Impact of Disruptions to Shipping and Security in Red Sea Region on Singapore's Consumer Prices and Fuel Costs

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.

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.