Businesses with supply chain ties to China should remain “vigilant”, and closely monitor potential disruptions, a leading supply chain visibility platform provider warns.
Among the disruptions visibility specialist FourKites cites is Chinese New Year, which took place on January 22.
Typically in China, new year places the country’s supply chains under strain, as hundreds of millions of people travel home to be with their families.
This leaves businesses understaffed, and the 2023 new year is expected to see record numbers of people travelling, following the lifting of the country’s zero-tolerance Covid strategy at the end of 2022.
Glenn Koepke is Network Collaboration GM at FourKites, a supply chain visibility company. Koepke anticipates shipping volumes to plummet during the Lunar New Year, as ports shut down and operations come to a standstill.
“Then we’ll see a climb back to steady volumes,” he says, adding that he expects these volumes to remain “moderate” through to the end of Q1.
COVID likely to hit supply chains in China
A bigger disruptor of supply chains than new year is likely to come from COVID, Koepke says.
He says Chinese exports to the United States fell by 19.5% on the year-ago figure, dropping to $301.1bn. Exports to the European Union fell by 39.5%, to $43.6bn. The global economic slowdown is a factor here, but outbreaks of omicron in China are also an ongoing concern.
“Export volume will remain significantly lower year-on-year, as the global economy remains soft, and this will ease a lot of the pressures we have historically seen in China and elsewhere,” says Koepke.
He adds: “COVID will cause temporary disruptions but with a softer air freight market, expediting product out will be easier for shippers and forwarders.
“Businesses should keep a close tab on the financial stability of their logistics service providers, and maintain a level of safety stock for critical products to withstand issues when they do occur.”
- How tech can help SMBs build a resilient supply chainDigital Supply Chain
- China policy sees Apple CEO Tim Cook go from hero to zeroSupply Chain Risk Management
- How will supply chain get tanks to front line in Ukraine?Logistics
- Logistics round-up: Amazon axes jobs; DHL lauded as employerLogistics