Singapore reacts to Red Sea-driven congestion

The crisis in the Red Sea has had some unexpected effects. One of these is a surge of traffic into certain container ports. Singapore is one of the most affected. The Port Authority of Singapore has issued a statement outlining what is happening at the port and how they are responding.

The reason for the congestion, the Port Authority explained was due to “several container lines discharging more containers in Singapore as they forgo subsequent voyages to catch up on their next schedules”. Shipping lines are also “leveraging PSA’s cargo handling capabilities to help manage their containers stowage onboard vessels to facilitate expeditious discharge of cargo for their subsequent port calls”. These statements suggest that the container lines have re-designed their route structures to reduce the length of their journeys. This has resulted in more trans-shipment through Singapore.

The consequence of the Red Sea-driven congestion, has been an 8.8% year-on-year increase in container throughput volume over the past four months and an increase in ships “arriving off-schedule”. If the shipping lines cannot reschedule the arrival of ships, they may face an average waiting time of “about two to three days”.

In an attempt to manage the situation, Singapore has “reactivated older berths and yards that have previously been decanted at Keppel Terminal”. The port expects new berths at the Tuas terminal complex to be opened in a few months which will ease the problem.

Singapore is not alone in seeing a jump in demand driven by the effects of the Cape of Good Hope route. Tanger-Med is experiencing double-digit percentage growth in what was already a large and rapidly growing port complex, whilst other ports in the Western Mediterranean such as Barcelona and Valencia are reported to be seeing growth rates of over 20% in the first quarter of 2024. Of course, there have been losers, notably ports in the Eastern and Central Mediterranean.

As Maersk implied in its statement earlier in the week, this congestion is making it harder for the shipping lines to deploy their growing fleet of vessels, which in turn supports higher rates.

Author: Thomas Cullen

Source: Ti Insight

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