The Logistics Industry in Singapore – The Past, Present, and Future
How has the logistics industry in Singapore has evolved over the years? What is being done to help Singapore maintain its position as one of the region’s leaders in the logistics sector?
Logistics – The Early Days
According to the Singapore Logistics Association (formerly the Singapore Freight Forwarders Association), freight forwarding began to take shape in the 19th century along with the development of entrepôt trade, where Singapore was a “bustling centre for the exchange of products of Europe, India and China”, and this opened up opportunities for storage, cargo insurance and local forwarding.
In the early 80s, Singapore-based freight forwarders began expanding to Indonesia, Malaysia, Thailand and the Philippines. After the recession in the mid-80s, companies began to expand their range of services. For example, those who concentrated on air freight started to show interest in sea freight, and vice-versa. The mid-80s also saw an increasing shift into warehousing and distribution. Later on, freight forwarders progressed, and went on to include services like warehousing, inventory management, configuration – all which are broadly referred to logistics.
Fast forward a few decades, and Singapore has become one of the region's leaders in logistics, and is home to specialised logistics capabilities like healthcare and cold chain, chemical, aerospace, art and wine logistics. It also ranked as the top logistics hub in Asia in the 2012 and 2014 Logistics Performance index by the World Bank.
Going Global
Singapore is one of Asia's leading global business and financial centre, and its strategic location has also encouraged businesses in the region and around the world to explore business opportunities. According to the Singapore Economic Development Board (EDB), there are two industry trends which suggest that Asia will be the home of future global leaders of transport and logistics. The long-term shift in trade and investment from the West to East was cited as one of the reasons for growth, with further growth attributed to Asia's early advantage in low-cost competition and “frugal engineering”, which is “a product design approach that emphasises using the bare minimum of resources to create basic, no-frills products”.
Excellent Connectivity
The logistics sector in Singapore is also known for its technological capabilities. For example. TradeXchange®, an initiative led by Singapore Customs, the EDB and the Infocomm Development Authority of Singapore (IDA) facilitates the exchange of information within the trade and logistics facility. TradeXchange® also offers a single electronic window for integrated workflow, submissions and enquiries to the sea ports, airports, maritime authorities, Customs and Competent Authorities. This results in simplified and seamless trade transactions across the supply chain which will yield higher productivity, business agility and, ultimately, strengthen Singapore's competitiveness in the global trade and logistics sector.
Industry Outlook for Singapore’s Logistics Industry
The EDB and SPRING Singapore has drawn up a five-year roadmap to increase the long-term productivity of the logistics and transportation industry.
This S$42 million Logistics and Transportation Productivity Roadmap will boost the long term productivity of the logistics and transportation industries and in turn, enhance productivity in the manufacturing and services sectors as well. The roadmap will help select segments of the logistics and transportation industry increase the value-added (VA) per worker by about 30 per cent to reach S$130,000 by 2015 and focuses on:
- Enhancing Supply Chain Management Expertise
Supply chain management (SCM) is a strategic competitive advantage and key differentiator for global industry leaders. By enhancing their SCM capabilities, companies in Singapore can work towards higher productivity and lower operating costs. Under this initiative, the EDB will strengthen the SCM expertise by encouraging leading industry players to facilitate knowledge transfer of global best practices and know-how to Singapore.
Developing SCM expertise specifically for Asia also serves as an additional differentiating factor as it will help businesses in Singapore navigate the trade landscape in the region and capture new growth with rising intra-Asia trade. For example, the EDB is working with logistics companies to train supply chain managers on building new practical knowledge on the operating landscape in Asia and harnessing opportunities for supply chain optimisation.
Logistics companies in Singapore are also given opportunities to develop specialised capabilities and solutions for the manufacturing and services industries. Industries where logistics companies can develop specialised capabilities include biomedical sciences, perishables, oil and gas and aerospace. EDB and SPRING Singapore are continuously working with academic institutions to equip students with the relevant skillsets, and the EDB will also work with leading logistics players to develop these specialised capabilities.
- Enhancing Innovation and Improving Efficiency at Enterprise and Industry level
The Centre of Innovation for Supply Chain Management (COI-SCM) was launched in 2011, and serves as the platform and one-stop centre to assist companies in appreciating efficiency gains through process innovation, use of technology and automation, process re-design and re-engineering. It also helps help logistics companies develop expertise through training courses. This enables the logistics industry in Singapore stay relevant to the new demands from their customers through continuous innovation and improving efficiency. SPRING also encourages enterprises in Singapore to innovate and consider new business models to drive efficiency and productivity and work towards enhancing business capabilities and gaining market share.
The logistics and transportation is also one of the 16 priority sectors to benefit from the National Productivity and Continuing Education Council (NPCEC) initiative. Set up in April 2010, the NPCEC Council aims to achieve national productivity growth of two to three per cent per annum by 2030 by focusing on developing:
- National productivity initiatives at the sectorial, enterprise and worker levels
- A comprehensive, first-class national Continuous Education and Training (CET) system; and
- A culture of productivity and continuous learning and upgrading in Singapore.
With such initiatives and support from government associations for continuous development, combined with Singapore’s strategic location, world-class infrastructure and stellar global connectivity, the nation’s logistics industry is set to reach even greater heights.