Congestion at Singapore’s container port, which is at its worst since the pandemic, has started spilling over to neighbouring ports, posing a risk for global supply chains. Shipping rates have risen as much as fivefold over the past year and it is only a matter of time before some of that is passed on to shoppers, according to Bloomberg.
One explanation is that ships rerouting to avoid Red Sea attacks have led to bottlenecks in other Asian and European ports. Diversions have then meant more ships going through Singapore. Maersk, the world’s second-largest container carrier, for example, said it would skip two westbound sailings from China and South Korea this month owing to severe congestion. JPMorgan had estimated the Red Sea shipping crisis could add 0.7 percentage points to global core goods inflation for just the first half earlier this year.
Now, another more unexpected problem could mean lasting disruptions to the global supply chain even when the Red Sea shipping crisis eases. The total volume of vessels, especially to and from China, has surged in recent months, and the annual peak shipping season has arrived earlier than expected.