Keeping Trade Flowing

How Singapore is transforming into Asia’s next generation logistics hub.



From Humble Beginnings 

Since its early days, Singapore has been a bustling sea port and important trading outpost due to its strategic location along key international shipping routes. And as its economy rapidly took off in the years after independence - emerging as a manufacturing and oil refinery hub - so did its logistics and supply chain industries grow in tandem to support trade and business. Some of the key milestones include the launch of the Tanjong Pagar Container Port to tap on international container traffic growth and the development of Changi International Airport to consolidate its growing air passenger and cargo traffic.
 
Fast forward to today, we can see that Singapore has continued to grow from strength to strength, establishing itself as a major logistics hub to the region. In 2014, the World Bank ranked Singapore as the No. 1 Logistics Hub in Asia in its Logistics Performance Index. The Republic’s success can be attributed to three factors: world-class infrastructure, good location and excellent connectivity to the region and the rest of the world. In turn, much of this can be attributed to the foresight of the Singapore government, which has continually planned ahead to ensure hardware and software components of the logistics sector are relevant and ready for the future.

A Key Source of Growth 

In many ways, the importance of the logistics sector to Singapore’s economy cannot be understated. In 2014, the industry employed more than 188,000 people and contributed some 7 per cent to the economy. The Republic is also an important location for the world’s top logistics companies, with 20 of the top 25 global logistics players running operations here, on top of being the preferred logistics and supply chain management hub for leading manufacturers such as Dell, Hewlett-Packard, Infineon, LVMH, Novartis, Panasonic and more.
 
With so much going for it, the long term prospects for Singapore’s logistics sector are certainly bright with the economies of Asia forecasted to continue seeing strong growth. Singapore is party to some 18 multilateral and bilateral Free Trade Agreements (FTAs), and continuing to pursue greater trade facilitation such as the Trans-Pacific Partnership. As such, its volume of trade with the region is expected to follow suit. With the ASEAN Economic Community (AEC) coming into place by the end of 2015, the 10 Southeast Asian economies will transform into a single market, bringing about liberalised movement of goods, services and people - and in turn generating even greater demand for Singapore’s logistics and supply chain management solutions. 

Taking to the Skies 

Singapore is well-connected to the region and the rest of the world by air. And in Changi Airport, the Republic boasts one of Asia’s largest cargo airports, which is served by over 6,500 weekly flights connecting to 280 cities in 60 countries, and handling close to 2 million tonnes of cargo each year. In this regard, its strategic location is definitely a help, with Singapore being proximate to the world’s major markets and situated within a seven-hour flight radius to half of the world’s population in Asia Pacific.
 
By 2017, Changi Airport will see the completion of its Terminal 4 complex, adding an additional gross floor area of 195,000 square metres. At the National Day Rally in August 2015, Singapore’s Prime Minister Lee Hsien Loong further announced that Terminal 5 will be built by the mid-2020s to double the airport’s current capacity, so as to stay ahead of regional competition. In all, some S$3 billion has been set aside in the Changi Airport Development Fund for the cost of development and upgrading and replacement of air navigation and operations facilities. 
 
Air freight providers engaging in niche categories such as high-value goods and perishables will be glad to hear about the development of specialised logistics facilities catering to them. Opened in 2010, the Singapore Freeport is a highly secure storage vault for high value collectibles that is located adjacent to the Changi Airport and securely connected via internal airport roads. Its close proximity to the airport also offers international collectors convenient access to their stored valuables.
 
Meanwhile, the Coolport @ Changi is a S$16.5 million on-airport perishable handling centre, which is designed to handle a wide range of fresh produce including chilled meat and live seafood, as well as temperature-sensitive pharmaceutical and biomedical products. Both specialised logistics facilities are also built on free trade zones, which means that the goods stored do not attract duties or taxes while they are within the premises, and making both excellent transshipment hubs. 

