Singapore, the world’s second largest container port, is currently experiencing unprecedented congestion levels since the COVID-19 pandemic began, indicating disruptions in global maritime shipping caused by the Houthi attacks in the Red Sea. Delays have also been reported in many ports in Asia and Europe.
Retailers, manufacturers, and other industries reliant on shipping are facing challenges such as surging freight rates, port congestion, and shortages of empty containers once again. Meanwhile, many companies are struggling to build up inventory to prepare for the upcoming peak shopping season at the end of the year, which could increase the risk of inflation.
According to maritime data company Linerlytica, global port congestion has reached a new high in the past 18 months, with 60% of vessels anchored in Asia. As of mid-June, over 2.4 million containers (20-foot equivalent units) of vessel capacity were waiting at anchorages.
Since last November, vessels have been forced to take longer routes around Africa to avoid the Houthi attacks in the Red Sea, disrupting shipping schedules and reducing the number of ports they can call at.
As a result, large cargo vessels are now unloading more cargo at transshipment hubs like Singapore in one go, skipping parts of their journey to catch up with their schedules. At these hubs, a significant amount of cargo is being transferred to other vessels to complete the final leg of the journey.
Jayendu Krishna, director at Drewry Shipping Consultants, stated that shippers are attempting to offload containers at transshipment centers to cope with the situation. Drewry reported a 22% increase in cargo discharge throughput in Singapore between January and May, with other key hubs also experiencing rising cargo volumes.
Singapore, as the world’s second largest shipping port, has been particularly affected by congestion in recent weeks. The Maritime and Port Authority of Singapore (MPA) reported in late May that the average waiting time for container ships to berth was two to three days, while delays could extend up to a week according to Linerlytica and PortCast, against the usual turnaround of less than a day.
Some vessels bypassing Singapore have led to congestion in neighboring ports. Linerlytica indicated mounting pressure on Malaysia’s Port Klang and Tanjung Pelepas, as well as increasing wait times at Chinese ports, with Shanghai and Qingdao experiencing the longest delays.
Drewry anticipates that congestion at major transshipment ports will remain high, but with carriers increasing capacity and restoring schedules, the situation may gradually alleviate. The Singapore Port Authority has reopened old berths and yards at Keppel and will open more berths at Tuas to address the port congestion.
Earlier this month, Maersk, the world’s second largest container shipping company, announced cancelation of two westbound journeys from China and South Korea in early July due to the congestion issues.
Shipping stakeholders and research firms suggest that the congestion has been exacerbated by customers shipping goods earlier than expected, anticipating robust demand ahead of the annual peak shipping season, consequently driving up container freight rates and posing inflation risks.
Jonathan Gold, Vice President of Supply Chain and Customs Policy at the National Retail Federation (NRF), mentioned that U.S. retailers are stocking up to meet the ongoing high consumer spending levels compared to last year. Since the beginning of 2024, container freight rates from Asia to the U.S. and Europe have doubled.
Concerns about possible strikes at U.S. ports later this year may have accelerated the peak season, with DHL indicating that strikes at German ports have further compounded the shipping predicament. Experts warn that all these disruptions might translate into higher prices for consumers. The disruptions could mean that consumers will have to pay higher prices.
(Source: This article is sourced from related reports by Reuters)