Port congestion – the other issue driving freight rates    

SINGAPORE – Congestion at several Asian ports, particularly at the Port of Singapore, is reportedly at an all-time high, exacerbating a worsening ocean freight situation and driving container rates up further.

Last month, port officials said that Singapore is experiencing a “bunching” of vessels, primarily because of vessels being diverted away from the Red Sea. As of late May, berthing delays are now up to seven days, with more than 500,000 TEUs (twenty-foot containers) waiting to berth.

“The diversion of vessels around the Cape of Good Hope has disrupted vessel arrival schedules at major ports around the world with off-schedule arrivals and has caused a ‘vessels bunching’ effect,” officials said in response to media.

According to ocean shipping tracker LinerLytica, bottlenecks in Singapore have spilled over into key Malaysian ports. They’ve also caused wait times to increase across all main Chinese port regions.

In December 2023, ocean carriers largely opted out of moving ships through the Red Sea and Suez Canal due to attacks by Yemen’s Houthi rebels. They began rerouting those ships around the horn of Africa instead, which adds around 14 extra days to a ship’s journey.

This means ships are being taken out of commission for longer, which – thanks to a coinciding early peak season – means the extra capacity added to the market over the pandemic is largely soaked up.

As a result, importers across all industries are having to pay more to get their freight placed onto ships. Importers who pay contracted rates are moving into the more expensive spot market to meet their shipping needs.

“Right now, the battle is getting on ships,” Ashley Furniture CEO Todd Wanek told Furniture Today. Ashley added a surcharge to compensate for rising costs last week.

Flexsteel, another major supplier, also added one last week.

“We’re having real issues getting capacity at contracted rates and we’re forced to move to open market rates to ensure continued flow of goods and strong service levels for our customers,” Vice President of Sales David Crimmins told Furniture Today.

As of last week, average spot rates sit at $5,117 per 40-foot container, per Drewry. Rates from Shanghai to Los Angeles sit at $6,441, while Shanghai to New York sits at $7,552. Furniture importers have indicated rates upwards of $7,000 to the West Coast and $9,000 to the East.

Rates do not appear to be falling anytime soon.

Check out this article for more background.

See also:

  • Why are ocean container rates rising? Taking a closer look
  • A COVID redux? Furniture importers sound alarm on rising container rates

The post Port congestion – the other issue driving freight rates     appeared first on Furniture Today.