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Singapore container throughput up 3.4% in Jan-Sept; down 2.8% in Sept amid delays

Highlights

Yards opened up in Tuas

Additional capacity as Free Trade Zone

Freight at multi year highs

Singapore's container throughput was up 3.4% in the first nine months of 2021 from a year earlier and 2.4% higher compared with the same period of 2019 to just over 28 million TEUs but there are significant time delays and rise in costs resulting in even switches to air transport, Singapore's Senior Minister of State for Transport Chee Hong Tat said.

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More ships are now coming to Singapore to use it as a catch-up port and also utilize one-stop services such as bunkering, supplies, and crew change, the minister told reporters Oct. 20.

Deliveries across the world for items ranging from highly sensitive computer chips to essential food ingredients and clothes is delayed and costlier due to disruptions, and suppliers are looking at options such as dry bulk ships and air transport to mitigate costs, market participants said.

Container freight is at multi-year highs amid tight supply and logistical challenges, with the Platts Container Index assessed at $7,403.39/FEU on Oct. 20, more than four times what it was a year ago and close to seven times what it was around the start of the global pandemic. The Platts Container Index was assessed at $1,091.54/FEU at the end of the first quarter last year.

Singapore is playing its part as a global hub port but it is not costless, the minister said. "There is a cost to our port because boxes now stay in our yard much longer than before," he said and pointed out that long-dwelling boxes put additional pressure on operations.

According to the minister, Global vessel schedule reliability has fallen from an average of 75% during 2018-2020, to 35%-40% this year, and the average delay is close to 7.5 days for late vessel arrivals.

Since late last year, Singapore's PSA has reopened eight berths at Keppel and 18,000 ground slots to provide 65,000 TEUs of yard capacity and from last month also started using yards at Tuas, he said.

Singapore Customs has approved use of this 2,000 TEUs of additional capacity in Tuas as free trade zone to speed up the movement and storage of cargoes, he added.

PSA is expediting the inflow of very time-sensitive and critical materials, including semiconductors and also working with companies to orchestrate cargo flows from China to Singapore, to avoid disruptions in local production schedule.

In Southeast Asia, containers' spot rates are firm. Platts assessed spot container freight from Southeast Asia to East Coast North America at $11,000/FEU on Oct. 30, and from Southeast Asia to West Coast North America at $10,500/FEU, both unchanged day on day. Combined with premium surcharges commonly seen on the route, all-in rates from Southeast Asia to North America can range around $15,000-$20,000/FEU.

The trans-shipment port is taking a series of measures to mitigate the disruptions, but they "would not totally remove the bottlenecks and congestion in global supply chains, because some of these are upstream and downstream, so the issue is very complex," the minister said.

Slowdown in September

Some of these bottlenecks reflected in the key port indicators last month when container throughput at 3.12 million TEUs, was down 2.8% on year, according to the government data. The number of total ship arrivals of all types in Singapore at just over 220 million gross tons was also down 8% on year.

According to market participants, bunching and queuing along with longer turnaround time slows down fresh arrivals. The minister conceded that transshipment containers on average spend more time at Singapore port before being loaded on ships. Due to changes in the connections for trans-shipment cargo, there is a need to replan and execute additional container movements, he said.

The minister said that congestion in upstream ports results in vessels arriving off-schedule in Singapore and this has led to significant vessel bunching with more peaks and troughs in port operations. There is even high utilization of warehouses with more stock-up of inventories.

To make up for delays which ships are experiencing, Singapore port is open round the clock and relevant data is being shared with industry players to avoid needless queuing. "There is no point to rush to the queue".

Singapore's initiatives to help shipping lines catch up on their delayed schedules will not completely solve the problem but reduce it, the minister said.