VZCZCXRO1568
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGP #1223 3550744
ZNR UUUUU ZZH
R 210744Z DEC 09
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 7563
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHHK/AMCONSUL HONG KONG 6512
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC

UNCLAS SINGAPORE 001223 
 
STATE PASS USTR 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EWWT SN
 
SUBJECT:  SINGAPORE PORT DOWN, BUT NOT OUT 
 
REF: A) 08 SINGAPORE 1319 
B) SINGAPORE 308 
 
¶1.  (SBU) Summary:  Singapore's port, the busiest container port in 
the world, is beginning to recover from the global financial crisis 
that crippled international trade, but volumes are still 
dramatically off the heights from early 2008.  The Port of Singapore 
Authority (PSA) saw its annual container throughput in Singapore dip 
a hefty 14 percent through November of 2009, though in November the 
port finally reverted to year-on-year monthly growth.  Despite the 
economic setback and growing competition from regional ports, PSA is 
cautiously expanding capacity as part of an ongoing port 
development.  End Summary. 
 
Economies Recovering, Port Following 
------------------------------------ 
 
¶2.  (SBU) Port operator PSA Singapore Terminals, which handles about 
one-fifth of the world's total container transshipment throughputs, 
has handled 22.92 million twenty-foot equivalent units (TEUs) in the 
first 11 months of 2009, down 14.6 percent from 2008.  The global 
financial crisis that struck the region late in 2008 particularly 
impacted container volumes, hitting both demand for goods and the 
availability of trade finance that fuels the shipping industry (Ref 
A).  The decline was most severe in the first two months of 2009, 
when monthly container throughputs dipped 20 percent year-on-year to 
below two million TEUs.  GOH Hwee Shan of PSA's Research and 
Statistics Division, told Econoff that the port began to see a 
recovery in August, thanks mostly to rising intra-Asian trade. 
Singapore port posted its first positive growth in volumes for the 
year in November, though that was more a reflection of the sharp 
dropoff in container volumes in the previous November. PSA forecast 
that its annual container throughput in Singapore will reach only 25 
million TEUs for 2009, down from 29 million TEUs in 2008. 
 
Fighting for Market Share in the Recovery 
----------------------------------------- 
 
¶3.  (SBU) Singapore has been fighting to retain its market share in 
the transshipment business despite the slowdown in global trade. 
Nearly 80 percent of the containers passing through Singapore are 
transshipped to other locales.  At the height of the economic 
downturn, Singapore's Maritime and Port Authority (MPA) instituted 
concessions on port dues and related fees to encourage shipping 
business (Ref B).  OH Bee Lock, Senior Vice President of PSA 
Corporate Planning, told Econoffs that Singapore faces strong 
competition from traditional rivals like Hong Kong, as well as ports 
in Malaysia, Thailand and Vietnam which are now battling for a 
bigger slice of the global container transshipment market.  Shippers 
are also increasingly looking to cut costs by shipping directly from 
port to port and avoiding transshipment charges. 
 
¶4.  (SBU) Also of concern for the port of Singapore is the financial 
health of shipping companies that are plagued by continuing low 
freight rates.  Approximately 10 percent of the world's container 
vessels were idled in 2009 and MPA observed that operating container 
vessels were only 50-60 percent full (Ref B).  Neil Dekker of Drewry 
Shipping forecasts that the world's major container carriers would 
lose US$20 billion in 2009 as a result of a global container traffic 
slowdown of 10.3 percent.  That would mark a 27 million TEU decline 
from the 2007 level worldwide.  Drewry sees the Asia-Europe route, 
one of the most competitive globally, witnessing a 29.5 percent 
reduction in shipping rates in 2009. 
 
Singapore Plans Expansion Despite Setbacks 
------------------------------------------ 
 
¶5.  (SBU) Despite the current economic slowdown, Singapore intends 
to expand the port's container capacity in order to remain 
competitive in the global market.  During the economic downturn, MPA 
continued with land reclamation projects at the port to support 
PSA's future expansion plans for its operations in Singapore (Ref 
B).  PSA's most advanced Pasir Panjang terminal is equipped with 
berths up to 16 meters deep and with quay cranes able to reach 
across 22 rows of containers so it can handle the newest generation 
of super container vessels carrying 12,000 TEUs.  PSA intends to add 
ten new container berths in the next few years at Pasir Panjang, 
bringing PSA's total to 54 container berths in Singapore.  For the 
longer term, PSA is planning subsequent phases of expansion in Pasir 
Panjang Terminal aimed at eventually increasing container volume 
capacity at the port from the current 35 million TEUs to 
approximately 50 million TEUs annually. 
 
SHIELDS