Congestion at Singapore’s largest container port hub has been at the worst levels since the pandemic over the past few weeks and could point to possible global supply chain disruption.

While congestion began to ease in recent days, container ship arrivals have fallen to the lowest levels in a year, according to Yahoo news. Total shipping tonnage was down by about 10 per cent in June – the lowest since February 2023, according to the Maritime and Port Authority of Singapore. 

Knock-on effects

“June figures were down in part due to some vessel owners opting to unload or refuel at Malaysian ports to avoid delays,” the report said. “The attacks in the Red Sea are ongoing, meaning ships are still sailing around southern Africa, thereby not stopping at Middle Eastern ports.” 

Singapore is the world’s largest shipment complex connecting 600 ports from 123 countries and blockages there can have serious consequences for global trade. So far, port congestion has also spread to Malaysia as a result of these delays, but more trouble could be ahead.

First, disruption in the Red Sea is still ongoing. JP Morgan estimated in February this year that, with 30 per cent of global container trade routing via the Suez Canal, there would be a 30 per cent increase in transit times and a 9 per cent reduction in effective global container shipping capacity.

Early annual peak

Second, according to the Financial Times, the total volume of traffic has peaked early this year – especially to and from China. That is partly because of companies rushing to secure inventory of items that have seen steep tariff increases from US President Joe Biden in recent months. Those items include chips, batteries, steel, medical products, electric cars and solar cells.

In May “there was a significant increase in ocean freight exports of Chinese e-commerce, electric vehicles, and renewable energy-related goods,” Asia-focussed freight forwarder Dimerco told Reuters news agency. “The peak season, which traditionally starts in June, was advanced by a full month, causing ocean freight rates to soar.”

As container prices rise, there will be a potential impact on global inflation – as well as further potential delays in product deliveries.