Moving on the Seas 

When it comes to shipping, the Republic boasts the world’s busiest transshipment hub, which handles about one-seventh of the world's container transshipment throughput or 31.24 million twenty-foot equivalent units (TEUs) of containers in 2013. In fact, Singapore is connected by 200 shipping lines to 600 ports in 123 countries, with daily sailings to every major port of call in the world. The comprehensive port facilities and services are also unmatched with regards to quality, efficiency, competitiveness and reliability, with the ability to handle more 2,000 containers per vessel, with a turnaround time of less than 12 hours. All this is perhaps, why Singapore is frequently recognised as the “Best Seaport in Asia” by the Asian Freight and Supply Chain Awards (AFSCA).
 
Despite its relatively small size, Singapore has several port and terminal facilities to cater for different types of shipping traffic. Towards the southern part of the island, the Port of Singapore Authority (PSA) manages a total of 57 berths at its container terminals in Tanjong Pagar, Keppel, Brani and Pasir Panjang, which operate as one seamless and integrated facility. To the western part of the island, Jurong Port serves the maritime and shipping needs of Singapore’s industrial companies nearby with 32 berths, handling general, bulk and containerised cargo.
 
With an eye on the future and to cater to growing cargo trade, the Singapore government has stepped up the development of Pasir Panjang port, which is currently in phase three and four of an expansion and look to be operational by the end of 2017. The new terminals are expected to handle 15 million containers, bringing Singapore's total handling capacity to 50 million containers a year. Looking even further ahead, the Ministry of Transport announced in 2015 that the Republic will be relocating its transshipment port operations to Tuas in 10 years, a move that will add 65 million TEU in annual capacity, nearly doubling today's capacity at local PSA terminals. It noted that consolidating transshipment operations at Tuas will bolster efficiency and economies of scale while eliminating inter-terminal transfers, resulting in cost savings and increased productivity.

Taking Stock of Progress 

Singapore is the preferred location in Asia for many global logistics players in part due to the strong support they enjoy from the Singapore government. Besides the constant upgrades in infrastructure and connectivity to the region, the Singapore government also believes in close collaboration with logistics companies to set up a robust and competitive ecosystem. The Republic’s business-friendly customs procedures and excellent air and sea freight handling capabilities offer partners a strong platform from which to add on their own logistics and supply-chain excellence. 
 
The Singapore government also provides strong support to logistics firms that are looking to increase their productivity and reduce reliance on manpower. A wide variety of government grants are available such as the Productivity and Innovation Credit (PIC) scheme to support the adoption of productivity enhancing technology and the Capability Development Grant (CDG) to help companies develop new capabilities to increase their overall competitiveness. Government agencies such as SPRING Singapore also support companies in the logistics industry through the Logistics Productivity Toolkit as well as work with industry groups to improve sector wide productivity. 

Manning Up to the Challenge 

While Singapore pushes on in its quest to transform into Asia’s next generation logistics hub, it has not forgotten that skilled talent and manpower will be required to operate new facilities, technologies and systems effectively and to best results. Some of the ways the Singapore government has looked to upgrade its existing logistics sector workforce and build up a talent pipeline is through SkillsFuture. This nationwide initiative aims to equip Singapore’s workforce with skills needed in the future economy. 
 
SkillsFuture aims in part to encourage companies to take a more active role in the training and development of the workforce by working closely with education and training institutions to provide more opportunities for workplace learning. One such initiative is the SkillsFuture Earn and Learn Programme, where fresh polytechnic and Institutes of Technical Education (ITE) graduates are able to gain work experience over a one-year period at participating companies while concurrently studying for further qualifications relevant to their discipline of study.
 
On a higher level, the Economic Development Board of Singapore (EDB) is also working with companies to develop talent that can navigate the complexities of Asia’s fragmented logistics and regulatory landscape. Logistics professionals looking to take on greater leadership and management roles at their respective companies can also look to the renowned Double Masters Program (DMP) by The Logistics Institute-Asia Pacific (TLI-AP), which taps on the academic stature of both the National University of Singapore (NUS) and Georgia Institute of Technology (in the USA).  

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