Singapore port container logjam worsens as ships avoid Red Sea

    WORLD  14 June 2024 - 07:03

    Bloomberg carries an article about Singapore’s port, which is facing a sustained period of congestion, Caliber.Az reprints the article.

    Singapore’s port, already one of the busiest in the world, is facing a sustained period of congestion as vessel diversions to avoid the Red Sea push more container ships to the Asian maritime hub.

    The attacks by Yemen’s Houthi rebels have resulted in shipowners opting not to transit the Suez canal and taking the longer route around the Cape of Good Hope at the southern tip of Africa. That means they don’t get a chance to refuel or unload cargo at ports in the Middle East, leading to worsening marine gridlock in the waters off Singapore.

    The Houthi attacks have reverberated through global supply chains, but the effects are particularly acute in Singapore, which is located on one of the world’s busiest shipping routes linking Europe and the Middle East to China. The growing logjam at the port, a major center for refueling and the redistribution of containers, will result in delays to goods being delivered and will also put more upward pressuring on shipping rates.

    Singapore’s yard utilization rates, a measure of how busy a container port is, rose to nearly 90 per cent last month, compared with optimum levels of around 70 per cent, according to Jayendu Krishna, a director at Drewry Maritime Services.

    There’s a lot of rerouting going on, leading to changes in vessel schedules and a pile-up of trans-shipment container boxes at certain ports, he said. This is causing a “bunching of ships” at some hubs as wait times become longer and congestion grows, Krishna said.

    Container volumes in Singapore totaled 16.9 million twenty-foot equivalent units, or TEUs, in the first five months of the year, almost 8 per cent higher than the same period in 2023, the Maritime and Port Authority of Singapore said in a statement. Container lines including CMA CGM SA had moved more tonnage through the city-state’s port, the authority said.

    There are some early signs that container congestion at Singapore is starting to ease this month, according to shipbrokers, which may prevent container pile-ups from worsening further.

    There was also increased activity at Malaysian ports last month. Tanjung Pelepas, located just west of the city state on the Johor Strait, and Klang, near Kuala Lumpur, had record monthly throughput in May. Conversely, traffic at major Middle Eastern ports has tumbled. Volumes at the major trans-shipment hub of Salalah in Oman fell by 17 per cent in the first quarter, Drewry data show.

    The snarl-up of containers ships isn’t likely to dissipate anytime soon, and spot rates for vessels are likely to climb even further, HSBC Holdings Plc analysts including Parash Jain said in a note.

    “While these inefficiencies are largely centered in the exporting regions in Asia and some trans-shipment hubs, it will only be a matter of time before these issues relay on to the importing destinations in EU and the US,” they said. “The bull has further to run” for container freight rates, they said.

    The waters off Singapore are typically crowded with all manner of ships, and that looks set to intensify in the coming months, as the impact of the re-routing takes time to work its way through the global transport system.

    Some 44 containers ships had to wait for four days off the city-state last month, compared with just 14 in January, according to the Drewry data.

    The logjams are only emerging now, months after the Red Sea attacks intensified in January, Krishna said. That’s because “there’s always some spare capacity in ports and container yards, so it took time for the Singapore port to reach its maximum utilization level.”

    Caliber.Az

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