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SHIPS IN LINE, BUNKERS SHINE: SINGAPORE’S FUEL BOOM

Bunker Traders in Singapore: Navigating the Surge in Demand

In recent months, Singapore’s bunker traders have seen a significant uptick in business, spurred by various global developments. This trend is drawing attention from major National Oil Companies in the UAE and big commodity traders , who are expanding their bunkering teams to capitalize on the booming market.

Increased Bunker Fuel Sales in Singapore, the world’s largest bunkering port, has experienced a record surge in bunker fuel sales. The rise in sales reflects increased global consumption as cargo ships, tankers, and other vessels take longer routes to avoid the Red Sea. Many of these new routes involve rounding Africa’s Cape of Good Hope, adding several thousand miles and up to three weeks of travel time compared to the traditional route through the Red Sea.

Shifts in Shipping Routes The number of cargo and tanker ships passing through the Suez Canal, located at the northern end of the Red Sea, has decreased dramatically. Compared to last year, vessel traffic has dropped from around 75 ships to about 35. This shift has driven more ships to Singapore for refueling, contributing to the increased demand for bunker fuel.

Record-Breaking Fuel Sales Starting in December 2023 and continuing through the first quarter of 2024, bunker fuel sales in Singapore have reached unprecedented levels, with December 2023 marking an all-time high since 1995. Singapore’s port has serviced approximately 1,000 ships, a substantial increase from 639 in April. The Maritime and Port Authority of Singapore (MPA) has noted a significant increase in vessel arrivals since the beginning of 2024, with overall vessel arrival tonnage growing by 4.5% year-on-year to 1.04 billion GT in the first four months.

Challenges and Capacity Constraints Despite the increased business, Singapore’s port faces capacity challenges. The surge in vessel arrivals has strained the port’s resources, leading to delays in cargo movements. As ships stay at sea longer, exporting countries struggle with a shortage of ships and container equipment. Observers attribute these bottlenecks to diversions caused by unrest in the Red Sea and a rush by Chinese exporters to ship goods before trade restrictions take effect.

Impact of U.S. Tariffs The U.S. recently announced plans to raise tariffs on $18 billion worth of Chinese imports, targeting strategic sectors like electric vehicles (EVs), batteries, steel, and critical minerals. The tariff on EVs is set to quadruple to 100% this year, while the tariff on semiconductors will increase from 25% to 50% by next year. This has led to a rush by Chinese exporters to beat the looming trade restrictions, causing a spike in average container prices by 88% in the past two months.

Congestion at Singapore’s Port Typically, ships traveling through the Strait of Malacca dock in Singapore. However, the growing volume of vessels has led to heavy congestion, increasing the wait time for berthing from one to two days to around seven days. This congestion highlights the need for increased capacity and more efficient port operations to handle the rising demand.

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