Ocean Freight Impact Singapore Congestion

Table of contents

Dear Valuable Customer,

At Freight Systems, we believe in keeping our customers up to date on the latest ocean update challenges that might be affecting our services.

Freight rates

As the intensity of assaults stepped up, more ships (bulkers, tankers) are being diverted around Cape of Good Hope. For example, container shipping re-routing has turned into a new normal, meaning the initial impact is settling, which is reflected in slipping rates. The impact of the Red Sea continues to be witnessed by shippers globally in terms of longer transit times, an increase in cost, and a reduction in equipment availability. Ports around the world have been issuing advisories about delays in waiting time to dock the vessels due to the schedule reliability of incoming vessels driven by longer transit via the Cape of Good Hope.

What is the impact on shippers and consignees in India

Port congestion, delayed sailing, rollover of containers, and blank sailing (driven by a longer lead time for specific routes) have had a significant impact on India’s ocean freight rates, capacity, and outbound transit times, including equipment availability. It is particularly affecting our exports to Europe and North America. The disruptions have led to sharp increases in freight rates. For instance, short-term contract rates for shipments from major Indian ports to Europe have surged dramatically. Rates for shipments from Jawaharlal Nehru Port Trust (JNPT) to Rotterdam rose by 300% between January 2023 and January 2024.

Singapore Port Congestion

Singapore’s port is now facing wait times of up to seven days for berthing, with up to an estimated 450,000 TEU (twenty-foot equivalent unit) currently queued. This is a stark contrast to the usual situation, where ships can typically berth upon arrival, with up to a half-day wait at most. The congestion stems from the disruption caused by conflict in the Red Sea, which is leading carriers to re-routing around the Cape of Good Hope. With 132 vessels facing delays of up to 46 hours, some carriers are skipping calls at the port, leading to further disruptions downstream. This is combined with an increase in demand in recent months, leading to this critical situation.

Trade Shifts: There is a notable increase in container shipping imports from China to Mexico amidst the ongoing US trade tensions.

Schedule reliability / BAF & Shanghai Freight index  

Panama Canal: Balancing Capacity Restrictions

In a bid to preserve levels in the canal’s watershed, which supplies water to half of Panama’s population, the ACP last year progressively reduced capacity in the form of draft and daily transit restrictions. As expected, the number of containership transits increased MoM in February 2024, rising to 7.2 per day, up from 6.6 in January, but still short of the 8.4 recorded at the start of the ACP’s financial year in October 2023. For context, containerships’ daily average for FY2023 (October 2022 to September 2023) was 7.6, so while the capacity restriction measures have curbed the sector’s growth through the canal, they have not caused transits to drastically plummet, which has been the case for other sectors, most notably dry bulk, and chemical tankers.

OCEAN FREIGHT MARKET: CANCELLED SAILINGS

As of May 2024, the major shipping alliances 2M, OCEAN, and THE—have announced several blank sailings. Over the next five weeks, 43 sailings have been cancelled across the major East-West head haul trades (Transpacific, Transatlantic, and Asia-North Europe & Med), representing a 7% cancellation rate. OCEAN Alliance accounts for the highest number of cancellations, followed by 2M and THE Alliance.

This period sees a 54% concentration of these cancellations on the Transpacific Eastbound route, 30% on the Asia-North Europe & Med route, and 16% on the Transatlantic Westbound route​.

General Update

  • Global economy and trade: According to the IMF ‘s January forecast, the global economy is likely to grow moderately at 3.1% in 2024, similar to 3.1% in 2023. The forecast is thus below the historical average of 3.8% from 2000 to 2019. World trade is predicted to grow by 3.3% in 2024, which is lower than the historical average of 4.9%.
  • Demand: After global container transport volumes declined by 4.0% in 2022 and rose by just 0.2% in 2023, the consulting firm Accenture Cargo now expects container transport volumes to grow again by 3.8% in 2024.
  • Supply: According to MDS Trans modal, the tonnage of commissioned container vessels fell to around 6.7m TEU at the end of December 2023, compared with around 7.2m TEU at the end of December 2022. As in 2023, a very high number of deliveries of vessels is anticipated again in 2024. Drewry expects the globally available container vessel fleet to grow by 1.9m TEU, or 6.8%, YoY after scrapping and postponement of deliveries.

To mitigate disruptions, we strongly advise planning shipments well in advance of their scheduled dates to secure space. Our teams continue to monitor the condition and are in contact with the sea port authorities for new developments that might affect operations. Rest assured; we will promptly share any new information with you.

What we need from our Shippers?

  • Early Forecast
  • Booking ahead of 2 weeks from sailing date
  • Precise information around cargo readiness
  • Urgency Information & Time to Plant information if available
  • Dedicated pick up/delivery options to improve overall lead time

Please feel free to reach out to our customer service or sales team if you need any further assistance related to this. Please write to us at info@freightsystems.com

We appreciate your ongoing support and understanding as we navigate through these challenges.

Regards

Team Freight Systems

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