Singapore port ready for demand uptick should Red Sea routes reopen in 2026

SINGAPORE – Singapore port operator PSA is preparing for the potential return of ships through the Suez Canal, after carriers spent nearly two years diverting vessels around Africa to avoid violence by Yemeni rebels operating in the Red Sea.

A return to shipping through the Suez will shorten delivery times and potentially reduce freight rates for retailers and their customers in the long term. However, heavier traffic at major transshipment ports like Singapore is expected over the short term as shipping schedules and services are adjusted, analysts said.

From Dec 18 to Dec 19, a Singapore-flagged Maersk vessel successfully transited the Bab-el-Mandeb Strait and Red Sea under “the highest possible safety measures”, Maersk said in a statement. It is a first step towards gradually resuming navigation along the East-West corridor via the Suez Canal and the Red Sea, although there are no other planned sailings for now.

Earlier in December, French liner CMA CGM had also indicated that its vessels could resume travel through the Suez Canal on outbound and return trips between India and Pakistan and the US east coast, with the first ship to depart from Karachi in January.

A spokesperson for PSA told The Straits Times that the port operator is closely monitoring the evolving situation involving vessels re-routing through the Red Sea and the Suez Canal.

“For PSA Singapore, as the world’s largest transshipment hub, we are anticipating demand to be elevated due to a surge in arrival of vessels on the East-bound route, particularly in the initial weeks following the re-routing,” the spokesperson said.

“To mitigate potential disruptions arising from these routing changes, we are proactively engaging shipping-line customers and maintaining close communication to facilitate the early exchange of vessel arrival and volume information. This supports advance berth planning and helps uphold service levels.”

The port operator added that it continues to ramp up capacity at Tuas Port, which will have 12 operational berths by the end of 2025. It also uses advanced analytics and artificial intelligence-enabled tools to predict vessel arrival times, allowing for more proactive and dynamic berth planning and enhanced operational efficiency.

Tuas Port, a PSA Singapore mega project, is expected to become the world’s largest fully automated container terminal in a single location when it is fully open by the 2040s. It reached a milestone of handling 10 million twenty-foot equivalent units (TEUs) in February.

Houthi attacks on commercial ships in the Red Sea

have killed at least nine mariners and sunk four ships since the group declared solidarity with Palestine in 2024, disrupting shipping in the Red Sea and forcing vessels to reroute around the Cape of Good Hope on longer, costlier voyages.

Now, the shipping industry is looking at potentially resuming voyages through the Red Sea in 2026 after the Houthis in November signalled a halt to their strikes in the region following a ceasefire in Gaza between Israel and Hamas in October.

A gradual return to the Red Sea route after long detours around the Cape of Good Hope would be the key thing to watch for in container shipping in 2026, Mr Rico Luman, ING’s senior sector economist for transport and logistics, wrote in a Dec 1 note. “Container lines deciding to navigate back to the Red Sea is arguably the most important development to watch for in the global shipping market next year. And it’s not a matter of ‘if’, but ‘when’. And should one big company decide it’s worth the risk, others will surely follow,” wrote Mr Luman.

The Suez Canal has been a vital link for modern East-West trade for decades, handling more than 15 per cent of global goods trade and up to twice that share of global container traffic, particularly consumer goods.

However, the initial resumption of shipping through the waterway is likely to create congestion at European ports, with knock-on effects across the global network, including Singapore, analysts said.

Container shipping works much like an airline schedule, with ships following fixed routes that call at a set of major ports, which are linked to smaller feeder ports, explained Mr Jayendu Krishna, head of maritime advisers at Drewry.

He noted that sending ships back through the Suez Canal could shorten voyages by about 10 to 14 days, depending on speed. But changing routes may also mean cargo has to be regrouped at key ports, which could lead to congestion.

Shipping lines have not rushed to reroute their vessels to the Suez Canal, given the uncertainty, Mr Jayendu said.

He added: “A likely possibility is the slow return to the canal. Rerouting may cause some congestion. But I believe the situation should be manageable. Any congestion will likely be temporary.

“The current indications suggest that there will not be a sudden movement away from the Cape of Good Hope, given that the situation in the Middle East remains fragile.”

Against this backdrop, PSA noted that as a global port operator, it recognises it is operating in a world where geopolitical tensions, rapid advances in AI and technology, as well as social and environmental pressures are creating more frequent shocks and disruptions.

“At PSA, our customers and partners value our neutrality in serving all shipping lines,” the spokesperson said, adding that by “strengthening operations, technology and connectivity, PSA aims to set higher benchmarks that give customers a competitive edge”.

“We will continue to develop container terminals with future-ready capacity and enhance port ecosystems to create value beyond the waterfront, while overlaying these with digital integration to strengthen coordination and visibility across supply chains.”