Congestion at the port of Singapore
Congestion at the port of Singapore has reached 2 million TEUs, according to consultancy Linerlytica, which has said that equipment shortages and a lack of tonnage had conspired to raise the spectre of cargo delays and high freight rates as seen during the pandemic.
As a result of the raised congestion levels vessel operators have been forced to take action
to secure their peak season positions, “after their initial hesitation to commit too
far ahead if demand would falter after the summer peak season,” argued
Linerlytica.
The spike in congestion at the world’s second-busiest container port in Singapore has seen
carriers prolong charter agreements and order new boxes in preparation for what could be
a long peak season.
“The global port congestion indicator hit the 2m TEUs mark, accounting for 6.8% of the global fleet with Singapore becoming the new congestion hotspot. The SCFI [Shanghai
Containerized Freight Index] has jumped by 42% in the past month, with further gains to
follow in June as carriers are adding new surcharges and rate hikes,” stated Linerlytica in its latest weekly report.
Market signals are “extremely bullish” and are reminiscent of the substantial rate increases
that began in 2021 and continued throughout 2022, as the pandemic effects reached their
heights, said the consultant.
During the pandemic-affected period supply chain congestion was caused by inland
connections and a lack of storage in the US ports and inland terminals, causing ships to be
delayed waiting for cargo handling slots, with the knock-on effect that too few empty
containers were being returned to Asia for loading.
This year congestion has returned to container supply chains, with Singapore becoming the
latest victim, as ships are returning to Asia out of schedule due to extended journeys
around the African Cape and the blanked sailings when vessels were unavailable to meet
weekly schedules.
Carriers do not have enough tonnage to handle the much longer supply chains caused by
the Cape diversions, which was not a problem until demand began to increase according to
one industry observer.
An increase in cargo, said Linerlytica, caused, “Berthing delays of up to seven days with the total capacity waiting to berth rising to 450,000 TEUs in recent days.”
Linerlytica added, “The severe congestion has forced some carriers to omit their planned
Singapore port calls, which will exacerbate the problem at downstream ports that will have
to handle additional volumes.”
These delays have resulted in vessel bunching, causing “spillover congestion” and schedule
disruptions at downstream ports.
Increasing port congestion has already taken more than 400,000 TEUs of vessel capacity out of circulation in the last week alone with a further escalation to the current critical delays expected in the coming weeks as the peak season gathers pace.