Container ships keep piling up at Singapore port, sending sea freight rates soaring

For the manufacturers and exporters needing to get their finished products out of the city state, that means there may be little choice other than to hold on to their inventories longer than they’d like to.

“The fundamental backdrop remains the same with higher peak season volumes coming” in a shipping market already seeing healthy demand, Jefferies LLC analysts led by Omar Nokta wrote in a note. “Congestion is a growing risk as peak season is under way amid a reshuffling of the fleet.”

The Yemen-based Houthis have been attacking vessels in the Red Sea since last October, in retaliation for Israel’s assault on Gaza. The situation in the vital waterway has intensified from early this year, with a second vessel sinking after being struck.

That had resulted in shipowners opting not to transit the Suez Canal and taking the longer route around the Cape of Good Hope at the southern tip of Africa. That means now they don’t get a chance to refuel or unload cargo at ports in the Middle East, leading to worsening congestion in the waters off Singapore.

A lack of immediate alternatives to Singapore in the region is making the logjam even worse.

Nearby ports, such as Port Klang and Tanjung Pelepas in neighbouring Malaysia, aren’t easy substitutes because they aren’t as well-connected as Singapore, said Jayendu Krishna, a director at Drewry Maritime Services. So outbound cargoes may not be able to reach their destinations on time if they don’t leave from the city state, he said.

Weekly mainline service connections – a measure of how many other ports have a direct shipping link with a given harbour – for Singapore were at 148.7 in the second quarter, data from Drewry showed. That’s nearly twice the number of Port Klang and more than three