Everybody who works with China knows about implications of Chinese New Year holidays (CNY). Every year factories close, and workers go back home to rural areas to visit their families.
It takes factories at least a month to ramp back up after CNY. The period before and after the holiday is prime time for mistakes, and the cost of shipping around the holiday goes up drastically.
Companies abroad need to forecast far in advance to adjust for production times. But this year all this is even more complicated due to covid. In one hand we have freight rates which are crazy, there are less transits and a lack of containers so the cost of shipping a container has rocketed past $10,000 on the spot market (selling at CFR this freight means shipping costs of $500/t for IQF fillets).
In the other hand we have the latest outbreak of coronavirus in China, mainly in Dalian area where there are a lot of fillet processing factories.
On end December Dalian’s port stopped operating, and then 40 companies were ordered to suspend operations, 153 were closed for deep cleaning, while another 560 were given a time limit which they must do the same.
After holidays workers came back to plants, and Chinese authorities demand a previous confinement for all of them before start to work. This situation means there are many orders still production queue to be produced from March and on, and the players (producers and importers) have face new high freight rates, so goods will came late in time and more expensive than before.