Container freight rates in Asia are expected to remain elevated due to persistent congestion at key ports, particularly in Singapore. Seasonal peak demand, capacity issues, and geopolitical disruptions are contributing to the high shipping costs. Despite some improvements in port wait times, challenges remain.
Peak Demand and Capacity Issues
The convergence of peak demand season and strained capacity, as commercial vessels avoid the Red Sea and Suez Canal, continues to push up shipping costs globally. The Drewry World Container Index edged up 1% to $5,901 per FEU, while the Shanghai Containerized Freight Index dipped slightly. Experts suggest that these conditions will keep rates high until the end of the peak season, typically from August to October.
Singapore Port Congestion
Singapore, the world’s second-largest port, has seen average wait times for berthing reduced to two days or under. Despite this improvement, high berth demand and unscheduled vessel arrivals since early 2024 have led to increased waiting times. The Red Sea crisis continues to disrupt global shipping, potentially extending port congestion from Asia to Europe. Delays have also impacted Malaysia, with berthing delays of up to five days at Port Klang.
Rail Alternatives: ASEAN Express
The ASEAN Express, a new cargo rail service connecting Malaysia, Thailand, Laos, and China, offers a faster alternative to traditional ocean freight. The rail service, which completed its inaugural trip on 11 July, reduces transit times to just under 14 days compared to up to three weeks by sea. This new service is expected to enhance regional trade connectivity and alleviate some of the pressure on shipping capacity, particularly benefiting the agricultural sector with faster transport times for perishable goods.
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Source: I.C.I.S
