How To Mitigate Supply Chain Volatility During Chinese New Year

While millions of people in China and elsewhere in Asia celebrate the Chinese Year of the Snake on January 29, 2025, supply chain managers around the world may already be struggling with significant backlogs at ports and warehouses. Also known as Chinese New Year (CNY) this annual logistical déjà vu seems to bring about new supply chain challenges every year.

This year is no different. Let’s take a look at three areas of supply chain volatility as we head into CNY.

1) Potential tariffs the new U.S. president intends to impose on certain products at the start of his term of office could prompt many U.S. companies to ship their goods earlier than planned to arrive before tariffs are activated.

2) Strikes on the US East Coast and Gulf Coast, according to the latest reports, might happen soon if the contract is not ratified by both parties in time, leading to further delivery delays. Last October, the strikes brought freight transport in the U.S. to a standstill and led to weeks of delays.

3) A weakening Chinese economy and subdued consumer demand for goods, could lead to a possible increase in layoffs and thus a labor shortage. As a result, increased production demand in the run-up to Chinese New Year may not be fully met. This begs the question of how to keep internal productivity intact with fewer resources.

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For companies that rely on deliveries from China, it is particularly important to be aware of and prepared for the typical phases of volatility surrounding CNY.

“Many Chinese manufacturing companies retained the fewer employees to fulfill the fewer orders than before,” said Jason Chiu, Vice president and GC Head of Center of Excellence, SAP Digital Supply Chain. “However, the increasing orders are coming for the Christmas, New Year and the Chinese New Year demands.”

How can companies sourcing their goods and commodities from China mitigate, maintain and even optimize the impact on supply chains amid these festivities?

Plan ahead and optimize stock

The most important tip is also the most boring one: plan ahead – not only for the period before, but also after the Chinese New Year, as supply chains often recover in spring. Stock levels should be topped up to avoid possible production stoppages. Data-based planning tools and AI-supported demand forecasts can help to optimize orders. This minimizes the risk of being left with either mountains of product or – even worse – empty shelves.

Consider alternative delivery options

For urgent deliveries during the Chinese New Year supply chain disruption, companies should consider alternative transport options, such as ship-to-rail or an alternative combination of ship-to-air.

Expand the supplier base

It is advisable to expand the supplier base and the supplier network in order to have fallback options in the event of a disruption. And in view of the US President-elect’s announcement to increase tariffs, more thought should be given to relocating procurement and production sites to other countries in order to offset dependence on Chinese suppliers.

Maintain supplier relationships

Building positive relationships with Chinese suppliers can make a big difference during Chinese New Year. Taking the time to congratulate your suppliers on the occasion or sending them a small thank you note can help you score points. In the Chinese business world, guanxi – good relationships – count for more than you might think.

And remember in the Year of the Snake: stay adaptable, think ahead and maneuver elegantly around bottlenecks. With smart planning and a touch of serenity, Chinese New Year 2025 will be no obstacle for your supply chains.

With this in mind: 新年快乐 xin nian kuaile!

Download the latest IDC Report to learn how companies are using cloud technology to understand supply chain operations and business outcomes.