- Singapore has seen a major spike in congestion, forcing carriers to stretch charter agreements and to build container fleets.
- Increasing port congestion has already taken more than 400,000 teu 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.
- Delays have resulted in vessel bunching, causing spillover congestion and schedule disruptions at downstream ports.
The world’s second busiest container port at Singapore has seen a major spike in congestion, forcing carriers to stretch charter agreements and to build container fleets in preparation for an elongated peak season.
According to Hong Kong analyst Linerlytica significant new port congestion has added to the already over-stretched container market that is struggling to cope with shortages of container equipment and vessel space, mainly as a consequence of the Red Sea diversions.
“The global port congestion indicator hit the 2m teu 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,” commented Linerlytica in its latest weekly report.
Singapore has seen a major spike in congestion
Carriers have been forced to secure new equipment and extend vessel charters beyond September “after their initial hesitation to commit too far ahead in the event that demand would falter after the summer peak season,” claimed Linerlytica.
Market signals are “extremely bullish” and are reminiscent of the substantial rate increases that began in 2021 and continued throughout 2022.
Port congestion at that time was caused by backed up freight in US ports with insufficient inland capacity to store or move containers, 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 the extended journeys around the African Cape. Moreover, the carriers have insufficient tonnage to handle the much longer supply chains caused by the Cape diversions
“There are berthing delays of up to seven days with the total capacity waiting to berth rising to 450,000 teu in recent days. 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,” said the analyst.
In addition, 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 teu 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.
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Source: Seatrade Maritime News
