Goodbye, year of the rooster; hello, year of the dog. The Chinese New Year is almost upon us, and, as logistics and shipping professionals know, the holiday has global effects on freight flows and supply chains. Millions of factory workers leave China’s coastal belt of megacities—from Tianjin in the north to Beijing, Shanghai and down to Guangzhou and Shenzhen—and head back to their hometowns in the rural provinces, shutting down production and exports for up to three weeks. 

The Chinese New Year is one of the biggest first quarter seasonality factors every year, and CNY 2018 will also have huge impacts on West Coast freight. This year, the holiday falls on Friday, Feb. 16, a full 19 days later than 2017’s CNY, creating a six week sweet spot between the western New Year and the Chinese New Year during which Asian shippers will push as much freight out as they can before everything shuts down. Shippers and ocean carriers taking advantage of that sweet spot should help strengthen American truckload rates during what’s traditionally the slowest time of year. Container spot rates from Shanghai to Los Angeles still haven’t recovered from their year-long slide in 2017—that rate was at $1,360 per FEU (forty foot equivalent unit) on Jan. 18, down from weeks prior and down 39% YOY. This may change as we draw closer to the Chinese New Year, when ocean carriers customarily drop one or two sailings a week to keep rates high during the pre-holiday surge. 

But the late holiday will have another interesting effect on the tail end of the celebrations, when the workers return to China’s east coast and freight volumes start picking back up. We expect normal freight flows to resume in mid- to late March, depending on how quickly China restarts production, and accounting for the 17 day container ship transit time from Shanghai to Los Angeles.

FreightWaves expects 2018 to experience a sudden, sharp uptick in container volume on West Coast ports after the CNY lull; this year, that port traffic will coincide with California strawberry, lemon, artichoke and asparagus harvests. We predict an extraordinary demand for trucking capacity on the West Coast and significant delays on getting freight out of the larger ports like Los Angeles and Long Beach. Low priority freight will sit in the ports as traffic ramps up, and eventually those shipments will become ‘must-haves’ for their customers.

Read more at freightwaves.com.