On December 18, 2025, the Hainan Free Trade Port will fully close its borders, a move that will create ripples in regional trade. As an important hub in Southeast Asia, Singapore's market position is facing unprecedented challenges.

**Diversion of transshipment trade intensifies**

Singapore has long relied on transshipment trade to maintain its economic vitality. Data shows that in 2024, its transshipment trade volume with China will reach $380 billion, with a 15% share of goods transiting between China and Indonesia. Under the traditional model, products such as coconuts and rubber from Indonesia shipped to China must detour through Singapore, taking about 20 days, resulting in a spoilage rate of up to 8% for fresh produce.

The closure of Hainan has changed the situation. Yangpu Port has implemented a "direct transportation - deep processing - domestic sales" model, attracting direct shipping routes from Indonesia. The direct route only takes 6 days, and the loss rate can be controlled within 3%, significantly reducing enterprise costs. Data from the first 10 months before 2025 shows that the cargo volume of direct shipping from Indonesia to Yangpu Port surged by 78%, while the transshipment volume in the same region from Singapore dropped by 23% during the same period, and the trade volume of transshipments to China decreased by 11.3% year-on-year, reaching a ten-year low.

**Competitive Advantages of Policy Dividends**

Under the framework of "first-line relaxation, second-line control, and free movement within the island" in Hainan, 6,600 tax items have achieved zero tariff imports. More importantly, there is an incentive mechanism for the manufacturing industry—goods that achieve a 30% value-added in Hainan can be exempt from import tariffs when sold to the mainland, and even a 9% value addition can still create profit margins.

In comparison, transiting through Singapore incurs port operation fees, fuel surcharges, and long waiting costs. The annual waiting cost for a 100,000-ton cargo ship can reach millions of dollars. The electronic customs clearance at Yangpu Port takes only 1 hour (efficiency several times that of Singapore), and the "second-line customs" design simplifies the entry and exit process, saving 400 nautical miles of travel. The price advantage of bonded fuel is significant; a large ship can save over 100,000 RMB in fuel costs for a single refueling, along with a 15% corporate income tax incentive, prompting multinational companies to adjust their regional layouts towards Hainan.

**The Essential Differences in Industry Positioning**

Huangjing Port will be operational in August 2024, but its annual processing capacity is only 8 million TEUs (less than 1/8 of Singapore's), lacking supporting services such as financial settlement and ship maintenance, posing limited threats. In contrast, Yangpu Port is different - backed by a domestic market of 1.4 billion people and a complete industrial system, it is not only a transit port but also an industrial hub that integrates processing, trade, and logistics.

The traditional transshipment model only involves "goods passing through hands", while Yangpu Port achieves full-chain benefits of "processing value-added + tax-free domestic sales", and its positioning in deepening the industrial chain gives it irreplaceability. For the users, this is not only a cost consideration but also involves independent control of the supply chain—this is the strategic value that the Singapore intermediary model cannot provide.

**Long-term Concerns of Geopolitical Competition**

If the regional pattern continues to evolve, the Thai Canal (Kra Canal) may become the next variable. This passage through southern Thailand, if constructed, would allow ships to bypass the Malay Peninsula and transfer directly between the east and west coasts of Thailand, saving several days of travel time, and could potentially shift high value-added industries such as port operations, financial settlements, and ship maintenance to Thailand.

The China-Laos Railway is now operational, the China-Thailand Railway is advancing rapidly, and the land logistics network in the Indochina Peninsula is taking shape, with the technical and economic feasibility of the Southern Thailand Canal continuously improving. This poses a long-term challenge to traditional hubs that rely on the geographic location of the Strait of Malacca.

**Conclusion**

The closure of Hainan and the rise of Yangpu Port reflect the restructuring of regional trade patterns. For traditional hubs that rely on intermediary models, mere geographical advantages are no longer sufficient to maintain competitiveness; industrial depth, policy incentives, and strategic positioning are becoming the determining factors. Finding a position in the new regional division of labor is the core issue at hand.