Packaging Supply Chain Network Status

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Tagged "China"

July 6, 2020

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.

June 26, 2020

All manufacturers in the Lumi network are open. Chinese manufacturers are entering into the busy season. To see how the busy season impacts order deadlines, take a look at our Peak Season Deadlines.

Freight

The increase in ocean freight costs has slowed compared to the last few weeks, though demand and restricted capacity are keeping prices high. Carriers have restored some previously cancelled sailings for July in order to stabilize availability and price as much as possible.

Air freight rates have significantly dropped from their April peak, though they are nearly double what they were this time last year.

June 18, 2020

All manufacturers in the Lumi network are open. Chinese manufacturers continue their ramp-up into the busy season. Expect delays in production of 1-2 weeks for now. Take a look at our Peak Season Deadlines to see how these delays are impacting order deadlines.

Ocean Freight

Demand for ocean freight continues to increase. This combined with limited capacity from cancelled sailings has pushed rates higher. Prices for China-US East Coast reached $3,000/FEU for the first time since July 2019. China-US West Coast rates are at their highest level since November 2018. 

At the beginning of this week, some cancelled sailings were restored. However, with businesses uncertain about consumer spending, carriers are unsure how much capacity to keep on the market. Expect this uncertainty to be a constant throughout June and into July.

June 10, 2020

All manufacturers in the Lumi network remain open. Chinese manufacturers are entering their busy season. Delays of 1-2 weeks are in effect, and will extend in the coming weeks.

Freight

Air freight rates continue to decline from highs earlier this year. This is due to more capacity with the increase of passenger air travel as well as cooling demand. Still, rates from Shanghai and North America are roughly double what they were this time last year.

Ocean rates have increased unexpectedly due to a spike in demand and limited capacity. Some carriers are reporting delays of up to two weeks, and rate increases of 15-20%. Transpacific sailing capacity for Q3 is expected to be 5-10% less than the same time last year. Carriers have just announced more scheduled cancellations for this period.

April 22, 2020

Over 180 factories in the United States have reported status updates to Lumi this week.

US manufacturing

Packaging factories remain an essential service and continue to operate at full capacity, with one exception in New York which was first reported in late March. Increased demand could increase lead times by up to 2 weeks. 

China manufacturing

Production has almost fully recovered from initial COVID-19 shut downs. All factories surveyed are back at full capacity. 

International freight shipping 

To control freight rates, ocean carriers have cancelled a record number of sailings. Rates from China to the US remain mostly unchanged, but you should plan for 1-2 week delays due to limited vessel availability.

Air cargo rates remain high due to a decrease in passenger jet capacity and an increase in demand for urgent supplies. Rates are currently 3 to 4 times normal levels for this time of year and will likely continue to increase.

March 11, 2020

The unpredictable spread of COVID-19 has caused delays across supply chains globally. The impact on packaging for Lumi members so far has been localized in China.

As of this writing, all of the factories in the Lumi network are operational, however some factories in China are experiencing 1-3 week delays as they catch up to the backlog from Lunar New Year and the coronavirus closures.

We surveyed 24 manufacturers in the Lumi network including 12 in the US and 12 in China, between March 5th and 9th 2020, to gather information about how exactly your packaging supply chain is being impacted. Further detail can be found in our webinar recorded earlier today. 

China manufacturing

Manufacturers in China are taking greater precautions than in the United States. These include all employees wearing face masks, adding more wash stations, cleaning surfaces more frequently, and monitoring body temperature.

Some manufacturers are reporting 5-10% personnel shortages due to quarantine measures, but have stated that this has not affected production capacity.

  • 100% of factories have reopened factories since Feb 17
  • 22% reported 5-10% cost increases for raw materials, especially paper
  • 75% reported lead times extended by 1-3 weeks as they catch up with backed up orders from factory shut downs and manage material shortages.

China logistics

Air freight costs from China are still high — up to $1/KG increase from end of February to first week of March.

Some of the biggest delays may come from lack of air space, due to flight cancellations. There's also an increase of expedited orders being air freighted out of China to account for delays. This all results in a major cut in cargo space. Order early to avoid air freight and mitigate costs.

US manufacturing

All US manufacturers in the Lumi network are operating at full capacity. Prevention among US manufacturers is less strict right now. Only hand washing and safety training were consistently reported.

With the rapidly increasing number of cases, the biggest risk reported by US manufacturers is a personnel shortage.

