DSV WARNS OF SUPPLY CHAIN PRESSURE FOR CHINESE NEW YEAR

DSV said planning should be done ahead of next year's Chinese New year festivities as it anticipates "extraordinary factors" to further put the supply chain under pressure.

 

The freight forwarder told its customers that the Chinese holiday usually puts added pressure to the supply chain as factories normally close while its employees celebrate the festivities.

 

The Chinese New Year holiday is slated to begin on January 31 next year.

 

 

DSV said "several extraordinary factors cause a great deal of uncertainty about what the impact of the upcoming Chinese New Year will be."

 

The forwarder also noted expectations of "exceptional demand" for movement of goods amid persisting capacity constraints in the market.

 

"The Chinese power curbs – i.e. the electricity rationing which was recently introduced in many parts of China to reduce carbon emissions – are also likely to have a significant impact on production in the coming months," DSV said, while noting that aside from pre-holiday rush, there are also  ongoing Covid-19 restrictions, global supply chain congestion, power curbs and the upcoming Beijing Winter Olympics on February 4 to February 20.

 

"The extent of the policy varies from province to province, but in some places, the power curbs have resulted in factories cutting output or halting production entirely," it said. "Although we have seen the situation improving recently, it is not possible to say how things will look in the future."

 

While no announcement have been made yet related to how the holding of the Winter Olympics would affect movementof goods in China, DSV said it "expect that the security inspection level and road control will be increased in certain areas."

 

"In this forecast, it is important to not only make a plan for the time before the Chinese New Year, but also for the time that comes after the celebration, as the repercussions of the Chinese New Year might be felt well into the spring," the freight forwarder said.

 

"For this reason, you might also benefit from considering a deeper inventory than normal to support an easier end user delivery in your supply chain in the time after the Chinese New Year," it added.