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Preparing for Chinese New Year: Avoiding supply chain disruption in 2025

Dec 11, 2024 | 4PL, Automotive, China, eCommerce, International Trade, MVT, News, Publishing, Retail, Supply Chain

Chinese New Year (CNY) is a time of celebration across China but presents significant challenges for shippers and careful planning is essential to navigate the disruption effectively.

In 2025, the holiday officially runs from 29th January to 4th February, with its effects on production and logistics stretching weeks before and after these dates.

Production and logistics in China begin slowing well before the official holiday period. Workers start taking leave in early January, significantly reducing manufacturing output by mid-month. During the official CNY public holidays, factories, ports, and freight services shut down entirely. Although operations resume after the Lantern Festival on 12th February, it can take until mid-March for production and shipping networks to return to normal capacity.

This extended downtime creates a ripple effect across industries dependent on Chinese manufacturing, including electronics, textiles, toys, and automotive parts. The period is characterised by delayed production schedules, increased freight costs, and severe supply chain bottlenecks.

Key challenges during CNY
1. Severe delays: Factory closures lead to delayed production and delivery schedules, particularly for industries with complex supply chains.

2. Increased costs: Freight rates spike before the holiday due to high demand, often including peak season surcharges. Post-CNY, container shortages and port congestion further inflate costs.

3. Labour shortages: Even after the holiday ends, the staggered return of workers impacts production capacity, causing additional delays.

4. Inventory challenges: Businesses relying on “just-in-time” manufacturing face stock shortages as lead times lengthen significantly.

Mitigation strategies for businesses
To minimise disruption, businesses must adopt proactive strategies to maintain continuity during and after the CNY period.

Plan shipments early: Secure carrier bookings well in advance to avoid delays or last-minute surcharges. Less-than-container loads (LCL) can offer flexibility if full container capacity is unavailable.

Diversify suppliers and routes: Reduce dependency on single suppliers or ports. Consider alternative shipping methods, such as air freight, to mitigate delays.

Optimise inventory management: Build up stock levels for high-demand products before January to account for production slowdowns.

Enhance communication: Collaborate with suppliers, logistics providers, and customers to align timelines and contingency plans. Clear communication ensures all parties are prepared for potential delays.

Post-holiday recovery: Prepare for a gradual return to normalcy by staggering production schedules and allocating resources to handle delayed shipments.

Key dates to consider
22nd January to 9th February 2025: Potential for reduced production.
29th January to 4th February 2025: Official public holidays.
12th February 2025: Lantern Festival; operations typically resume.

Metro’s proactive strategies, powered by our advanced MVT technology, keep your supply chain running smoothly during Chinese New Year.

With our MVT technology, vendor management is seamless and fully transparent down to SKU level. This powerful tool empowers you to monitor every milestone in your supply chain, enabling timely and informed decisions to effectively navigate challenges.

Chinese New Year doesn’t have to disrupt your operations. With Metro’s expertise, global partnerships, and cutting-edge MVT technology, you can avoid delays, optimise costs, and maintain critical inventory levels.

EMAIL Andrew Smith, Chief Commercial Officer, today to discover how Metro can support your supply chain through Chinese New Year 2025.

Air freight situation and outlook for 2025

Dec 10, 2024 | 4PL, Air, eCommerce, Exports, Foodstuffs, News, Publishing, Retail, Sea/Air, Supply Chain

Global air freight market continues to experience robust growth, driven by eCommerce and the peak season, but faces capacity constraints due to reduced belly cargo capacity and a limited supply of wide-body freighters, particularly on key trade routes.

Demand rose 10% year on year in November, marking the 13th consecutive month of double-digit growth. However, capacity has only increased by 2%, pushing the cargo load factor to its highest level in over 30 months at 63%, with average spot rates 22% up year-on-year.

Regional performance
Europe: Transatlantic rates have risen due to capacity cuts in freighter and belly cargo availability, coinciding with the winter season. European imports from the Middle East remain strong, driven by sea-air volumes and Red Sea disruptions.

