How shipping delays in Singapore can impact Maldives imports and exports

A cargo vessel belonging to Maldives State Shipping (MSS).

Shipping delays in Singapore has more than doubled owing to a shortage of ships and containers, and congestion reports CNA which added that this disruption could reflect in higher prices for the consumers.

It all began when US President Joe Biden announced tariff hikes on Chinese imports to the country, ranging from electric vehicle batteries to computer chips – which saw a tariff increment four times the current amount. In response to this, container prices saw a whopping 88% spike in the last two months, which is reflective of Chinese exporters being in “mad rush” to beat the looming trade restrictions imposed by its biggest competitor in the West.

Generally, ships bound from China to the US usually take the ‘Strait of Malacca’ route to carry the cargo, and primarily dock at Singapore. Over the past months the sheer volume of ships docking in Singapore had gone up – thereby inducing a congestion crisis at the international port.

CNA also reports that as of right now, it requires an average of seven days for a ship to be berthed at the Singapore port, instead of one to two days observed previously. Moreover, by May end, Singapore port had received over 1,000 ships compared to just 600 in April.

Two more major shipping firms, Mediterranean Shipping Company and CMA CGM, said Saturday they were suspending passage through a Red Sea strait vital for global trade after Yemeni rebel attacks in the area. (Photo/AFP)

Tan Hua Joo, a Container Shipping Market Analyst of Linerlytica while speaking with CNA said that there is a lack of space available for ships in light of the increase in ship volume to the Singapore port, and noted that while there is an additional capacity for ships to berth at the port, it would only be available at the end of the year.

Joo added that due to this, port users will need to include this delay into their cargo movements and forecast in the next few months.

The more these ships stay berthed at the port, the longer it takes for them to reach to their intended destinations – meaning countries that rely on the receipt of these cargoes, i.e. import-heavy countries, or countries that are sending these cargoes to their intended destinations, i.e. export-heavy countries.

Moreover, because of this delay in vessel movement, export countries face a shortage of ships and equipment to export their goods to intended global locations.

“For freight forwarders of big products, like cars, the price to ship their goods has jumped three-fold. So this means they have to either absorb costs or pass them to consumers,” a CNA reporter highlighted.

Pelaris Cheng, the Managing Director of Hermes Logistics said that due to the shortage of space in the vessels, with already laden cargo, they have less space to load their goods. She added that in such circumstances, they can only load the urgent or important consignments.

The situation becomes even more alarming as analysts speculate the issue could metastasize into the ASEAN region ports.

Analysts also forecast some sectors in the Singapore are expected to come off worse in light of the shipping industry disruption, for instance phones and those involved in manufacturing industries, especially the production of heavy goods like consumer electronics and electric vehicles, could expect heavy financial impact due to the supply-chain disruption.

The main gripe here is that these manufacturers generally rely on sea freight to send and receive the raw materials needed to produce their products.

Besides this, e-commerce firms are expected to take a hit as well, especially those selling larger household items such as furniture – are expected to face delays – while those selling smaller items may have to resort to costlier options to ensure their products reach the customers.

Professor Lawrence Loh, from the Department of Strategy and Policy, NUS Business School said that air freight generally costs five to 20 times more than sea freight charges, but are viable options in carrying smaller and urgent packages to their intended destinations. He opined that due to the limited scope of goods that can be carried via air freight compared to sea freight, the latter option is still “here to stay” since it is necessary in transporting larger items.

“We would also likely see higher food prices and higher transport prices, led by higher energy prices in the foreseeable future, and more important as well commodity prices are expected to rise, especially when Chinese trade starts to accelerate in this activity, seen through the rest of this year,” Barnabas Gan, the Acting Group Chief Economist of RHB Bank said, highlighting that the ongoing ship and container crunch coupled with higher growth momentum are likely to push inflation up.

The Implications on Maldives

Maldives is an import-heavy country, with comparatively smaller export sector – though not entirely diminutive. In April 2024 alone, the countries total imports, inclusive of fuel, saw a six percent increment, reaching a total of MVR 4.7 billion.

However, exports saw a significant 22 percent decline, registering MVR 151 million worth of commodities exported in the month. A month earlier in March, exports registered a whopping 64 percent decline, with just MVR 124 million worth commodities exported.

Although there have been no official comments from any relevant bodies in the Maldives at the time, it could be speculated that this significant decline in the country’s exports has been, in part largely or small, contributed by the shipping delays and the subsequent supply-chain disruptions in the ASEAN region.

While the impact from the supply-chain disruption may not be immediately felt, it is expected that the adverse effect of this disruption would be felt across the South Asian region, inclusive of the Maldives in the coming months.