The holiday shopping (and returns) rush is over for consumers here in the U.S. However, the Supply Chain remains in its peak season. Believe it or not, Chinese New Year is a mere month away. Your suppliers are hard at work to complete as many projects as possible before traveling home for the holiday. We’ve spoken a lot in previous posts about how to prepare for Chinese New Year. We’ve also talked about what to expect from your suppliers, freight forwarders, etc. during the closures. Today, our focus is on what you can do while factories are closed and your points of contact are out of the office.
Chinese New Year Closures To-Do List
These are the main activities that you’ll want to prioritize during closures. We’ll dive further into what each of these tasks entails and the significance of each throughout this article.
- Send your suppliers Chinese New Year gifts
- Curate RFQs for various products to source after reopening
- Introduce yourself to potential suppliers
A Token of Appreciation
In recent communications with your sourcing agents and factories, you’ve likely noticed their response times are growing longer. This will continue to worsen the closer that we get to February, until closures when your messages will go unanswered. While your points of contact are still in the office and managing their inboxes, ask for a good address where you can send a small gift for CNY. But first, take some time to familiarize yourself with Chinese New Year gift-giving etiquette before sending their gift.
We’ve reached the point where it is too late to order an OEM product that will be produced before Chinese New Year. Instead, reach out to your suppliers and ask when they plan on returning to work. Keep in mind that it will take some time for production levels to ramp up after reopening. The deadline to request custom order samples from your suppliers has also passed. Factory engineers are solely focused on monitoring the production of current projects. They do not have time to commit to specialized items.
During factory closures when you’re not working with your suppliers is a great time to create RFQs for various products you’re interested in sourcing. As we’ve discussed in the past, many suppliers adjust their product offerings after Chinese New Year closures. Creating thoroughly detailed RFQs and sending them to current and potential suppliers upon reopening allows you to quickly determine who can supply your new products. Reaching out to potential suppliers prior to closures should be reserved for introducing a project or initiating a relationship. Do not reach out to a potential supplier prior to CNY and expect they’ll begin production on your order at that time.
Don’t send new suppliers payments during or ahead of closures. In certain situations, this can secure your production once their factory reopens. However, there are other times where a sourcing agent or factory will ask for a “retainer” with the promise to try and help you after they reopen. The agent can disappear entirely, or the factory can come back after reopening and say they are no longer producing that item. This strongarms you into producing another product with them or losing out on your money outright.
Roadblocks in Logistics
In China, the effects of COVID-19 on the logistics industry are felt again as cases begin to rise. Two major shipping and logistics companies have already announced suspended services in the coming weeks. Orient Overseas Container Line (OOCL) will suspend feeder services in southern China from January 20th through February 22nd. These days may vary slightly depending on the containers’ destination.
Ocean Network Express (ONE) has also suspended inbound shipments. Specifically, the suspension applies to onward transportation by feeder vessels. ONE’s suspensions are active between January 5th and February 26th in Southern China. These suspensions will cause additional delays in shipping.
In the World of Warehousing
Shipping carriers continue to be overwhelmed with the elevated number of shipments and lack of equipment. This blend of supply and demand has led to extended processing and delivery times. Carries have been and will continue to limit the capacity of outbound shipments for each location. For this reason, your 3PL warehouse may be at max capacity and unable to accept new shipments. This has led to many Amazon sellers specifically looking for secondary and tertiary 3PL locations across the U.S. However, with Amazon’s recent change to their IPI storage limitation threshold, capacity should begin to reopen between mid-January or early February.
If you’re experiencing capacity issues with your current 3PL, reach out to other 3PLs during Chinese New Year Closures. Spreading your inventory between Amazon FBA warehousing and a few 3PLs can help scale your business and feed your FBA warehousing more efficiently.
Lisa Kinskey is the Marketing Assistant of Noviland, Inc., a rapidly growing sourcing & purchasing solution making sourcing from overseas factories simpler. Lisa has a background in sales, marketing, and event planning, and currently resides in Duluth, Georgia.