Transportation and Shipping: Singapore Dinner and Debate

We recently welcomed industry executives from all segments of the transportation and logistics industry to our annual Transportation and Shipping Dinner in Singapore. 

The entire industry has experienced a disruptive international environment in the past year, and a summary of the key insights shared and topics debated during the dinner is provided below. 

The US presidential election’s influence on trade flows in Asia 

The upcoming United States presidential election and its potential consequences for trade flows in Asia was the first topic of conversation.  

The discussion was especially focused on concerns regarding trade policy with China, as the imposition of trade tariffs on goods made in China has been a significant issue. The discussions noted that any dramatic increases would raise concerns of the potential consequences on trade flows for the entire region, as manufacturers would likely continue to shift their production efforts geographically. 

Additionally, higher consumer prices resulting from tariffs could impact demand, causing trade volumes to shrink. Irrespective of the administration, continuation of policies regarding elevated tariffs targeted at Chinese goods and key industries such as tech and green industries is anticipated to be a rolling issue for Asian businesses, as they seek to manage the immediate and potential long-term impacts.

Is the party over for container freight rates next year?

The second topic debated by our guests was the future of container freight rates, which quadrupled as a result of supply chain disruptions caused by COVID-19 in 2021 and 2022. Although rates went into reverse in 2023, they are now back above pre-pandemic levels, driven primarily by the need to sail the Cape of Good Hope to avoid the Suez Canal and the conflict in Gaza. However, with steadily growing supply capacity and limited demand growth due to economic headwinds around the world, rates would normally be expected to slide next year. Freight rates have already dropped 30% over the past few months, lending credibility to this argument. Shippers’ memories of the extraordinary freight rates during the pandemic are fresh, and they will certainly press carriers hard for reduced pricing as soon as possible. 

On the other hand, multiple geopolitical tensions, including conflicts in the Middle East and Ukraine, have created a complex, potentially multi-crisis environment when combined with the US presidential elections. Executives around the world are looking to mitigate the risks posed by the current conflicts and potential economic sanctions or tariffs. The ensuing changes include companies diversifying their manufacturing footprint by shipping raw materials and components out of China to be manufactured elsewhere for further shipment to the US, creating an extra leg of shipping and increasing demand for capacity especially in Southeast Asia.

In addition, more and more shippers are demanding measures for meeting decarbonization goals, which reduces choice in picking carriers. As new shipping environmental requirements are drafted, costs will inevitably rise to meet them. These interconnecting factors could potentially create a “new normal” for the container shipping industry, stabilizing freight rates on a high note, albeit lower than the peaks reached during the pandemic.

As with every year, our event sparked fascinating discussion and debate, and we thank all of our guests for an enjoyable evening together.