Last updated: Chinese New Year supply chain disruption: What to expect

Chinese New Year supply chain disruption: What to expect


Chinese New Year (CNY), also known as Spring Festival, symbolizes the end of winter and the beginning of a new year in the Chinese lunar calendar. It also triggers one of the largest annual travel waves in the world as families reunite and celebrate. (In 2023, the Chinese New Year falls on January 22nd, with the week being a public holiday. February 5th marks the end of the celebration, closing with the Lantern Festival).

But Chinese New Year supply chain disruption across the globe is nothing to cheer about.

“Each year, the pause before, during and after Chinese New Year increases pressure on global supply chains as millions of people take time off from work to celebrate Chinese New Year with their families. As a result, companies are pausing production and causing delays in the delivery of finished goods”, says Uwe Haizmann, Partner, EAC International Consulting, Munich.

CNY’s one-week production halt often means it can take up to four weeks for China-based suppliers, contract manufacturers, and partners to resume normal operations.

During this time, almost everything is closed, including government offices and factories, while ports and customs usually operate with a minimum of staff and focus on perishable and priority goods.

Impact of 2023 Chinese New Year  on supply chain

This year’s planning around CNY could be challenging in terms of the uncertainty in production supply and possible disruptions, despite recent relaxation of COVID restrictions by the Chinese government.

Even though manufacturers and suppliers promise to maintain production during the holiday, there’s still the possibility of unexpected shutdowns due to lockdowns.

“But now, as China suddenly moved away from its Zero-COVID policy, we expect positive COVID cases to accelerate in Q1 of 2023, which will result in a significant labor shortage in the entire Chinese supply chain, and which in turn will cause further disruptions in the global supply chain,” adds Haizmann.

Here’s where robust forecasting and planning is essential.

According to a study from EY, “forecasting must become a core competency with an emphasis on analyzing data from multiple and sometimes novel sources to understand not only your customers’ plans, but also the potential change in who your customers are and how you deliver value to them.”

5 ways businesses can survive CNY disruption

Here are additional tips that can help global businesses manage Chinese New Year supply chain issues.

1. Plan ahead

Plan not only for the pre-CNY period, but also for the post-CNY period, as the impact on the supply chain may last until spring. Based on structured data (orders) from the past as well as unstructured data such as current sentiment analysis, weather patterns, COVID spikes and other events, businesses can create a meaningful picture of supply and demand to guide inventory build.

2. Review and optimize your inventory

With many multi-channel order fulfillment processes, inventory is typically distributed across many locations throughout the supply chain, making it important to know what inventory is where. Using inventory optimization planning logic, forecast demand can be matched with forecast supply to ensure customer orders are fulfilled, shorten lead times, and minimize inventory shortages and over-ordering.

3. Check alternative delivery options

For urgent deliveries during Chinese New Year supply chain disruption, business may want to consider alternative transportation options, such as ship-to-rail or an alternative sea-to-air combination.

4. Expand the supplier base

Rely on a variety of suppliers and expand your network to have fallback options in the event of a disruption. Consider expanding your supply network to include reliable partners in geographically neighboring regions of the current production site.

5. Implement a quality management plan

Make sure quality doesn’t fall by the wayside when production is running at full speed because product needs to get on the road quickly. With a quality management and thorough inspection plan in place, you can reduce the risk of late delivery due to quality issues or, worse, delivery of defective goods to your customers.

Knowing what to expect during Chinese New Year is half the battle. However, being well prepared is the best way to avoid any negative impact on the supply chain. With this in mind,

Happy Chinese New Year!

Xin nian kuaile! (新年快乐! )

Gong xi fa cai! (恭喜發財! )

Supply chain challenges can make for a wild ride. Get advice, best practices, + predictions from top experts HERE.

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