By Lisa Barrington and Jeslyn Lerh
SEOUL/SINGAPORE (Reuters) – Congestion at Singapore’s container port is the worst since the COVID-19 pandemic, a sign of how prolonged ship diversions to avoid attacks on the Red Sea have disrupted global shipping – including bottlenecks have arisen in other Asia. and European ports.
Retailers, manufacturers and other industries that rely on huge box ships are again grappling with rising rates, port reserves and shortages of empty containers, as many consumer-facing companies look to build inventories ahead of the year-end peak season.
Global port congestion has reached an 18-month high, with 60% of ships anchored in Asia, maritime data firm Linerlytica said this month. Ships with a total capacity of more than 2.4 million twenty-foot equivalent container units (TEUs) were at anchorages from mid-June.
But unlike during the pandemic, it is not a buying wave of homebound consumers flooding the ports.
Instead, ship schedules are being disrupted by missed sailing schedules and fewer port visits as ships take longer routes around Africa to avoid the Red Sea, where Yemen’s Houthi group has been attacking shipping since November.
Ships therefore unload larger quantities at a time at major transshipment hubs such as Singapore, where cargoes are unloaded and reloaded onto different ships for the final leg of their journey, forgoing subsequent voyages to catch up on schedules.
“(Shippers) are trying to control the situation by dropping off the boxes at transshipment hubs,” said Jayendu Krishna, deputy head of Singapore-based consultancy Drewry Maritime Advisors.
“Liners have been collecting boxes in Singapore and other hubs.”
Singapore’s average cargo volume increased by 22% between January and May, which had a significant impact on port productivity, Drewry said.
SEVERE CONGESTION
Singapore, the world’s second-largest container port, has experienced particularly severe traffic congestion in recent weeks.
The average wait time to dock a container ship was two to three days, Singapore’s Maritime and Port Authority (MPA) said in late May, while container trackers Linerlytica and PortCast said delays could last up to a week. Normally the mooring takes less than a day.
Neighboring ports are also backing up as some ships skip Singapore.
Stress has shifted to Malaysia’s Port Klang and Tanjung Pelepas, Linerlytica said, while wait times have also increased at Chinese ports, with Shanghai and Qingdao experiencing the longest delays.
Drewry expects congestion at major transshipment ports to remain high, but expects some relief as carriers add capacity and restore schedules.
Singapore’s MPA said port operator PSA had reopened older berths and yards at Keppel (OTC:) Terminal and would open more berths at Tuas Port to address longer waits.
Maersk, the world’s second-largest container ship, said this month it would skip two westbound sailings from China and South Korea in early July due to severe congestion at Asian and Mediterranean ports.
PEAK SEASON
The annual peak shipping season has also arrived earlier than expected, worsening port congestion, shippers and research firms say
This appears to be driven by inventory replenishments, especially in the US, and customers shipping goods early 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 increases for buyers, such as the post-pandemic inflation spike that central banks are still trying to tame.
Rates had stabilized until April, but in May “there was a significant increase in sea freight exports of Chinese e-commerce, electric vehicles and renewable energy-related goods,” according to Asia-focused freight forwarder Dimerco.
“The high season, which traditionally starts in June, was brought forward a full month, causing sea freight rates to soar.”
Container import volume at the top 10 U.S. seaports rose 12% in May, fueled by the second-highest monthly import volume since January 2023, according to data provider Descartes (NASDAQ:).
“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.
Ocean imports from Asia to Europe are also showing signs of a restocking season heading into peak season, pushing rates to 2024 highs, said Judah Levine of freight platform Freightos.
Container freight prices from Asia to the US and Europe have tripled since early 2024.
Rates 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 since August 2022, according to freight platform Xeneta.
Some industry players believe part of the reason for the bottlenecks at Chinese ports is because US importers are rushing to buy Chinese goods such as steel and medical products, which will face steep tariff increases starting August 1.
But newly imposed U.S. tariffs would affect only about 4% of Chinese imports to the U.S., said Jared Bernstein, chairman of the Council of Economic Advisers.
Gene Seroka, executive director of the Port of Los Angeles, the largest U.S. gateway for China ocean imports, also expects a limited impact.
“We may see some of this cargo come in, but it won’t be a deluge,” he said.
Concerns about possible strikes at US ports this year could also push the peak season forward, while DHL says strikes at German ports will further worsen the gridlock.
All these disruptions will likely mean higher prices for consumers, experts warn.
“These are huge financial blows for shippers to absorb,” said Peter Sand, principal analyst at Xeneta.
