Singapore logistics firms are confronting significant cost increases, potentially reaching 50 percent, as cargo destined for the Middle East faces severe disruptions. Escalating regional tensions have driven up fuel prices and led shipping lines to suspend routes, effectively halting shipments. Freight forwarders report substantial surcharges, rising energy expenses, and prolonged delivery delays are crippling supply chains.
Hermes Logistics, a Singapore-based freight forwarder, has 18 containers of cars stranded at sea en route to its primary market, the Middle East. The company is incurring surcharges exceeding S$5,000 (US$3,900) per container, with uncertain delivery timelines due to the volatile situation around the Straits of Hormuz. Businesses are attempting to share these increased costs with customers and exploring alternative routes, though these also involve surcharges.
Penanshin Air Express highlights escalating fuel and electricity costs as major concerns, potentially driving up overall transport and warehousing expenses by up to 50 percent. The current disruption is unprecedented, with cargo movement completely stalled, unlike during the COVID-19 pandemic. The impact is felt locally as well, with increased fuel prices at petrol stations.
The Association of Small and Medium Enterprises (ASME) warns that firms may be forced into difficult decisions, including manpower cuts, to manage the disruption. ASME president Ang Yuit advises prudence and vigilance, urging businesses to prepare for a potentially turbulent period and reconsider expansion plans in the Middle East. The situation is described as messy, with no short-term resolution expected, leading some businesses to scale down operations to mitigate risk.