Asia: Air freight demand is set for double-digit growth in key lanes, particularly between North Asia and Europe, despite elevated rates and tight capacity. The anticipated cargo rush to avoid new US tariffs has not yet materialised, but demand remains buoyant.

Americas: The US is grappling with capacity challenges stemming from South America congestion and redirected EU-to-AML routes. Port strikes in Canada have slightly increased air freight demand, adding further pressure to regional supply chains.

Outlook for 2025
Global air cargo volumes are projected to rise by 5.8% year on year in 2025, reaching 72.5 million tonnes. This growth will be supported by booming eCommerce originating in Asia, although any changes by the U.S. to the current ‘de minimis’ thresholds, could have a profound impact.

Geopolitical uncertainty will continue to play a significant role in shaping air freight dynamics. The Red Sea crisis is expected to persist, influencing routing decisions and costs. Potential tariff changes in the United States could impact trade volumes, though benefits from deregulation under a business-friendly administration may offset some of the negative effects.

Rates and capacity
Air freight rates are likely to remain elevated if demand continues to outpace capacity. Airlines are responding with rate increases and expanding dedicated services to key regions. For example, Air China has announced rate adjustments, reflecting confidence in the strength of the market.

Global available cargo tonne-kilometres (ACTKs) are expected to grow gradually, though at a decelerating rate. Capacity expansion remains constrained by limited availability of freighters and reduced belly cargo options on key routes.

The air freight market is poised for continued growth in 2025, bolstered by strong demand from eCommerce and evolving trade dynamics, while challenges such as capacity constraints and geopolitical uncertainties remain.

For urgent and sensitive shipments, Metro offers tailored airfreight, charter, and sea/air solutions. With block space agreements (BSA) and capacity purchase agreements (CPA), we guarantee space and competitive rates on the busiest routes.

Our Birmingham International Hub and partnerships with regional airports provide significant time and cost benefits, while our global network ensures agility in a dynamic market.

Whatever your cargo size, type, or deadline, we deliver the best rate and service combinations to meet your needs.

EMAIL Elliot Carlile, Operations Director, for insights and pricing today.

Road freight market update and Metro review

Dec 10, 2024 | 4PL, Automotive, Chemical, Foodstuffs, France, Hazardous, Intermodal, Logistics, Metro, Publishing, Retail, Road, Turkey

The road freight market in the UK and Europe is grappling with structural cost challenges, evolving regulations, and capacity constraints, while Metro’s road freight division continues to expand, delivering innovative solutions and outperforming market trends.

In the UK and Europe, road freight rates have remained under pressure due to structural cost drivers. The market stabilised in Q3 as softer short-term demand provided some relief. However, higher costs associated with fuel, tyres, insurance, and maintenance are sustaining elevated freight prices.

New truck registrations in Europe have fallen by 7.5% year-to-date, limiting capacity growth. As a result, many carriers are extending vehicle lifespans, with the average truck age now at 14.2 years. This decline in fleet renewal, combined with new EU regulations banning non-compliant rubber imports by year-end, has further tightened capacity and increased costs.

The TEG Road Transport Index showed a slight month-on-month decline but remains 4.4 points higher than the same period last year. Similarly, the haulage price index rose marginally in November but has seen a 10.4-point increase year-on-year.

Consumer demand around Black Friday offered a brief boost to the sector, with UK retail destinations seeing an 11% rise in footfall compared to the previous Friday. However, this temporary spike is unlikely to offset the ongoing challenges posed by inflationary pressures and volatile diesel prices, which continue to drive rates higher.

Metro’s road freight performance
Metro has made significant strides in its road freight division, upgrading its groupage services to France and Germany to deliver greater speed, efficiency, and customer satisfaction. These enhanced services ensure regular, reliable departures and seamless distribution throughout key regions.

France: Metro’s groupage services remain a standout feature, offering efficient, dependable shipping across the country.

Germany: Metro has expanded its presence, particularly in the Ruhr area, a vital industrial hub. Frequent departures ensure swift distribution through a trusted partner network.

