The Port of Singapore, one of the biggest ports in the world, has reached a critical level of congestion. The overcrowding started in early 2024 with a significant increase in off-schedule vessel arrivals. This continued into the year and led to a backlog of shipping containers. The usual waiting time for ships to berth in Singapore was once less than 24 hours. Today, ships are stuck in line for up to a week.
Due to the ports’ strategic location, advanced capabilities and winning utilisation rate, it has been essential to world trade for many years. However, changes in the global shipping landscape, climate and international politics have placed pressure on the deep-water port and led to a backlog of shipping containers.
With Singapore’s shipping delays doubling in recent weeks, it’s essential that importers and exporters understand major contributing factors and impacts. Dive into the issues overcrowding one of the world’s most advanced ports and how Singapore is adapting.
A history of high demand
Deep understanding into the container backlog requires insight into why shippers have relied on the Port of Singapore for over two centuries.
Most vessels travelling between the Indian Ocean and Pacific Ocean pass through the Singapore Strait. This offers a deep-water passage to The Port of Singapore, where ships stop for bunkering and transshipment. For over two centuries, the port’s location positioned it as an essential trading post. Recent technological advancements, such as ship building and repair services, has allowed the port to remain incredibly important to exporters and importers around the globe.
The Port of Singapore is Asia’s largest transshipment centre and the world’s most important bunkering station. However, a multitude of global events have affected supply chains within a short span of time. This has placed the port’s leading handling capacities under immense pressure and led to delays for importers and exporters worldwide.
Red Sea disruptions
The most pressing cause of the container backlog is overcrowding due to Red Sea disruptions. Shippers are all too familiar with the conflict, which has forced 90% of vessels that relied on the channel to reroute through the Cape of Good Hope in Africa. This diversion has lengthened the Asia-Europe service lane, one that now also needs to support rerouted vessels, by thousands of miles.
Diversions caused by the Red Sea conflict have forced the Port of Singapore to accommodate a huge amount of unexpected route changes and off-schedule vessel arrivals. Many ships are now stopping in Singapore to refuel for their lengthened journey, contributing to an increased demand for transshipment and bunkering. Some container vessels are needing to unload cargo in Singapore that is no longer viable for them to transport, causing further overcrowding and delays.
Drying of the Panama Canal
Linking the Atlantic and Pacific Ocean, the Panama Canal is utilised by around 5% of cargo ships. However, record-breaking droughts have made it difficult for large cargo carriers to pass through. Low water levels are causing sea-bourne traffic jams, with less ships able to pass through at once and some needing to unload cargo beforehand. This is causing significant shipping delays and container backlogging that impacts ports as far as Asia. When combined with the overwhelming number of off-schedule arrivals from Red Sea diversions, the drying Panama Canal is a climate issue arriving during an already difficult time for the Port of Singapore.
United States to raise tariffs on Chinese exports
In May of this year, the Office of the United States (US) Trade Representative announced plans to raise tariffs on imports from China. This has caused a rush in Chinese exports and placed further pressure on the Port of Singapore. These increases are a combination of those set during Donald Trump’s presidency and other increases led by the Biden administration, such as quadrupled import duties on Chinese electric vehicles (EVs) to 100%. A few raised tariffs will begin on the 1st of August, 2024. More will take effect on the 1st of January in 2025 and 2026.
Facing raised tariffs on over $18 billion (US) worth of exports to America, Chinese exporters are accelerating their efforts. This means an increased number of ships carrying cargo from China to the US are needing to dock in Singapore. With container terminal utilisation already pushed to the limit, the port simply doesn’t have the capacity to facilitate increased container vessels from China without delays.
Singapore’s response
Singapore is responding to the congestion by doubling down on their efforts to expand their port. In anticipation of the rising demand for berthing and transshipments, the country announced plans for a mega port back in 2012. Due for completion in 2040, the Singapore government committed $14 billion (US) to the ‘Tuas Port’. The first phase focused on reclamation works, which were completed in 2021.
Following the container backlog caused by Red Sea disruptions and other factors like the drought and tariff raises, Singapore is accelerating the launch of new berths in the Tuas Port. In addition to the existing eighth berths, three new ones are set to be opened later this year.
The Tuas Port plans include:
- 21 deep-water berths operationalised by 2027
- 66 berths spanning 26 kilometres when completed
- A private 5G network for automated cranes and vehicles
- Remotely managed port operations in the Tuas Port Control Centre
- Zero net emissions by 2050
The Maritime and Port Authority of Singapore (MPA) have also reopened the Keppel Terminal in an effort to alleviate backlogging. The terminal offers berths and yards that have increased the port’s weekly handling capacity from 770,000 TEU to 820,000 TEU.
It’s time to optimise your supply chain
As congestion at the Port of Singapore continues, importers and exporters of large cargo are especially impacted. With limited alternative routes and transport modes, stakeholders are facing rate increases, delays and uncertainty. This has called for many organisations to reassess the performance of their supply chain.
As one of Australia’s largest freight forwarding and logistics specialists, we empower our clients to adapt their supply chain to changing conditions. Leveraging our industry-leading Business Intelligence Hub, we tailor solutions to amplify the resource-efficiency and risk management of your supply chain.
Learn more about our supply chain consulting expertise by reaching out to us today.