Impact of Disruptions to Shipping and Security in Red Sea Region on Singapore's Consumer Prices and Fuel Costs
Ministry of Trade and IndustrySpeakers
Summary
This question concerns the impact of Red Sea shipping disruptions on Singapore’s consumer prices, fuel costs, and supply chains as raised by Ms He Ting Ru. Minister Gan Kim Yong stated that while rerouting vessels adds 10 to 15 days to transit, the short-term impact is manageable due to sufficient stockpiles and the use of air freight for time-sensitive cargo. He noted that oil supplies are not significantly impacted as they primarily transit the Strait of Hormuz, though higher sea freight and insurance costs are expected. Minister Gan Kim Yong emphasized that the government is monitoring the situation and working with businesses to strengthen their contingency plans. He added that while Singapore can currently weather the disruptions, a worsening of the Red Sea situation could lead to indirect longer-term impacts on supply chains.
Transcript
51 Ms He Ting Ru asked the Minister for Trade and Industry in view of the disruptions to shipping and general insecurity in the Red Sea region that escalated in December 2023 (a) what is the anticipated impact for Singapore on (i) consumer prices (ii) fuel costs and (iii) logistical and supply chain delays; and (b) what mitigation actions are being taken to lessen the impact.
Mr Gan Kim Yong: The Red Sea situation remains volatile. Major shipping lines have progressively suspended transit through the Red Sea and rerouted their vessels via the Cape of Good Hope. Despite this diversion in shipping routes leading to an additional 10 to 15 days of transit, businesses have assessed that the delays are still manageable thus far.
In the short term, we can weather the impact of the Red Sea situation on the flow of supplies to Singapore. We have sufficient stockpiles of critical supplies. In addition, more time-sensitive cargo is transported by air rather than via the Red Sea. Likewise, Singapore’s oil supply is not expected to be significantly impacted, as oil from the surrounding Middle Eastern region is primarily transported through the Strait of Hormuz. However, we can expect some increase in sea freight costs from the longer voyages and higher insurance costs. If the Red Sea situation worsens, the supply chain disruptions may cause an indirect longer-term impact.
We will continue to monitor the situation closely and work with businesses to manage their supply chains and strengthen their contingency plans.