  • 100% of factories reported that they're open and operating.
  • 100% of factories reported using US raw material sources, and therefore they're not dealing with any material delays.
  • No factories reported quarantined personnel at this time.
  • No factories reported increased lead times or cost.
March 9, 2020

Wednesday March 11th at 10AM PST, we will be hosting a webinar to discuss the impacts of the coronavirus (COVID-19) on the Lumi factory network and packaging supply chain more broadly. Sign up here.

January 29, 2020

You’ve no doubt heard about the coronavirus (COVID-19) outbreak in China, specifically the Hubei province. While there are no factories in the Lumi network within the Hubei province, the outbreak could soon prompt factory shutdowns in neighboring provinces that may cause delays.

​As of this writing, no lead times have been affected by the outbreak, but should shutdowns continue, you may see delays in order lead times, preproduction sample lead times, and quoting from factories in the these areas. 

Before the outbreak, we forecasted shutdowns for Lunar New Year throughout early February. We are keeping in close contact with manufacturers in China and will update you should shutdowns be extended past those dates.

October 11, 2019

An increase from the 25% tariffs implemented on May 10, 2019 to 30% has been delayed several times, and was suspended today. This tariff increase would affect the majority of packaging products shipped from China, including plastic bags, cotton bags and corrugated boxes.

August 30, 2019

The previously announced tariffs scheduled for September 1, 2019 have been increased from 10% to 15%. The affected categories available through Lumi fall under HTS categories 4901 and 4902 which covers publications (magazines, newspapers, booklets, books). These products have strong coverage across the Lumi Network, if you need help moving production to navigate these tariffs please reach out to your Lumi team.

August 19, 2019

A new 10% tariff is due to take effect on September 1, 2019. The list of affected products has been updated on August 13th by the USTR. As of this writing, the affected categories available through Lumi fall under HTS categories 4901 and 4902 which covers publications (magazines, newspapers, booklets, books).

May 10, 2019

The tariff increase of 25% has officially gone into effect today.

Products which were impacted by the 10% increase last year will be increased by an additional 15%, and new products impacted by the tariffs will increase by the full 25%.

Any products that are in production or in transit but have not passed through US customs will be affected. If you are a Lumi customer with current orders affected by the increased tariff rate you will see the tariff as a separate line item on your invoice.

Despite the 25% tariff, our market analysis indicates that the majority of plastic packaging is still more cost effective imported from China, however if you are interested in evaluating other options, request a quote.

December 4, 2018

With recent news of the tariff delays with China, we have delayed the 25% increase on China-sourced Lumi products until the increase goes into effect. Our prices now reflect the most recent tariff increase of 10% from September 2018. When it does, we'll update this post to reflect the change. 

If you ordered at the previously increased tariff rate, how does this impact you? For products imported from China after November 1, 2018, Lumi will refund the 15% tariff difference after your products arrive in the U.S., assuming that the tariff increase doesn’t go into effect before then. 

November 1, 2018

Over the past several months, you’ve probably heard the news about increasing tariffs on Chinese goods. Since August, nearly 6,000 line items in the Harmonized Tariff Schedule (HTS) were hit with a 25% tariff increase, going into effect on January 1, 2019.

In the third round of tariffs on September 24, 2018, nearly every type of packaging and packaging material made the list. 

How the tariffs will impact Lumi pricing

Starting today, we will increase baseline pricing by 25% for the following products to account for the increase in tariffs. This tariff increase will only affect items in your Dashboard if they are made in China.

  • Poly Mailers
  • Poly Bubble Mailers 
  • Paper Bubble Mailers 
  • Laminated Pouches
  • Tote Bags
  • Twisted-Handle Shopping Bags 
  • Garment Bags
  • Kraft Mailers
  • Any other custom-sourced packaging items from China

Why are we applying the tariff increase today if it takes effect on January 1st? With current lead times for manufacturing and sea freight from China, products ordered today will be affected by the tariff increase by the time they enter the US. You can stay on top of the current supply chain status by viewing the Delivery Schedule.

Historically, we have sourced the majority of our flexible plastic packaging (poly mailers, poly bags, laminated pouches) from China because of their highly competitive pricing, matched with their high standards for construction and print quality. We’re working with our manufacturing partners in mainland China to mitigate the U.S. tariffs as much as possible and provide geographic alternatives when we can. 

As always, we’ll keep you updated on any price fluctuations and the drivers behind them.