Singapore port congestion shows global ripple impact of Red Sea attacks (updated)

Descartes Systems group

26/06/2024 05:19

(Adds port operator's name; paragraph 15)
    By Lisa Barrington and Jeslyn Lerh
       SEOUL/SINGAPORE, June 26 (Reuters) - Congestion at
Singapore's container port is at its worst since the COVID-19
pandemic, a sign of how prolonged vessel re-routing to avoid Red
Sea attacks has disrupted global ocean shipping - with
bottlenecks also appearing in other Asian and European ports. 
    Retailers, manufacturers and other industries that rely on
massive box ships are again battling surging rates, port backups
and shortages of empty containers, even as many
consumer-oriented firms look to build inventories heading into
the peak year-end shopping season.
    Global port congestion has reached an 18-month high, with
60% of ships waiting at anchor located in Asia, maritime data
firm Linerlytica said 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. 
    But, unlike during the pandemic, it is not a buying flurry
by house-bound consumers that is swamping ports. 
    Rather, ship timetables are being disrupted 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 been attacking shipping since November. 
    Ships are therefore offloading larger amounts at once at big
transhipment hubs like Singapore, where cargoes are unloaded and
reloaded on different ships for the final leg of their journey,
and forgoing subsequent voyages to catch up on schedules. 
    "(Shippers) are trying to manage the situation by dropping
the boxes at transhipment hubs," said Jayendu Krishna, deputy
head of Singapore-based consultancy Drewry Maritime Advisors.
    "Liners have been accumulating boxes in Singapore and other
hubs."
    Average Singapore cargo offload volume jumped 22% between
January and May, significantly impacting port productivity,
Drewry said. 
    
    SEVERE CONGESTION
        Singapore, the world's second-largest container port,
has seen particularly severe congestion in recent weeks.
    The average wait time to berth a container ship was two to
three days, Singapore's Maritime and Port Authority (MPA) said
in end-May, while container trackers Linerlytica and PortCast
said delays could last up to a week. Typically, berthing should
take less than a day.
    Neighbouring ports are also backing up 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 at
Chinese ports, with Shanghai and Qingdao seeing the longest
delays.
    Drewry expects congestion at major transhipment ports to
remain high, but anticipates some easing as carriers add
capacity and restore schedules. 
    Singapore's MPA said that port operator PSA had re-opened
older berths and yards at Keppel Terminal and would open more
berths at Tuas Port to tackle extended waits. 
    Maersk  MAERSKb.CO , the world's second-largest container
carrier, said this month it would skip two westbound sailings
from China and South Korea in early July due to severe
congestion in Asian and Mediterranean ports.   
            
  
        PEAK SEASON
    The annual peak shipping season has also arrived earlier
than expected, exacerbating port congestion, shippers and
research firms said
    This seems to be driven by restocking activities,
particularly in the U.S., and by customers shipping goods early
in anticipation of stronger demand, said Niki Frank, CEO of DHL
Global Forwarding Asia Pacific. 
    Container rates, meanwhile, have surged, raising the risk of
another spate of price increases for buyers like the
post-pandemic inflation spike which central banks are still
trying to tame.
    Rates had stabilised into April but in May "there was a
significant increase in ocean freight exports of Chinese
e-commerce, electric vehicles, and renewable energy-related
goods," Asia-focussed freight forwarder Dimerco said.
    "The peak season, which traditionally starts in June, was
advanced by a full month, causing ocean freight rates to soar." 
 
    Container import volume at the 10 largest U.S. seaports in
May rose 12%, fuelled by the second-highest monthly import
volumes since January 2023, said data provider Descartes.       
 
    "(U.S.) consumers are continuing to spend more than last
year, and retailers are stocking up to meet demand," said
Jonathan Gold, a National Retail Federation vice president.
    Ocean imports into Europe from Asia are also showing signs
of a re-stocking season running into peak season - pushing rates
to 2024 highs, Judah Levine of freight platform Freightos said.
    Container freight prices from Asia to the U.S. and Europe
have tripled since early 2024.
    Rates from Asia and Singapore to the U.S. East Coast are at
their highest since September 2022, while rates into the U.S.
West Coast are highest since August 2022, freight platform
Xeneta said.

        Some industry players think part of the reason for the
bottlenecks at China ports is fuelled by U.S. importers rushing
to buy Chinese goods such as steel and medical products that
will be subject to steep tariff hikes from Aug. 1.  
    But newly imposed 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 limited impact.
    "We may see some of this cargo come in, but it is not going
to be a deluge," he said.
    Concerns about possible strikes at U.S. ports this year
could also be pulling the peak season forward, while DHL said  
German port strikes were adding to the gridlock. 
    All of those disruptions will likely mean higher prices for
consumers, experts warn.
        "These are huge financial hits for shippers to absorb,"
said Peter Sand, chief analyst at Xeneta.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Global container rates for major shipping routes    https://tmsnrt.rs/3zciffK
Singapore monthly container throughput    https://tmsnrt.rs/3S5gyrt
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Jeslyn Lerh in Singapore, Lisa Baertlein in Los
Angeles, and Lisa Barrington in Seoul; Editing by Miyoung Kim
and Kim Coghill)
 ((lisa.barrington@thomsonreuters.com;))