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SINGAPORE: Singapore’s shipping industry is feeling the effects of a bottleneck in the global supply chain, with an increase in the number of commercial vessels docking and an increase in the volume of containers at the country’s port in recent years. months.
A sudden surge in demand has outstripped the available capacity of ships, containers and ports, causing delays in shipments around the world, including Singapore.
A report from commodity pricing agency S&P Global Platts earlier this month found that an average of 49 vessels per day stayed in the port of Singapore for more than two days in November last year, up from 17 November. of 2019.
According to S&P Global Platts, this number stood at 46 in January, before hitting a high of 52 per day in February, an increase of about 60 percent over the same period last year.
Port operator PSA Singapore said that, like many other ports, it has seen an increase in ship calls and container volumes.
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“This exceptional situation is due to a confluence of factors, including an unprecedented and volatile increase in cargo demand, congestion at all nodes in the global supply chain (including warehouses, warehouses and seaports) due to renewed closures. , lack of usable empty containers while loaded ones are held longer in these nodes, and the reliability of the shipping schedule of the shipping lines falls to historical lows of 10 years, causing further delays in almost all ports world’s maritime companies, ”said a PSA corporate spokesperson.
Experts also warned that the blockade of the Suez Canal on Wednesday (March 24), one of the world’s most important trade routes, by a massive 400-meter long freighter could also cause more bottlenecks in global shipping. .
On Thursday, Singapore’s Transport Minister Ong Ye Kung said a prolonged disruption of the Suez Canal could cause PSA to experience more schedule disruptions as shipping lines divert their trips.
Rupesh Jain, managing director of Maersk Thailand, Malaysia and Singapore, said the shipping giant had experienced the “perfect storm” in global container trade for the past seven to eight months.
After seeing a double-digit volume decline in the second quarter of last year amid global lockdowns due to the COVID-19 pandemic, demand rebounded in the third and fourth quarters of last year and “far exceeded anticipated volumes. faster than expected, “he said. .
“The rebound in demand was driven by a US-based pickup in demand and other markets followed suit shortly thereafter due to a change in purchasing patterns and government stimulus packages,” said Mr. Jain .
“All available vessels are in use and it is difficult to secure temporary additional capacity,” he added.
Container production also decreased by 40 percent during the first half of 2020 compared to the same period in 2019, which, together with the unexpected recovery in demand, led to a significant drop in the availability of containers globally, he pointed.
Congestion, along with lower productivity at terminals and inland warehouses, with boxes tied up for longer periods, has also caused bottlenecks, he added.
“As a major transshipment port for the Asia-Pacific region and the main exchanges between Asia and Europe, Singapore is not spared,” said maritime expert from the Singapore University of Social Sciences (SUSS), Yap Wei Yim.
“The mismatch between mainline and feeder vessels contributed to significantly longer storage times for containers that sometimes extended as long as weeks,” he said.
The capacity shortage is exacerbated by port congestion, disruptions in ship schedules and disruptions in repositioning empty containers, he said, adding that freight rates are increasing as these issues persist.
Linerlytica analyst Tan Hua Joo noted that the port labor shortage has also exacerbated the situation in Singapore.
Demand for containers is likely to remain high with the launch of vaccination programs and the gradual recovery of the global economy, added Dr. Yap.
“Therefore, unless supply issues in the form of capacity shortages are sufficiently addressed, we can see this development extending into the second half of 2021 and even into 2022,” he warned.
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While some companies have opted for air cargo to ease pressure on maritime capacity, this will only alleviate the current crisis to “a very small degree,” said Jasmine Lam, associate professor at Nanyang Technological University.
This is because the shipping capacity by maritime transport is much higher, said the director of the Center of Excellence for Maritime Energy and Sustainable Development.
“Additional cargo handling capacity is needed to back up,” he said, suggesting that more cargo handling facilities and container warehouses might be needed to handle such situations.
Port operator PSA Singapore said it has been “increasing additional capacity and resources, and is working closely with shipping line customers and cargo owners to alleviate the situation.”
“The Port of Singapore has taken various measures to alleviate congestion, including recruiting new labor from non-traditional countries such as Thailand and India, and has reactivated some of its idle capacity at the Keppel and Brani terminals,” said the Mr. Tan.
“It will also be able to use the new Tuas capacity from the end of this year,” he added, referring to the opening of the first phase of the Tuas megaport.
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Meanwhile, Maersk has taken a number of initiatives to ease bottlenecks in the supply chain, Jain said.
“From the conversations we had with our customers, the most common and immediate need was to introduce greater flexibility, improved data visibility and new modes of transportation into their supply chains,” he said.
“In addition to ocean services, we offer our clients solutions that span the entire spectrum of the logistics chain. Our teams in Thailand, Malaysia and Singapore now offer the option of cross-border transportation from China to Thailand, milk runs from Vietnam to Malaysia as easily as we can do air transportation from Singapore to Japan, ”he said.
Jain added that he expects the current situation to improve as vaccines are rolled out and purchasing patterns return to normal, adding that additional containers and containers entering the market this year are likely to alleviate bottlenecks.
“It is difficult to say exactly when (the situation will improve) and it could be well into the second quarter, and much will depend on the global launch of the vaccine,” he said.
