Lunar New Year will be celebrated throughout Asia on February 12, 2021, but is shaping up to be much different in China than in years past. The traditional week-long holiday is already being reduced to single day celebration by many factories and service providers.
Reeling from spikes in COVID-19 cases in the past weeks, the Chinese government has locked down some 26 million people in three cities outside of Beijing to prevent further outbreak, and is advising against travel for the upcoming holiday. While there is no official ban on travel for the holiday at this time, speculation is running high the lockdowns may extend well into February if the pandemic outbreaks continue.
Similarly, ocean carriers who traditionally announce a large number of blank sailings around the holiday, have kept most of their vessels deployed for the period. They have good reason to do this as they attempt to satisfy the record high demand for cargo moving out of the region, while also delivering much needed containers (many of them empty) back to China from their markets in USA and Europe in efforts to stem equipment shortages there.
While reducing the annual disruption caused by Lunar New Year closures this year may seem like good news for the overloaded freight system, the down-steam effect in the USA may hurt even more. We are currently overrun in the Los Angeles / Long Beach port system with vessel bunching as California continues to work through six straight months of record container volume. The velocity of cargo flow through the port has slowed due to the effects of congestion, chassis shortages, empty container returns, and COVID-related labor shortages. With 31 containerships at anchor in California this week, there are now more vessels waiting outside the port than those being handled at berths. This is something we have not seen since the longshoreman lockout of 2002.
It was hoped that blank sailings for Lunar New Year might provide a window for all ports to catch up with the flow, but with regular schedules being kept, along with the arrival of extra-loaders, the containership gridlock is expected to grow even larger for the foreseeable future while consumer demand remains at all-time highs. Record savings, and another round of stimulus checks more likely to be spent on retail goods than travel and leisure, are leading indicators that demand is not going to drop off any time soon. The spillover effect will push cargo diversions to already maximized Atlantic and Gulf ports, and an overall reduction in cargo velocity nationwide. Vessel delays and terminal dwell time are therefore expected to get worse through March, and possibly into the second quarter, as the system overload continues.
Mohawk recommends getting your cargo in the cue early by booking 4 weeks ahead of sailing date, and to consider using the premium services now offered by carriers as a way to prioritize which containers will load any given vessel.
