THE CHINESE GOLDEN WEEK’S IMPACT ON OCEAN FREIGHT: EVERYTHING YOU NEED TO KNOW
The Chinese National Day is celebrated on October 1st and commemorates the founding of the People’s Republic of China in 1949. Similarly to the Lunar New Year, almost all companies, including factories, are closed for business during one week. This unparalleled event bears significant repercussions on Ocean Freight. The Freight Forwarding Experts share everything you need to know about this unique time of the year.
Why Does the Golden Week Matter for Ocean Freight?
While port activity is maintained and customs offices remain open, all Chinese factories are closed during the Golden Week, undoubtedly impacting most just-in-time supply chains and logistics operations in general.
During the Golden Week, individual DHL Global Forwarding stations will arrange on-duty staff in order to handling urgent cases, but note ocean carriers generally omit sailings during this period.
Celebrated since decades, the October Golden Week goes on for seven days. It is now well-known by most shippers who have since adapted their operations: the ship out their cargo in the weeks prior, causing what is sometimes referred to as the pre-Golden week rush.
Understanding the Pre-Golden Week Rush
The disruptions induced by the Golden week start long before the holiday is celebrated. A pre-Golden Week volume surge can be observed each year two or three weeks prior to the National Day.
Ocean freight shippers see themselves caught in the crossfire of two major factors:
- In anticipation of factory closedowns described above, manufacturers must fulfill their customers’ demands ahead of the week-long break.
- The weeks leading up to the Golden Week trigger the start of the Christmas volume surge. The Christmas season starts early for Ocean Freight!
The rush does not only come down to container vessels and manufacturing activities. All other logistics activities, including freight forwarding, naturally see an activity peak as well two to three weeks before the holiday and up to a few days thereafter.
The activity surge for rates tendering – the process through which freight forwarders offer their ocean freight rate to their customers – starts as of August and even earlier. Indeed, the tendering process may take several weeks to conclude depending on the size and complexity of the set of port pairs to serve.
You Are Impacted by the Golden Week, Even If You Do Not Ship Out of China
Volume surges are not necessarily observed in other South-East Asian countries as a consequence of the Golden Week. That does not mean to say that they are not impacted by the holiday.
The pre-Golden Week rush and a subsequent backlog of orders to fulfil impacts all the major Asia-Pacific services. Ocean carriers will allocate more space capacity to Chinese shipments, inducing space scarcity everywhere else. The other countries can only wait until the aforementioned backlog is cleared out.
A shortage of containers can be observed in other South-East Asian countries from mid-August until the end of September, across all major ocean shipping lines. Additionally, ocean freight rates to the United States hit record levels.
If the Golden Week coincides with a manufacturing stop, the picture is quite different for the retail and consumer goods sectors. For millions of Chinese workers, the holiday is the occasion to travel back to their home provinces in the hinterland, or fly to neighboring locations such as Hong-Kong or Singapore.
To capture the intense traveler traffic, retailers usually offer significant discounts to attract potential buyers to the malls. This peak retail season can be compared to Black Friday (also occurring on November 11th in China) and may represent a unique yearly opportunity if you are an importer to South-East Asia. In 2020, with most neighboring countries still under lockdown, Chinese travelers may decide to stay in their country – or travel even further than before.
The Golden Week in 2020: COVID-19 Will Not Slow the Volume Surge
Contrary to what one may have anticipated, COVID-19’s influence will only fuel the volume surge and operational challenges further. As China’s major export markets have been under lockdown for an extended period of time, there is a sustained demand to replenish depleted stocks in the United States, Europe, or Australia.
This demand can be expected to remain high throughout the run-up to the Golden Week – and to show only a limited decline during the week-long holiday. And when the Golden Week is over, the surge to serve Western markets ahead of Christmas will sustain the strong demand.