Singapore port congestion reveals worldwide ripple impact of Red Sea attacks

Congestion at Singapore's container port is at its worst because the COVID19 pandemic, an indication of how extended vessel rerouting to avoid Red Sea attacks has interrupted international ocean shipping with traffic jams also appearing in other Asian and European ports.

Merchants, producers and other industries that count on enormous box ships are once again battling surging rates, port backups and scarcities of empty containers, even as many consumer-oriented companies aim to develop inventories heading into the peak year-end shopping season.

Global port blockage has reached an 18-month high, with 60% of ships waiting at anchor situated in Asia, maritime information company Linerlytica stated this month. Ships with a total capacity of over 2.4 million twenty-foot equivalent container units (TEUs). were waiting at anchorages as of mid-June.

However, unlike throughout the pandemic, it is not a buying flurry. by house-bound consumers that is overloading ports.

Rather, ship timetables are being interrupted with missed. sailing schedules and fewer port calls, as vessels take longer. routes around Africa to avoid the Red Sea, where Yemen's Houthi. group has actually been attacking shipping considering that November.

Ships are therefore offloading bigger quantities at the same time at big. transhipment centers like Singapore, where cargoes are unloaded and. reloaded on various ships for the last leg of their journey,. and giving up subsequent voyages to catch up on schedules.

( Carriers) are trying to manage the situation by dropping. packages at transhipment hubs, said Jayendu Krishna, deputy. head of Singapore-based consultancy Drewry Maritime Advisors.

Liners have actually been building up boxes in Singapore and other. hubs.

Average Singapore freight offload volume jumped 22% between. January and May, significantly impacting port efficiency,. Drewry stated.

SERIOUS BLOCKAGE

Singapore, the world's second-largest container port,. has actually seen particularly severe blockage in current weeks.

The average wait time to berth a container ship was 2 to. three days, Singapore's Maritime and Port Authority (MPA) stated. in end-May, while container trackers Linerlytica and PortCast. said hold-ups might last as much as a week. Usually, berthing should. take less than a day.

Neighbouring ports are likewise supporting as some ships skip. Singapore.

The strain has shifted to Malaysia's Port Klang and Tanjung. Pelepas, said Linerlytica, while wait times have also climbed up at. Chinese ports, with Shanghai and Qingdao seeing the longest. hold-ups.

Drewry expects congestion at significant transhipment ports to. stay high, but expects some alleviating as providers add. capacity and restore schedules.

Singapore's MPA stated that port operator PSA had re-opened. older berths and lawns at Keppel Terminal and would open more. berths at Tuas Port to deal with prolonged waits.

Maersk, the world's second-largest container. carrier, stated this month it would skip 2 westbound cruisings. from China and South Korea in early July due to extreme. blockage in Asian and Mediterranean ports.

PEAK SEASON

The yearly peak shipping season has also gotten here earlier. than anticipated, worsening port congestion, carriers and. research firms stated

This seems to be driven by restocking activities,. particularly in the U.S., and by customers delivering items early. in anticipation of more powerful demand, stated Niki Frank, CEO of DHL. Worldwide Forwarding Asia Pacific.

Container rates, meanwhile, have surged, raising the risk of. another wave of rate boosts for purchasers like the. post-pandemic inflation spike which central banks are still. trying to tame.

Rates had actually stabilised into April but in May there was a. significant increase in ocean freight exports of Chinese. e-commerce, electrical cars, and eco-friendly energy-related. goods, Asia-focussed freight forwarder Dimerco said.

The peak season, which typically begins in June, was. advanced by a full month, triggering ocean freight rates to skyrocket.

Container import volume at the 10 largest U.S. seaports in. May increased 12%, fuelled by the second-highest regular monthly import. volumes considering that January 2023, stated information provider Descartes.

( U.S.) customers are continuing to spend more than last. year, and merchants are stocking up to meet demand, stated. Jonathan Gold, a National Retail Federation vice president.

Ocean imports into Europe from Asia are also showing indications. of a re-stocking season running into peak season - pressing rates. to 2024 highs, Judah Levine of freight platform Freightos said.

Container freight prices from Asia to the U.S. and Europe. have tripled because early 2024.

Rates from Asia and Singapore to the U.S. East Coast are at. their greatest since September 2022, while rates into the U.S. West Coast are greatest given that August 2022, freight platform. Xeneta said.

Some industry players believe part of the reason for the. bottlenecks at China ports is fuelled by U.S. importers hurrying. to purchase Chinese products such as steel and medical items that. will be subject to high tariff walkings from Aug. 1.

But freshly enforced U.S. tariffs would affect only about 4% of. Chinese imports to the U.S., said Jared Bernstein, chair of the. Council of Economic Advisers.

Gene Seroka, executive director of the Port of Los Angeles,. the largest U.S. gateway for Chinese ocean imports, also expects. a minimal effect.

We might see some of this freight been available in, however it is not going. to be a deluge, he said.

Concerns about possible strikes at U.S. ports this year. might also be pulling the peak season forward, while DHL stated. German port strikes were contributing to the gridlock.

All of those interruptions will likely imply greater prices for. customers, experts caution.

These are big monetary hits for carriers to absorb,. stated Peter Sand, primary analyst at Xeneta.

(source: Reuters)