Congestion at Singapore’s container port is at its peak since the COVID-19 pandemic, showing that prolonged rerouting of ships to avoid Red Sea attacks has disrupted global shipping, with bottlenecks emerging also in other ports in Asia and Europe.
Retailers, manufacturers and other industries that rely on massive cargo ships are once again facing high tariffs, port blockages and shortages of empty containers, even as many consumer-focused businesses are looking to build up inventory as the peak end-of-year shopping period approaches.
Global port congestion has reached its highest level in 18 months, with 60% of ships waiting at anchor in Asia, maritime data firm Linerlytica said this month. By mid-June, ships with a total capacity of more than 2.4 million twenty-foot equivalent units (TEUs) were waiting at anchor.
But, unlike what happened during the pandemic, it is not a wave of purchases from homebound consumers that is overwhelming the ports.
Indeed, ships are taking longer routes around Africa to avoid the Red Sea, where Yemen’s Houthis have been attacking ships since November.
Ships therefore unload larger quantities at one time at large transshipment hubs like Singapore, where cargoes are unloaded and reloaded on different vessels for the final leg of their journey, and forgo subsequent voyages to catch up with schedules.
“Shippers are trying to manage the situation by dropping off boxes at transshipment centres,” said Jayendu Krishna, deputy director at Singapore-based consultancy Drewry Maritime Advisors.
“Carriers have been hoarding boxes in Singapore and other centers.
The average cargo unloading volume in Singapore jumped 22% between January and May, which had a significant impact on the port’s productivity, according to Drewry.
SEVERE CONGESTION
Singapore, the world’s second largest container port, has experienced particularly heavy congestion in recent weeks.
The Maritime and Port Authority of Singapore (MPA) said in late May that the average wait time for a container ship to dock was two to three days, while container tracking companies Linerlytica and PortCast reported that delays could last up to a week. Typically, docking should take less than a day.
Neighboring ports are also experiencing delays as some ships avoid Singapore.
Pressure has shifted to Port Klang and Tanjung Pelepas in Malaysia, Linerlytica said, while waiting times have also increased at Chinese ports, with Shanghai and Qingdao experiencing the biggest delays.
Drewry expects congestion at major transshipment ports to remain high, but anticipates some easing as carriers increase capacity and restore schedules.
Singapore MPA has reopened older berths and yards at Keppel Terminal and will open additional berths at Tuas Port to address increasing waiting times.
Maersk, the world’s second-largest container carrier, said this month it would skip two westbound departures from China and South Korea in early July due to heavy congestion at Asian ports and Mediterranean.
PEAK SEASON
The annual peak shipping season also arrived earlier than expected, exacerbating port congestion, according to shippers and research firms.
This appears to be due to restocking activity, particularly in the United States, and customers shipping goods earlier than expected in anticipation of stronger demand, said Niki Frank, CEO of DHL Global Forwarding Asia Pacific .
Container rates, meanwhile, have soared, raising the risk of a new wave of price hikes for buyers, similar to the post-pandemic inflation spike that central banks are still trying to curb. stem.
Rates had stabilized in April, but in May “there was a significant increase in ocean freight exports for Chinese e-commerce, electric vehicles and renewable energy-related goods,” said freight forwarder Dimerco, specialized in Asia.
“Peak season, which traditionally begins in June, has been brought forward by a full month, causing ocean freight rates to skyrocket.
The volume of container imports at the 10 largest U.S. seaports in May increased 12%, fueled by the second highest monthly import volumes since January 2023, data provider Descartes said.
“(U.S.) consumers continue to spend more than last year and retailers are stocking up to meet demand,” said Jonathan Gold, vice president of the National Retail Federation.
Seaborne imports to Europe from Asia are also showing signs of a restocking season extending into peak season, pushing rates toward record highs in 2024, said Judah Levine of freight platform Freightos .
Container freight prices from Asia to the United States and Europe have tripled since the start of 2024.
Fares from Asia and Singapore to the US East Coast are at their highest level since September 2022, while rates to the US West Coast are at their highest level since August 2022 , indicated the freight platform Xeneta.
Some industry players believe the bottlenecks at Chinese ports are partly because U.S. importers are rushing to buy Chinese goods such as steel and medical products that will be subject to steep hikes. prices from August 1.
But the newly imposed customs duties
US customs duties
would only affect about 4% of Chinese imports into the United States, said Jared Bernstein, president of the Council of Economic Advisers.
Gene Seroka, executive director of the Port of Los Angeles, the largest U.S. gateway for Chinese maritime imports, also expects a limited impact.
“We might see some of that cargo arrive, but it won’t be a deluge,” he said.
Concerns about possible strikes at U.S. ports this year could also bring forward the peak season, while DHL said strikes at German ports were adding to congestion.
Experts warn that all this disruption will likely result in higher prices for consumers.
“Shippers are having to absorb considerable financial losses,” said Peter Sand, chief analyst at Xeneta.
