Chinese New Year, not the cure all for freight forwarders

Chinese New Year is the one-year mark. At this time last year, the national Chinese holiday was extended to keep people at home to stop COVID-19. Factories went idle and shipments sat on docks. The ripple effect impacting global freight forwarders over the last year is unprecedented. Everyone wants to know when the industry and the world at large will operate normally.

While we expect some positive impact to freight forwarders business during this February 2021 holiday in China, it’s not going to be the full remedy that cures the situation. Production and shipments are continuing in China. Here’s what we’re hearing from our partners in Asia and is being reported in trade journals.

Several Chinese factories remain open to catch up on back-orders due to European and North American customers. Consider this: Exports of Chinese goods in December jumped 18.1% year over year in December, with shipments to the United States and Europe rocketing 34.5% and 21.4%, respectively, within the same period, according to an IHS Markit analysis of data from China General Administration of Customs (GAC).

Containers continue to ship from Asia to the United States stretching port operations to historic maximum levels. Container ships are waiting a week to port on the West Coast. East Coast ports, which traditionally manage European imports, are now managing import shipments from Asia traveling through the Panama Canal. See the video below taken by the U.S. Coast Guard showing ships waiting to port at LA/Long Beach.

Truckers on both sides of the Pacific are impacted by this situation. With a surge of imports coming into the United States, chassis are hard to find. During the Chinese New Year holiday, reports most truckers have opted to go home making them subject to mandatory quarantines and leaving them unable to drive, which will choke factory to port connectivity. That ripple effect will last for months to come.

Rail volumes are up, higher than ever, and our infrastructure is being tested. A key contributor to this upward trend in rail traffic has been grain volumes. While import volumes and Internet purchasing by consumers are causing an increase in intermodal volumes, rising soybean exports are boosting grain volumes.

Meanwhile Mother Nature isn’t making shipment movement any easier. A massive winter weather system swept the United States this week. Here in the Midwest a foot of snow fell in 24 hours. Texas, which rarely has snow, is dealing with ice and a massive power outage. Union Pacific Railroad closed most of its intermodal network this week due conditions in the Pacific Northwest, Midwest, and as far south as Texas.

Our team’s advice remains consistent: be patient, ship ahead and diversify shipments among carrier Alliances. This situation will continue through spring and into early summer.