Red Sea attacks raise freight charges, but still manageable for businesses: MTI

ATTACKS on vessels in the Red Sea have led to higher sea freight charges and import delays, but businesses say these repercussions are manageable so far as the proportion of goods shipped from Europe to Singapore by sea is small compared to the city-state’s total global imports, said Trade and Industry Minister Gan Kim Yong.

Gan said on Monday (Feb 5) that major shipping lines have re-routed their long-haul vessels via the Cape of Good Hope in South Africa, instead of cutting through the Suez Canal and the Red Sea at Egypt – a journey that adds 10 to 15 days of transit.

The delays have affected imports such as petrochemicals, speciality chemicals and machinery – goods that are typically transported via the Red Sea, said Gan, who was responding to parliamentary questions from Members of Parliament Darryl David and Saktiandi Supaat, who asked about the impact of tensions in the Red Sea on Singapore’s economy and imports.

David is an MP for Ang Mo Kio Group Representation Constituency (GRC), while Saktiandi is an MP for Bishan-Toa Payoh GRC.

The crisis at one of the world’s most densely-packed shipping channels began in November last year, when rebel Houthis in Yemen began attacking vessels passing through the Red Sea in a show of support for Palestinians in Gaza hit by the Israel-Hamas war.

Military forces from the United States and the United Kingdom responded with strikes and air raids against the Iran-backed Houthis, who have since declared American and British interests to be legitimate targets as well.

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Gan said that the government’s economic projections have taken into account the current situation in the Red Sea.

The Ministry of Trade and Industry expects Singapore’s economy to grow by between 1 and 3 per cent this year, with core inflation to come in at between 2.5 and 3.5 per cent, moderating from 4.2 per cent last year.

“Should the conflict escalate further, we expect additional downside risks to GDP (gross domestic product) growth and upside risks to inflation. We will continue to monitor developments closely including engaging with our business community,” said Gan.