Red Sea Rerouting

Since late 2023, security risks in the Bab al-Mandab Strait have forced carriers to reroute via the Cape of Good Hope instead of Suez. This adds ~6,400 km and 10–14 extra days to Asia–Europe sailings. Port congestion in Singapore is rising as more vessels transship there.

Impact:

Fewer vessels available for Asia → Australia loops. SMEs in Australia may face longer lead times for European imports and increased freight rates due to tonnage shortages.

Action:

Plan longer lead times for shipments to/from Europe.

For urgent imports, explore airfreight or multimodal options.

SMEs should secure bookings at least 4–6 weeks ahead if routing via Europe.

Bunker Fuel Volatility

Singapore bunker prices (IFO 380) are around US$418/mt (Sep 2025). Marine fuel sales hit a record 55.38m tonnes in the past 12 months. Alternative fuel blends (biofuel, LNG) doubled in H1 2025 but remain 3–5× costlier than conventional fuel.

Impact:

Carriers pass rising fuel costs into Bunker Adjustment Factors (BAFs). Importers into Sydney, Melbourne, Fremantle will see freight invoices climb in Q4 2025.

Action:

Ask forwarders for “BAF-inclusive quotes” upfront.

SMEs should build a 5–10% buffer in freight budgets to cover fuel surcharges.

Monitor Singapore bunker index weekly to anticipate changes.

 Strong US Dollar

The USD has remained strong through Q3 2025 (AUD/USD hovering around 0.63–0.65). Shipping contracts, insurance premiums, and bunker charges are mostly priced in USD.

Impact:

Australian importers: pay more in AUD for freight.

Exporters: more competitive globally, but margins eroded if contracts are locked in AUD.

Action:

SMEs should request dual quotes (USD + AUD).

Consider forward contracts or hedging for freight payments.

Exporters should highlight “AUD advantage” to overseas buyers when quoting.

Sources: Reuters, Drewry, Xeneta, Sea-Intelligence, IATA, BunkerIndex, DHL, The Nightly, Port Authorities, DFAT (Sep 2025)

Disclaimer – Market data is from public sources we consider reliable but has not been independently verified; accuracy is not guaranteed.