At present, the level of global port congestion has reached a new high in a year and a half, and the congestion level of the container port in Singapore is particularly severe, which has reached the highest level since the pandemic, and other Asian and European ports have also experienced congestion recently.
This shows that the impact of the Red Sea crisis on global shipping is gradually deepening, and at the same time, factors such as tariff threats and port strikes have exacerbated the global shipping crisis. For consumers, all of these shocks may eventually be transmitted to
the consumer side, leading to higher price pressures.
Many ports in Asia are already heavily congested
Maritime data firm Linerlytica recently said that global port congestion has reached its highest level in 18 months, and the situation is particularly acute in Asian ports - 60% of ships are berthed in Asia.
As of mid-June, there were still a large number of ships waiting at anchorage, and the total capacity of these ships had already exceeded 2.4 million 20-foot TEUs.
The Port of Singapore is perhaps the most notable of these congested ports. Singapore is the second largest container port in the world. In recent weeks, the port has seen particularly severe congestion.
In general, container ships berth at this port for no more than a day. But at the end of May this year, Singapore's Maritime and Port Authority (MPA) revealed that the average waiting time for container ships at the port had reached two to three days. Container tracking companies Linerlytica and PortCast said the container ship could have been delayed for up to a week.
Due to the overcrowding of Singapore's ports, neighboring Asian ports are also seeing greater traffic. Linerlytica said cargo pressure has shifted to Malaysia's largest ports, Port Klang and Tanjung Pelepas. At the same time, wait times at Chinese ports are also climbing, with Shanghai and Qingdao seeing the longest delays.
Port operator PSA has reopened older berths and terminals at Keppel Terminal and will open more berths at Tuas Port to address extended waiting times, the Singapore Maritime Authority said
Port congestion has affected shipping lines' shipping plans. Mascok, the world's second-largest container shipping company, said this month that it would cancel two westbound flights from China and South Korea in early July due to severe congestion at Asian and Mediterranean ports.
The Red Sea crisis is the main culprit
Unlike during the pandemic, it was not the buying frenzy of stay-at-home consumers that caused the congestion at the ports, but the Red Sea crisis. And the port of Singapore is the main victim.
Since last November, Yemen's Houthi rebels have carried out sporadic attacks in the Red Sea region, causing a large number of shipowners to abandon passage through the Suez Canal in favor of a detour to the Cape of Good Hope at the southern tip of Africa. This means that they have no more opportunities to refuel or unload at Middle Eastern ports.
As a result, many vessels are choosing to unload more cargo at a time at a large transshipment hub like Singapore, which in turn leads to increasing congestion in the waters around Singapore.
Jayendu Krishna, vice president of Singapore-based Drewry Maritime Advisors, said: "[Shippers] are trying to control the situation by dropping off boxes at transshipment centers. Liner companies have been piling up containers in Singapore and other hubs. ”
Drewry data shows that the average unloading volume at Singapore's port increased by 22% from January to May this year, severely impacting the port's productivity.
The shipping season has arrived early
In addition to the Red Sea crisis disruptions, shippers and research firms said this year's peak shipping season also came earlier than expected, adding to port congestion.
Niki Frank, CEO of DHL Global Forwarding Asia Pacific, said the earlier shipping season this year appears to be due to earlier replenishment activity, particularly in the US, and earlier shipments by customers in anticipation of stronger demand.
Heading into April, ocean freight rates had stabilized, but in May, "China's seaborne exports of e-commerce, electric vehicles and renewable energy-related goods increased significantly" and "the peak season, which usually starts in June, was brought forward by a full month, causing ocean freight prices to soar." ”
Container imports from the 10 largest U.S. seaports rose 12% in May, the second-highest monthly import since January 2023, data provider Descartes said. "Consumer spending continues to be higher than last year, and retailers are ramping up inventories to meet demand," said Jonathan Gold, vice president of the National Retail Federation.
Seaborne import data from Asia to Europe also shows signs of replenishment activity entering the peak season, pushing freight rates to 2024 highs, according to executives at freight platform Freightos.
Container freight rates from Asia to the US and Europe have tripled since the start of 2024. Freight rates from Asia or Singapore to the US East Coast have reached their highest level since September 2022, while freight rates to the US West Coast have reached their highest level since August 2022, according to freight platform Xeneta.
New tariffs lead to early imports?
Other industry insiders believe that part of the reason for the congestion at Asian ports may be due to the new tariffs in the United States.
On May 22, local time, last month, the Office of the United States Trade Representative announced that the United States would maintain the "Section 301" tariffs imposed on China during the Trump administration, and significantly increase tariffs on China's "targeted strategic products". The measures will take effect on August 1 this year.
Industry insiders believe that under the influence of this new tariff, U.S. importers may rush to buy goods such as Chinese steel and medical products.
On the other hand, the European Union has also recently negotiated tariffs on electric vehicles with China, further exacerbating the concerns of international traders.
In addition, the threat of a strike at the port has exacerbated the current congestion.
Previously, the Financial Associated Press has reported that later this year, there may be strikes at ports on the east coast and Gulf coast of the United States. In addition, strikes have occurred in German and French ports in recent days.
