Port Report: China May Look To Take A Little Extra Time Off This Lunar New Year

As the three largest U.S. ports see major congestion amid large volumes of inbound containers, the only near-term relief may come from the upcoming Chinese Lunar New Year. China's Lunar New Year, which begins February 5, is technically a week-long holiday for most of the country's factory workers. But China's manufacturing industry and logistics businesses typically shut down a week earlier and later than the official holiday period so employees can make the long journey home to the nation's vast interior. All in, the Lunar New Year can last up to 40 days thanks to the extended travel times and family reunions. This Lunar New Year is different due to an uncertain trade outlook and a weaker Chinese economy. The Wall Street Journal reports that factories in the export dependent southern coastal region of China furloughed workers up to two months prior to Lunar New Year due to weakening sales.

While the country's ports are only closed for three days, the factory closures and employee absences mean a slowdown in freight markets, particularly to China's biggest customer. Indeed, February is typically the slowest month for U.S. imports of Chinese goods. U.S. Census Bureau data show that the dollar value of Chinese goods entering the U.S. is at its monthly lowest point in February in five of the last eight years. Since 2011, the value of Chinese goods entering the U.S. fell an average of 15 percent during February. U.S. ports likewise see a slowdown in containers crossing into their terminals, with much of the slowdown extending into March. The Port of Los Angeles saw its container volumes fall 10 percent from January through February last year while a 31 percent drop was seen in February to March.

Shipping lines naturally dial back service in the face of lower volumes, with a number of voyages and sailings cancelled during Lunar New Year. Containership analytics firm PR News Service says the Ocean Alliance will take out six voyages to the U.S. West Coast and Canada from February through March. The 2M Alliance will take three sailings to the U.S. East Coast over the same time.

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