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The permutations for shipping of a muted Chinese New Year

The world’s largest human mass migration is a muted affair this year, something that has significant ramifications across many strands of shipping.

Chinese officials expect 1.15bn trips during the Lunar New Year holiday period, which started today, a 60% drop from pre-virus 2019 days.

Chinese authorities – afraid of a Covid surge – have adopted a carrot and stick approach to ensure fewer people travel this month – handing out freebies such as free internet for those staying put, while also demanding strict Covid testing and quarantining for anyone planning to travel.

China is expected to see 77.61% of its 280m migrant workers stay put for the Lunar New Year holiday

China is expected to see 77.61% of its 280m migrant workers stay put for the Lunar New Year holiday, according to a survey of 53,107 migrant workers at about 500 companies conducted by the Chinese Association of Labour Science, the Counsellors’ Office of the State Council and Xinhua News Agency.

It is unprecedented to see more than 100m migrant workers stay in place during the holiday.

There’s early signs factories are remaining busy during this traditionally fallow industrial period, while MarineTraffic data today shows major ports have a solid flow of ships coming to berth.

Apple suppliers Foxconn and Pegatron are offering bonuses and overtime pay to maintain production during the period as are many other factories amid a period of order backlogs, a Covid-linked export boom and supply chains under enormous pressure across the world.

Online container booking platform Freightos reported yesterday that ocean rates out of Asia remain at elevated levels this week, with some manufacturing in China staying open over Chinese New Year to meet still-surging demand.

“While post-CNY February is normally the slowest month of the year, reports that many manufacturers in China will stay open over the holiday to keep up with demand suggests that the surge could persist through February and even beyond,” commented Judah Levine, research lead at Freightos.

A new report from container track and trace firm Ocean Insights warned that another kink in global supply chains would become apparent in the coming weeks – namely Chinese truckers who had opted to go home for the new year holidays making them subject to mandatory quarantines and unable to drive.

In some regions, up to 95% of truckers will be unavailable, with the worst-hit regions in the south, Ocean Insights warned. These conditions will choke factory-port connectivity starting in about two weeks, with inventory backups lasting for months.

With demand for Chinese products at record highs during lengthy lockdown periods across the West, data from Sea-Intelligence shows carriers have only announced 21 blank sailings on the transpacific and 21 on Asia-Europe in the three-week Chinese New Year period. In comparison, a combined 88 sailings were blanked in 2020, whereas 67 sailings were blanked in this period in 2019.

Japan’s Yusen Logistics has warned clients this week that planning for the after Chinese New Year reopening process will be particularly important this year, as factories continue the race to catch up on orders and shipping.

“For ocean freight, delays are expected to persist due to severe congestion in the U.S. and in Asia, where ports like Yantian (China) have recently put forward a cut-off time of 7 days for gating-in export containers,” Yusen Logistics told clients in an advisory. Splash understands many other major Chinese ports up and down the coastline are also battling severe congestions issues.

On the tanker front, the fact that less Chinese are travelling this week has knock-on effects for dirty tanker demand.

“Fewer people leaving the cities will mean the pop in gasoline demand will be muted this year,” brokers Braemar ACM noted in a recent update.

Dry bulk brokers typically see business tail off at this time of the year, and while that is clearly the case for struggling capesizes, which have plummeted back into loss-making territory this month, smaller sizes are busy making money.

Kamsarmaxes are trading at more than $16,000 a day, with supramaxes and handysizes enjoying rates in excess of $13,000 a day.

For a special Lunar New Year Lai See treat for readers, check out what Splash Extra’s lead columnist is predicting will happen for shipping in the Year of the Ox by clicking here.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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