Singapore’s transformation into a trade and finance hub that leads global rankings of competitiveness often prompts observers to ask: What is its secret sauce? We at the Singapore Hub for Infrastructure and Urban Development asked Kelvin Wong, Assistant Managing Director of Singapore’s Economic Development Board, or EDB, to share with us the country’s journey in developing its logistics sector, considered among the world’s most competitive and innovative.
Q: The Economic Development Board, which you help manage, oversees the development of the logistics industry. How did the sector develop?
Singapore’s logistics and supply chain management (SCM) industry took shape in the 1980s, when the government looked beyond manufacturing to exportable services such as logistics and SCM as our second engine of growth. EDB attracted leading global third-party logistics providers such as then Exel, Danzas, BAX and Schenker, and helped locally-based firms like YCH and Accord Express develop capabilities to support the growing sector. We also helped develop parallel competencies, including in air logistics.
The 1990s saw rapid growth in air cargo and value-added air logistics, and the establishment of the Airport Logistics Park Singapore within the airport free trade zone allowed logistics companies to replenish rapidly and serve shippers throughout Asia Pacific and globally. With the opening in 2010 of cold chain facility, which can handle 250,000 tonnes of cargo annually in multi-tiered temperature zones, opportunities expanded as did logistics capabilities in semiconductors, aerospace, biomedical sciences and perishables.
Developing and growing a pipeline of talent is critical to success. The Georgia Institute of Technology in Singapore collaborated with the National University of Singapore to set up the Logistics Institute Asia Pacific here. It’s one of the first in Asia offering postgraduate studies and industry outreach programmes in logistics and each year produces over 300 graduates, many of whom become top executives in the logistics sector, which employs over 200,000 workers here.
We have to be proactive and ensure we are well-positioned to seize new growth opportunities. That’s partly the motivation for the launch of the Logistics Industry Transformation Map and its strategies for sector transformation through technology and innovation. The Skills Framework for Logistics is building deep skills to strengthen employability, and the Logistics Alliance of industry associations explores more purposeful, coordinated and synergistic efforts in the areas of innovation, productivity and talent. We hope that the industry will achieve a value-add of S$8.3 billion and introduce thousands of new jobs.
Q: Logistics is typically thought of private sector run. What role does government play?
The government is an enabler that facilitates a more holistic and integrated approach to grow the industry. We work closely with industry stakeholders and strategic partners to drive productivity, innovation and private-public partnerships, and we help our industry partners understand global trends, identify the sector’s needs, and develop new business models, infrastructure and partnerships.
Importantly, logistics companies continue to receive strong government support to groom and reskill talent. Many government programs further grow the talent pool, including the Skills Framework for Logistics already mentioned.
Q: Singapore ranks amongst Asia’s top logistics hubs. What is its ‘secret sauce’?
A few factors keep logistics companies here. First, we have a productive and competitive ecosystem that enables Singapore to be a natural anchor for companies looking to grow their global footprint. Today, we have 20 of the world’s top 25 players based here, including shippers’ distribution hubs and supply chain control towers.
Companies here invest in and adopt advanced technology. Our economy is innovation-led. Bloomberg’s Innovation Index ranks Singapore as the world’s third most innovative city, and innovation here cuts across sectors. Logistics and SCM players, for example, collaborate with the retail industry to serve the growing needs of e-commerce.
We are also strategically located and a leader in global connectivity. We have world-class sea and air ports, efficient customs, trade-friendly policies, and abide by international agreements. When the upcoming mega port at Tuas and Changi Airport’s Terminal 5 are fully operational, we will be even more efficient.
Again, a quality workforce is key and an incentive for companies to anchor regional and global functions here. Singapore produces over 8,500 graduates in science and engineering every year.
Q: What do you see as the opportunities and challenges for the global logistics industry? How is Singapore adapting to ‘disruptive’ technology?
Key trends that will shape the sector are the rise of e-commerce, and proliferation of technology and Industry 4.0. E-commerce in ASEAN is projected to grow 32% to almost US$90 billion by 2025. Singapore is well positioned to benefit from that growth.
While the logistics industry is familiar with technologies such as automated storage and retrieval systems, technological advancements have made these systems nimbler and cheaper. New handling technologies such as drones, warehouse robots, autonomous vehicles, and augmented virtual technologies are also gaining traction. We work closely with all these companies and will continue to partner with industry in their transformation and growth.
We acknowledge that emerging advanced manufacturing will result in a new level of supply chain complexities. This may further push the frontiers on supply chain risk management, design, planning and execution – pushing supply chains to be more responsive and flexible. Let’s be ready for Industry 4.0.
Q: What have been the most important ‘aha!’ moments for Singapore’s development?
The journey is never done. Much of our projects are works-in-progress that have the potential to evolve and grow. They also illustrate the modus operandi of EDB, its project partners, and Singapore in general. Be agile and responsive to global trends and needs of the industry the consumers. Be innovative and transformative in the way you approach challenges and opportunities. Be bold and enterprising in pushing boundaries and creating something new and progressive.
Q: Last question- Preferred mode of transport? Planes, Trains or Automobiles?
It has got to be planes. Almost every boy dreams to be a pilot and have the need for speed. Perhaps it’s because I have benefitted from the excellent air connectivity offered by Changi Airport and its 7,000 weekly flights to 381 cities. It has brought Singapore closer to the rest of the world - and great for people like me who enjoy travelling!
Senior Trade Logistics Specialist Yin Yin Lam contributed to this article.