Packaging Supply Chain Network Status

Minor Slowdown Expected As China Celebrates International Workers' Day

China will celebrate International Worker's Day (also known as Labor Day). Factories will generally be closed from 5/1 - 5/4 which may mean that you won't be able to communicate with your suppliers over that period. This should not cause any significant delays and factories plan around this closure to minimize disruption.

Potential Delays Due to COVID Related Closures in China

Regions of China — including Shenzhen and Shanghai — have shut down due to a rise in COVID cases. Since offices and manufacturing facilities are on lockdown in these areas, there may be production delays. We recommend messaging your supplier(s) in China to find out if any of your orders may be affected. Read more about China’s lockdowns.

Chinese New Year 2022
All factories in China will close between 31 January and 6 February for the Spring Festival (commonly known as Chinese New Year or Lunar New Year). Typically effects of the shutdown will be seen from mid-January as many people extend their holidays.

Ports will also close briefly so you should plan for your packaging to leave by the third week of January to be certain that they will be in transit before the holiday. Speak to your suppliers or freight forwarder about air freight if you have an urgent shipment, although costs usually rise dramatically at this time of year.

Different industries often stagger the closures so you should communicate with any active suppliers about their specific dates. Although the official holiday lasts for one week, some factories can be closed for up to 4 weeks.

Plan ahead
We recommend ordering earlier and higher quantities than usual for this time period. You can also combine air and sea freight to make sure you hit your timelines. Alternatively, the marketplace has a great selection of US suppliers who can quote for you.

Post-CNY Delays
When factories reopen, they often have a production backlog and minimal workforce. This means that delays are likely after CNY, so it is best to get full transparency from your suppliers before you place any new orders. This is exacerbated by potential supply chain issues as materials suppliers may be closed for longer.

Timeline

  • Factory closures: mid-January to mid-February 
  • Potential delays: mid-February to mid-March
  • Return to full capacity: mid-March onwards

Electricity rationing expected to reduce capacity in China

Power outages and electricity rationing in China is expected to reduce capacity, increase lead times, and increase costs from factories in China.

Manufacturers in China have reported that electricity may be rationed in the coming months. In some regions factories have been temporarily closed while in others they are subject to a 50% rationing of supply.

This rationing is driven by a combination of coal shortages and the enforcing of environmental targets.

In practice this will mean higher prices and longer lead times. This will add to existing delays seen at Asian and US ports although that is expected to improve once China returns from the Golden Week holiday.

If you need to order from China in the next 3 months, make sure you discuss this with your supplier so that you have a clear understanding of the timelines. You may also want to explore US manufacturing alternatives as there is no guarantee that the volatility won’t continue through 2022. 

Over 700 US factories have joined Lumi in the last 6 months with wide availability across products. Explore suppliers in the United States on Lumi.

Port congestion is causing delays

Shipping times from Asia to the US are continuing to rise as we approach the holiday season. Ports across the US and China are struggling to meet the current capacity needs, which is leading to delays in departure and arrival for goods. The Los Angeles—Long Beach hub is the most severely affected with more than 50 ships unable to dock. Other major US ports have seen backlogs over the last few months. 

You can expect to see a 2-4 week delay in ocean freight shipments. If your goods have not left Asia yet, you may want to consider partial air freight.

Golden Week closures in China

China will celebrate Golden Week from 1-7 October and the major ports will be closed.

Expected communication delays for Dragon Boat Festival, June 12-14

Manufacturers in China are preparing for the annual Dragon Boat Festival, which will last from June 12th to June 14th. Communications may be delayed until they return to work on June 15th.

Although not as long as the Lunar New Year celebration, the Dragon Boat Festival is a widespread holiday in nearly all of Asia. Plan on minor disruptions to production and slower responses from factories, freight forwarders, customs brokers and anyone else directly connected to the region.

The Dragon Boat Festival has been celebrated for thousands of years and its traditions are associated with driving off evil spirits, disease, and bad luck.

Expected production delays for Lunar New Year

Factories in Asia will be closed February 10-20 in observance of Lunar New Year (February 12). Some factories allow workers to take more than the allotted time off, so we like to plan for reduced production runs for the remainder of the month.

Before and after the weeks-long holiday, factories will experience congestion as they prepare for the close, and then catch up on the backlog. This will result in longer than expected lead times in early March, but production will level out in mid to late March. Please note, the delays in production also have an effect on logistics and congestion at port. All cargo should be planned in advance. Bookings within the Lumi freight team will begin March 15 and proceed as normal following that start date.

To avoid production delays, if you are ordering from factories in Asia and need to receive items before the end of March, we advise placing your orders as soon as possible.

Preempting production delays for Lunar New Year

Factories in Asia will be closed for weeks in early February in observance of Lunar New Year (February 12). Orders placed after December 31, 2020 will likely encounter serious production delays. 

Before and after the weeks-long holiday, factories will experience congestion as they prepare for the close, and then catch up on the backlog. 

To avoid production delays, if you are ordering from factories in Asia and need to receive items before the end of March, we advise placing your orders as soon as possible. 

U.S. International Trade Commission decides no on further duties for Chinese glass products

The U.S. International Trade Commission found on October 20, 2020 that no U.S. industry is materially injured by imports of glass containers from China. This is counter to what was determined in September by the U.S. Department of Commerce, however, both organizations must agree that imports are injuring the domestic industry in order for duties to go into effect.

As a result of the Commission’s negative determination, no further anti dumping duty will be applied or countervailing duty deposits required for imports of glass containers from China, and importers will receive refunds of the deposits that they have previously paid.

Potential anti-dumping duty for Chinese glass products

A new anti-dumping duty (ADD) is being considered for most glass items brought into the US from China. The items covered under the proposed ADD are glass bottles and jars that hold from 2 fluid ounces up to 1 gallon. 

The tariff would vary across industries and some manufacturers will be granted reduced rates, however the vast majority of factories affected would be subject to a rate of up to 256%.

In September 2019 a petition was filed by The American Glass Packaging Coalition claiming that manufacturers in China are receiving subsidies from the Chinese government.

On September 14, 2020, the U.S. Department of Commerce (DOC) made its final determination in favor of the new ADD, however in order for tariffs to be imposed, both the DOC and the U.S. International Trade Commission (ITC) must agree that imports of glass containers from China are injuring the domestic industry.

The ITC is currently scheduled to make its final determination in the anti-dumping duties investigation by October 26, 2020. If decided in favor of the new ADD, an anti-dumping order will be issued by November 2, 2020.

The ITC has not provided any indication of how they will rule in this determination, however on June 9, 2020, in a countervailing investigation, the ITC decided against a new ADD.