What is China Golden Week?
As one of the largest and most important markets in the world, China's logistics infrastructure is under enormous pressure to maintain a certain level of productivity and efficiency to keep global supply chains functioning and stable.
From factories and warehouses to ports, docks and more, Chinese workers in all logistics industries work long hours throughout the year to ensure the maintenance of global supply networks.
But twice a year, the world's largest exporter allows itself a break.
Known in China as Golden Week, the country has two such week-long respites - once every six months.
The first, known as the Lunar New Year Golden Week, is in January/February at the beginning of the year, giving people time to celebrate the Lunar New Year.
The second, National Day Golden Week, is part of the country’s National Day celebrations and takes place in October – right in the middle of the peak shipping season.
Given China's impact on global markets and world trade, the week-long - albeit expected - lull threatens to disrupt global supply chain operations, ripple effects and logistical delays.
In this article, we will focus on the National Day Golden Week in October. But to understand how China's National Day Golden Week affects logistics, we must first dive into some basic facts about the holiday.
When is China's National Golden Week?
China's National Golden Week is held every year in the first week of October to celebrate the founding of the People's Republic of China.
Golden Week 2022 will run from October 1st to October 7th.
How does China's Golden Week affect logistics?
Demand for Chinese exports soared in the weeks leading up to China's Golden Week as companies tried to get their exports out before operations in the country shut down completely.
In response to the lack of activity, shipping lines often announce service cuts.
At the time of writing, two major shipping alliances have announced cuts to 15 weekly sailings from Asia to North America:
- Nine o'clock to the west coast
- Four to the east coast
- Two go to the gulf coast
Even after Golden Week, capacity and personnel tend to remain limited, and production may slowly pick up. Carriers may also continue to cancel sailings in the coming weeks.
That said, failing to get your goods in and out of China ahead of the festivities can have dire consequences, as Golden Week delays can sometimes stretch for months.
For businesses, this can translate into potential contract breaches, accumulated delay charges, low sales figures, and more.
High demand and low availability
Demand for Chinese exports surged in the weeks leading up to the start of Golden Week.
That's in anticipation of the shutdown, as businesses importing from China try to get a spot on outgoing ships to ensure their goods leave the world's largest exporter before production halts.
In response to this growing demand, shipping lines have increased spot rates. Spot freight rates from China to the North American West Coast were at their highest level in two months as of early September.
Amid this boom, the industry is also facing shortages of containers, slots, truckers and everything in between. Shippers should be prepared to go the extra mile to ensure not only a slot on a container ship, but also cover for the equipment they need for transportation.
In addition to the standard General Rate Increase (GRI), there are other surcharges to consider.
Given the higher demand for Chinese exports compared to Chinese imports, there is often an urgent need to return containers to terminals to manage demand in Chinese ports.
At this point, carriers began implementing surcharges such as equipment imbalance surcharge (EIS) to compensate for the cost of returning empty containers to Chinese ports to meet export demand.
