We’re roughly a month and a half away from bidding adieu to 2020. In our excitement, let’s not lose sight of the important deadlines on the horizon. Shortly after our triumphant arrival in 2021, factories will be closed for Chinese New Year. In these last few weeks of the year, coordinating logistics and reiterating your quality expectations should be top of mind.
Preparing for Chinese New Year in November
If you’ve been following our CNY blog series, you’re familiar with some of the predictions that we’ve made based on historical information. While this year has been unique due to a late Prime Day and COVID-19, many of those items are coming to fruition.
Increased Freight Rates
GRIs per container as of November 1st currently stand at $400 – $500 for both East and West coast. However, remember that pricing is not locked in until the container is gated in, or checked in at the port of origin.
As we mentioned in our blog post last month, there are fewer 40-foot high cube containers available than there usually are. Due to a lack of availability and capacity issues overall, more rolled cargo should be expected.
Congestion and Chaos at the Ports
Congestion continues to be an issue along each coastline, specifically both at Los Angeles and Long Beach ports. These ports are each understaffed and therefore vessels can’t unload their cargo as planned. Chaos at the ports may lead to poor planning by Freight Forwarders with their trucking companies. These miscommunications and mishaps may result in various accessorial charges. Demurrages, Detention, Pre-Pull and Yard Storage, and Chassis Day Extensions are some examples of extra fees Sellers may incur.
Our Recommendation: Book Ahead!
Shipments should be booked at least two to three weeks in advance of production being complete. Keep in mind prices are subject to change depending on the cargo ready date (CRD). Prices are most likely to change within one half of a month from the shipping date, as GRIs are released on the 1st and 15th of each month. Not accepting the higher price will result in rolled cargo.
Chinese New Year Closure Preparations
By now, you’re likely receiving longer production queue estimates from your suppliers. Factories are prioritizing larger orders and from their more established clients leading up to the long holiday closure. They will take on smaller orders, but production won’t begin until after the holiday. These projects their saving for after the holidays are to entice their employees to come back to work after CNY.
Increased Sample Costs
While it is possible, increased sample costs do not mean the cost of the material has increased in Q4. Generally, the cost of samples will increase as we approach Chinese New Year because the factories are evaluating the opportunity cost of the sample itself. The value of the time invested in the sample production is higher as they run out of time to complete large orders before holiday closures. Factory engineers are typically on the floor overseeing production and quality assurance, a key role in the factory’s operations. Pulling engineers from their everyday tasks during peak season has proven costly to the factory. Therefore, the factory needs to ensure that the cost of sample creation is worth the potential work lost on existing orders. Your factory will see it as a sign of good faith if you proceed with the sample order at the increased rate they’ve proposed.
Delays in Communication
We’ve been referencing this since August when discussing reasons to plan for CNY early. Your suppliers’ sales representatives are going to be swamped trying to process last-minute orders and process larger orders. You should expect communications with suppliers to be delayed more than usual in the final calendar months of the year.
More “Yes” Responses in Haste
Items will slip through the cracks with folks’ plates being too full during this time. “Yes” is often the response you’ll receive but the outcome won’t be what you agreed upon. Be sure to have your point of contact repeat everything you’re asking for and get everything in the contract.
Our Recommendation: Emphasize Your QC!
Be very clear in your quality expectations with your suppliers during this time. As we’ve mentioned before, factories will often subcontract out their orders to smaller factories in an effort to complete as much work as possible. These smaller factories may not be familiar with creating your type of product, and likely are not up to date on your quality expectations. With that in mind, be sure to also clearly communicate and reiterate your Key Quality Indicators to your QC inspectors. It may also be a good idea to pay your QC inspectors extra. This can push you to the top of their list and secure priority inspections for your orders. You’re also more likely to receive a complete, thorough QC report that may otherwise be rushed through considering their volume of orders during this time. Your inspectors are also incentivized to catch more mistakes earlier on in the process.
“Should I start sourcing right before Chinese New Year?”
Is right now the best time to start sourcing new products? Probably not, especially if you’re just starting your Amazon or eCommerce business. You’ll want to start your sourcing journey when your suppliers have ample time to commit to your project and work through any hiccups. If you do decide to source a new product in these latter months, be sure to provide your supplier with as much information as possible upfront. Providing thorough and concise product details and quality expectations will communicate to the factory that you’re intent on success. You can use Noviland’s Private Label RFQ and QC Checklist as a guide for what all information should be included in your next RFQ.
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 Kennesaw, Georgia.