Packaging Supply Chain Network Status

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.

The Lumi manufacturing network of remains fully operational. With peak season underway, take a look at our Peak Season Deadlines to see how lead times are impacted.

Freight

Ocean freight rates from China to the US are rising once again. A general rate increase was implemented on Aug 15th sending China to US rates to recent highs. While rates have increased to both US coasts, the West Coast has increased more dramatically with a 15% climb since the end of July. Eastbound trans-Pacific shipments booked for August 15 departures are paying about $3,600 per FEU to the West Coast and $4,100 per FEU to the East Coast.

Due to high ocean rates and delays, air freight rates are increasing and are likely to continue to through the month.

The Lumi network of manufacturers remains fully operational in the US and China. Increased demand is causing delays of 1-2 weeks in both countries.

Both ocean and air carriers continue to cope with increased demand and availability. Rates are steady for now, but are likely to increase in the near term.

The Lumi network remains fully operational, though some manufacturers are reporting capacity constraints. These constraints are mostly driven by demand related to the upcoming holidays.

Ocean carriers are adding capacity to transpacific shipping lanes for August. Current vessels are at full capacity and demand remains steady. Book in advance whenever possible.

After falling steadily since May, air freight rates are expected to rise through August with the launch of products from Sony, Apple, and Samsung.

Lumi’s network remains fully operational with no closures. Expect 1-2 week delays on some specialty items.

Steady volumes are keeping ocean rates high. Though capacity is tight, orders are currently shipping at regular volumes and cadence. Only 4.7% of sailings from Asia to North America have been “blanked” (cancelled) for Q3 compared to 14.7% in Q2.

With fewer converted passenger jets currently in use, air freight rates from China to the US are on the rise again.

Typically, back-to-school business puts a strain on shipping capacity in late summer. In the coming weeks, we may see volumes increase due to back-to-school volumes, and more generally as companies try to get out ahead of a potential COVID-19 resurgence. 

The Lumi network remains fully operational with no closures. Expect 1-2 week delays on some specialty items.

Ocean freight and air freight rates are relatively unchanged from last week.

All manufacturers in the Lumi network are open. US manufacturers have not been impacted by the recent increase in COVID-19 cases.

Freight

After last week’s general rate increase, ocean freight rates have leveled off and look to remain stable for the the next few weeks. Improvements in capacity have helped and it is likely that short-term demand has peaked.

Air freight rates are beginning to normalize as the capacity crunch and PPE-driven demand continue to ease.