Ship diversions hit main Asian hubs with $131 billion trade loss

SINGAPORE : Russell Group, a data and analytics company, has reported that $131 billion in trade is at risk of being disrupted at the Ports of Singapore, Port Klang and Tanjung Pelepas.

All three ports have faced significant port congestion since the middle of June, with vessels avoiding the Red Sea because of the Houthi attacks in the area. 

Diverted vessels have been arriving either behind schedule or using the port as an alternative, which is creating large queues.

The analysis of these ports is from 12 June until 12 August, with the middle of June experiencing the worst port congestion, and August being the earliest date possible for the congestion to ease. 

Further analysis by Russell’s ALPS Marine identified that commodities like crude oil ($7.3 billion) and Integrated circuit boards ($11 billion) were the most likely to be impacted by the delays at the ports. 

Due to its size and location near the Strait of Malacca, Singapore has found itself a focus for many shipments, resulting in a large queue of ships waiting to enter the port.  

To avoid queues, many vessels have opted to use the nearby Malaysian ports of Port Klang and Tanjung Pelepas, and in doing so spread the congestion to these ports.

The breakdown of trade at each of these ports is as follows: 

• Singapore ($89.5 billion)
• Port Klang ($22.7 billion) 
• Tanjung Pelepas ($19.5 billion) 

Port operators such as PSA Singapore, however, have already implemented several measures that reportedly helped alleviate the situation.

Suki Basi, Managing Director of Russell Group commented on these figures: “These figures released today by Russell show that the spectre of port congestion has again arisen to create concern for businesses and insurers alike. 

“Previously, the port congestion had been linked to the COVID-19 pandemic. This time the congestion has been exacerbated by the fallout from the Red Sea attacks, with vessels using alternate ports like Singapore, Port Klang and Tanjung Pelepas to unload items, creating large delays. 

He further noted that if this demand spreads to other ports, especially as companies begin ordering for the upcoming holiday season in autumn, businesses may struggle to source items.

Sea-Intelligence recently reported that widespread port congestion forced shipping companies to cancel sailings despite strong demand and high freight rates, leading to a vessel capacity shortage.