Metro’s commitment to excellence extends beyond speed and cost. By prioritising communication, reliability, and trust, the company has built a reputation for hassle-free European shipping. Features such as GPS-tracked vehicles, dedicated routes, and door-to-door solutions ensure customers benefit from transparency and timely updates throughout the process.

Metro’s growth and outlook for 2025
The road freight division has seen exceptional growth, outpacing the market. While many competitors have experienced flat volumes, Metro has achieved over 50% year-on-year expansion, with a 60% increase in team size in the last year alone. The division is projected to grow by a further third in 2025, targeting an additional 40% volume increase.

Key priorities for 2025 include:
New groupage services: Recently launched lanes to the Netherlands, Poland, and Iberia are expected to play a significant role in Metro’s growth strategy.

French and German services: Continued development of these high-demand routes will remain a focus, with plans to enhance service frequency and efficiency.

Pan-European LTL and FTL services: The bulk of Metro’s volume is expected to come from its less-than-truckload (LTL) and full-truckload (FTL) offerings, supporting both inbound and outbound trade across Europe.

The road freight market faces continued pressure from rising costs and capacity constraints, but Metro’s proactive approach and investment in innovative solutions position it as a leader in the sector. By prioritising customer satisfaction and expanding its services, Metro is set to maintain its strong growth trajectory in 2025, even as the broader market navigates challenging conditions.

To explore the potential and benefits of our road freight services EMAIL Richard Gibbs to begin a conversation.

Sea freight situation and outlook for 2025

Dec 9, 2024 | 4PL, Automotive, Chemical, Exports, News, Publishing, Retail, Sea, Supply Chain

With 2024 characterised by elevated freight rates and fluctuating dynamics, the container shipping lines have emerged as the primary financial beneficiaries, leveraging rate increases and stabilisation efforts to maintain profitability.

The outlook for 2025 presents a mixed landscape of opportunities and challenges, driven by shifting demand patterns, increased capacity, and geopolitical uncertainties.

Current market dynamics
Freight rates remain significantly above pre-crisis levels. Despite a gradual downward trend in global head-haul rates, the market has stabilised, suggesting a potential period of relative equilibrium in the coming quarters.

Recent general rate increases (GRIs) by Asia-Europe carriers have demonstrated success, with rates on key routes from Asia to Europe rising by over 20%.

These elevated rates are expected to persist until the Chinese New Year in late January 2025. However, the seasonal decline in demand and the introduction of new alliance networks in February may present an opportunity for shippers.

Supply chain and capacity dynamics
Global shipping capacity grew by nearly 5% in Q3 2024, supported by minimal fleet idling and increased vessel activity. Ships previously affected by Suez Canal disruptions have returned to regular service, further bolstering capacity.

Nevertheless, the risk of overcapacity looms large. Continued vessel deliveries, combined with low scrappage rates, may necessitate fleet rationalisation if demand weakens. Carriers remain bullish, adding capacity to secure competitive positioning despite potential imbalances.

Outlook for 2025
The sea freight market in 2025 is expected to face moderate demand growth, projected at around 3-4%, though low consumer confidence and increased import tariffs in key markets, particularly the United States, may temper this growth. Additionally, manufacturing indices in major regions, including China and Europe remain suppressed limiting demand potential.

Geopolitical uncertainties will continue to shape the market. Ongoing negotiations in U.S. East and Gulf ports could lead to disruptions if unresolved by the 15th January 2025, while tensions in the Red Sea pose potential risks to key shipping routes.

Trade policy remains a critical factor, with proposed tariff increases in the United States potentially reshaping containerised cargo flows, particularly on Asian export routes. Meanwhile, the temporary rerouting of vessels around the Cape of Good Hope has absorbed some capacity, but a return to normal operations through the Suez Canal could intensify supply-demand imbalances.

As geopolitical risks and market disruptions continue to loom over the industry, maintaining resilient supply chains and budgeting effectively will be key priorities for shippers navigating the complexities of 2025’s sea freight landscape.

In a volatile sea freight market, our fixed-rate agreements on popular shipping routes reduce risk and provide essential budgetary certainty.

To explore how Metro’s fixed-rate options could support your business in 2025, please EMAIL chief commercial officer Andy Smith.