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The Lion City’s Ultimate Project

Singapore’s logistics industry is preparing a revitalisation as the government unveiled its Industry Transformation Map (ITM) late last year.

Under the S$4.5bn programme, roadmaps will be developed for 23 industries to address issues within each industry and deepen partnerships between Government, firms, industries, trade associations and chambers. As one of the shortlisted industries to receive the coveted makeover, the Government aims for the logistics industry to become operationally excellent, innovative, and supported by a strong core of Singaporean talent and firms, be leaders in innovation, and build up a strong core of local logistics talent and firms.

The industry’s transformation, aimed at reinforcing Singapore’s position as a global logistics hub, is set to add S$8.3bn in value to the sector and create 2,000 jobs for professionals, managers, executives and technicians (PMETs) by the end of the decade. Although the Singapore economy grew more than expected in the third quarter, with gross domestic product (GDP) coming in at 1.1 per cent compared to a year ago, the second quarter painted a slowing picture of Singapore’s economy, which had managed year-on-year growth of two per cent and quarter-on-quarter expansion of 0.1 per cent during the April to June period. Ministry of Trade and Industry (MTI) said improvements in the manufacturing sector contributed to the upward revision in the third-quarter GDP figures, but this was offset by a weak performance in business services, as well as the wholesale and retail trade sectors. However, Singapore’s challenges are not only constrained to its local shores.

The Asian Century

Singapore’s geographical location at the crossroads of East and West has played an important part in its success as a trading port. For ships coming from West Asia or the Bay of Bengal towards the Far East, they will have to access the Straits of Malacca or the Sunda Strait.

The rise of Asia and the emergence of ASEAN, however, has led to increased direct trade between Asian countries, which could result in bypassing transshipment and consolidation in Singapore. For example, the opening of Johor’s Tanjung Pelepas port in 1999 saw Maersk shipping moving all its operations across the Causeway, and business dropping by 10 per cent for the Port of Singapore. This is why Singapore must enhance its relevance through stronger physical and trade connectivity to key global markets.

The emergence of business trends, such as omni-channel retail, sharing economy, and manufacturing trends, such as digital and additive manufacturing, also require the logistics enterprises to innovate and develop new capabilities. With the rise of e-commerce, it no longer makes sense to only focus on delivering products from a warehouse to the respective physical stores. The infrastructure must take into account effective delivery strategies to homes and offices. With next-day shipping becoming the norm, the industry needs to stay ahead to meet customer demands.

The advancement of technology trends, such as big data, internet of things, and robotics and automation, give rise to the development of new material handling and supply chain management systems, allowing the logistics industry to achieve productivity savings. However,despite Singapore’s image as a leading logistics hub, the country’s small- and medium enterprises (SMEs) can be reluctant to adopt automation. The Singapore Institute of Productivity and Innovation (SiPi), a centre of excellence under the Singapore ManufacturingFederation (SMF), stated that while the business model innovation (BMI), a critical tool during a time of rapid disruption, is not new,local interest in the concept had only grown in the last two years. A 2014 national BMI study found that under 70 per cent of Singapore companies were unable to name even two examples of BMI.

So what is next for the industry?

While Singapore continues to retain its position as ASEAN’s leading logistics hub for the tenth consecutive year according to World Bank’sLogistics Performance Index, the country has fallen from first place in 2007 to fifth in 2016 when it comes to global ranking.

With this in mind as well as the previously stated challenges, the Government intends to strengthen its position as a logistics hubby deepening Singapore’s physical connectivity within intra-ASEAN and strengthening feeder network for international connectivity toEurope and US. This can only be possible, however, with improved infrastructure and grooming ASEAN-ready talent.

In addition, it is important to enhance Singapore’s trade connectivity (i.e. MRA, FTA, and DTA networks) with key trading partners to strengthen transshipment hub position and to push for the right technology advancements.

Moving forward, Singapore will be working towards achieving the following key objectives:

  • Goods handling speed of staff to increase
  • Storage capacity of facilities to increase without significant increase in land footprint
  • Volumes and mix of goods handled by facilities increases
  • Better traceability and automated job scheduling results in less erroneous handling

How does ITM lead the transformation efforts?

The ITM is a collaborative effort of the Economic Development Board (EDB), International Enterprise Singapore (IE Singapore), JTCCorporation (JTC), SPRING Singapore, Workforce Singapore (WSG) and SkillsFuture Singapore, in partnership with industry players,unions and trade associations.

For example, EDB and SPRING Singapore will work closely with key partners to support the industry to implement technologies that lead to productive operations. Additionally, the government will invest in next-generation infrastructure solutions with high specification units that provide opportunities to deploy automation, such as the upcoming JTC Logistics Hub @ Gul, expected to be completed in 2019.
When it comes to talent creation, support from Singapore government’s SkillsFuture initiatives will lead to the emergence of new professional roles and increase in job progression opportunities. Even the more experienced workforce will be given wider entry into the industry via the Professional Conversion Programmes (PCP) under the Adapt & Grow initiative.

Through these intense transformative strategies, the logistics industry looks set to meet today’s challenges. At least, the Government seems ready to provide the muscles in this process. But the industry players, including the SMEs, must pull their weight in this collaborative effort to boost Singapore’s waning competitive edge in this increasingly tough global environment.

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