Congestion in Singapore, the world’s second-busiest container port, has reached a critical level, compounding the shortage of ships and containers. Data from Inertia indicates that containerships have to wait up to seven days to berth in Singapore, recently seeing up to 450,000 TEU of vessels in the queue. This bottleneck at Singapore is primarily due to the diversions caused by the Red Sea crisis and shipping lines skipping the less busy Port Klang in Malaysia. Normally ships berth upon arrival or within half a day when arriving at Singapore. This discrepancy will likely cause chaos to the supply chains of the BCOs, and their downstream partners, tied up in this congestion.
Linerlytica’s report today states: “The severe congestion has forced some carriers to omit their planned Singapore port calls, which will exacerbate the problem at downstream ports that will have to handle additional volumes. The delays have also resulted in vessel bunching, which is causing spillover congestion and schedule disruptions at downstream ports.”
Asian ports are the most congested, with ports in South-east Asia accounting for 26% of global bottlenecks, while north-eastern Asian ports make up 23%. As congestion in Singapore has a considerable impact on the reliability of Asia-Europe services, trading of China’s container futures closed at a higher price of $4,209/TEU for the EC2406 contract, which expires on 24 June. The price is 6% higher than on 20 May and a 25% premium on the Shanghai Containerized Freight Index.
Not only in Singapore and Asia but globally port congestion is worsening and has tied up 2 million TEU of ships, nearly 7% of the fleet. Giving credence to the rate hikes seen across the industry. This also shows the disruption and chaos to supply chains isn’t isolated and confined to one region but instead a global problem. Limiting the available options BCOs have to realign their supply chains. And it is unlikely that congestion in Asia or globally will be rectified quickly, with The Consultancy expecting port congestion to worsen into June. This has forced operators to secure containers and vessels well beyond their normal time horizons, with some booking out to beyond September.
This critical situation underscores the need for visibility supply chain software, providing real-time data insights to assist BCOs and LSPs in making business-critical decisions to counteract the impacts on their respective supply chains.
For BCOs, real-time data insights can help manage and mitigate the impacts of delays by providing comprehensive tracking of shipments across multiple transportation modes. This capability allows BCOs to anticipate bottlenecks, reroute cargo proactively, and maintain optimal inventory levels, thus avoiding stockouts and ensuring timely delivery to customers. Enhanced visibility also facilitates better collaboration with suppliers and other stakeholders, enabling quicker adjustments to production schedules and more informed decision-making to counteract disruptions.
LSPs similarly benefit from improved visibility by gaining the ability to monitor shipments in real time, allowing them to provide more accurate delivery estimates and improve customer satisfaction. With detailed insights into port conditions and transit times, LSPs can optimize route planning and resource allocation, ensuring efficient use of assets and minimizing delays. Furthermore, the integration of advanced analytics and predictive tools in visibility software enables LSPs to identify potential risks early and implement contingency plans, such as securing alternative transportation modes or adjusting schedules to maintain service levels despite disruptions.
By leveraging these capabilities, both BCOs and LSPs can enhance their resilience against the pervasive challenges posed by global port congestion. Additionally, real-time tracking ensures transparency across the supply chain, enhancing coordination and communication among all parties involved, ultimately leading to improved efficiency and reduced operational costs.