply chain is the people within it, and human resource shortages will play a big part in the disruption we are expecting over the Spring Festival period.

We have seen many times in the past 12 months that complications caused by the Covid-19 virus have compounded existing supply chain challenges and that is certainly the case in this scenario. 

How we can support:

• With a strong team on the ground and deep relationships dating back over 20 years,  we are checking live flight schedules, working with local hauliers for road freight availability and have the experience necessary to manage local issues which can cause further disruption. 
• Our 24/7 global operations centre monitors developments and works in real time with our team on the ground in China to develop solutions to challenges as they arise.

We work with our clients to balance Urgency, Capacity, Risk and Cost. In one recent example we were able to overcome challenges created by the pandemic to maintain a continuous supply of critical materials from China for a major European OEM, the full story is here. 

We consider multiple solutions and present the best options in terms of times and costs, and provide constant information flow once the agreed plan is implemented.

Conclusion:

A mix of one-off challenges compounded by the largest people migration in the world is going to have an impact on the flow of materials.  The strongest solution is always comprehensive preparation, and it is by working with our clients to identify the challenges and form flexible, agile solutions that we are able to protect their supply chain.   

In a constantly evolving situation, our strongest tool is communication. Using the latest communication tools with our partners our 24/7 global control centre eliminates the challenge of timezones and we are able to operate decisively in real time whenever disruption occurs.