Declared the world's top logistics hub by the World Bank, Kelvin Wong makes a case for Singapore's role in an Asian supply chain strategy.
Asia presents a host of possibilities for manufacturers and service providers. With a rapidly expanding population in emerging regions such as China, India and Southeast Asia, the expanding demand for logistics and supply chain management solutions will present new opportunities for companies that are seeking new sources of growth.
However, given the region’s diverse business environments, customs regimes and transport infrastructure, the equation for optimal supply chain management will not be predicated on cost alone. Instead, an astute ability to navigate Asia’s complexities will be a key competitive advantage for manufacturers and 3PLs that seek to achieve lower total landed cost at better time-to-market.
In this respect, Wong suggests, Singapore presents an ideal partner to help companies address this conundrum. The city-state is strategically located along key shipping lanes, while being centrally located in the Asia Pacific region. Furthermore, it has established a comprehensive network of logistics linkages with key markets in Asia and beyond–PSA Singapore is linked to 600 other ports in 123 countries via over 200 shipping lines; Changi Airport has more than 4,000 flights per week connecting to 60 countries.
In a recent survey conducted among global freight forwarders and express carriers who are most active in international trade, the World Bank ranked Singapore the world’s top logistics hub, based on a Logistics Performance Index computed on several key criteria. Those criteria include ability to track and trace shipments, timeliness in cargo arrival, logistics costs, competence of domestic logistics industry, and ease and affordability of international shipments.
Indeed, Singapore’s position as the world’s top logistics hub is built on three key strong fundamentals: (1) world-class infrastructure; (2) a vibrant ecosystem of world’s leading players, (3) a focus on knowledge and thought leadership.
To ensure that Singapore-based companies command a competitive advantage for regional distribution and trading activities, Singapore has invested in specialized facilities to meet the complex needs of high value-added industries that require rapid turnaround time or careful handling of bulky raw materials or processed goods:
Airport Logistics Park of Singapore (ALPS) is strategically located within the free trade zone and in close proximity to Singapore Changi Airport. Logistics players and manufacturers alike can leverage the airport’s excellent connectivity and superior handling efficiency for quick turnaround of high-value cargo for regional distribution. The 26-hectare facility is almost fully occupied by 3PLs, and has established its position as a choice location for activities such as regional fulfillment, customization and postponement. In addition, multinational companies (MNCs) (e.g. Sandvik, Texas Instruments) have set up regional distribution centers in ALPS to expedite export to Asia Pacific markets. Among the multi-national 3PLs occupying space in the logistics park is US-based Menlo Logistics, which has its regional headquarters for Asia, India and Australia on Boon Lay Way and operates primary warehouses there and at ALPS.
Changi International LogisPark further complements ALPS by providing a dedicated logistics facility in close proximity to Changi Airport just outside the free trade zone. In 2008, Panalpina more than doubled its warehousing and distribution facility to more than 11,000 square meters in Changi International LogisPark. This expanded facility will be a key node in Panalpina’s Asia Pacific operations.
Changi Airfreight Centre (CAC) presents a 24-hour, 47-hectare free trade zone where consolidation and break-bulk can be conducted with minimal customs formalities. Coupled with two dedicated Express and Courier Centres, the CAC can accommodate requests for time-definite shipments to regional markets.
Banyan LogisPark is a world-class logistics hub that provides integrated logistics services on Jurong Island for chemical transshipment and distribution in Asia Pacific. Leading logistics service providers that have set up terminals along the 80-hectare waterfront land include Vopak, Horizon and Katoen Natie.
While 3PLs find it competitive to leverage Singapore’s specialized infrastructure, they need to move up the value chain to differentiate their services for customers that seek to expand into Asia. In this regard, 3PLs in Singapore (e.g. Agility, Nippon Express, Schenker) have developed integrated end-to-end logistics services that can serve the complex SCM needs of manufacturers across different industries and business models.
In addition, 3PLs based in Singapore have set up Centres of Excellence that house specialized capabilities targeted at key industries in Asia such as aerospace maintenance, repair and overhaul (MRO), biomedical sciences, chemicals as well as oil & gas equipment:
In 2007, TNT set up its largest regional life sciences hub in Singapore, offering cold chain management technology and specialized delivery of pharmaceutical products and diagnostics to end markets in the region within 24 hours.
In November 2008, Katoen Natie, the world’s largest silo logistics service provider, announced a S$60 million (US$ 39.7 million) expansion on Jurong Island, which is home to the world’s top petrochemical companies based in Singapore. This expansion will double the company’s capacity, and conduct value-added activities such as processing, compounding, blending, and optical sorting.
Mammoet and Al-Jaber are among 3PLs that have operations in Singapore offering heavy lift and transport for large equipment. In 2008, Toll Logistics announced a S$400 million (US$ 265 million) redevelopment of Loyang Offshore Supply Base, its offshore logistics hub in Southeast Asia, to establish the company’s first world-class asset in Asia.
DHL has set up a Supply Chain Centre of Excellence (SCCE) to spearhead innovative projects in RFID (Radio-frequency identification), financial supply chain, and Aircraft Maintenance, Repair and Overhaul that contribute to more efficient supply chains for customers distributing to the region from Singapore. The SCCE will also provide supply chain consulting expertise using state-of the-art tools for multinational companies seeking to transform and customize their supply chains.
Alongside this cluster of 3PLs, global manufacturers have set up distribution hubs in Singapore. They include Avaya that opened its regional distribution center in 2008 to expedite export of finished goods to end markets in Asia; Louis Vuitton that established a logistics hub for its fragrances and cosmetics products in Asia and parts of America and Europe; and Diageo which carries out postponement to better manage demand fulfillment and shorten lead time for distribution in Asia.
Knowledge and Thought Leadership
In today’s economic climate, companies are looking to differentiate themselves beyond cost and venture into providing complex services of higher value-add. To build up capabilities for these knowledge-intensive activities, companies need to equip their employees with the necessary skills and know-how to solve today’s complex challenges in the global supply chain.
Singapore is well positioned to address these needs by hosting the research, education and industry outreach activities of Asia’s leading logistics think-tank: The Logistics Institute–Asia Pacific (TLI-Asia Pacific), a collaboration between the Georgia Institute of Technology (Georgia Tech) and the National University of Singapore (NUS).
In research, TLI-Asia Pacific works closely with the industry and government to arrive at impactful solutions in the region. Topics of focus at the institute include defense logistics, supply chain intelligence, supply chain optimization and supply chain technology.
In education, TLI-Asia Pacific offers a strategic combination of Western expertise with a strong knowledge of Asian supply chains. Its Dual Masters Program (DMP) taps the strengths of NUS and Georgia Tech’s MSc programs that provide a well-rounded curriculum with courses in engineering, international trade/finance and logistics/SCM. To date, the institute has trained more than 100 graduates from its Dual Masters Programme and thousands of logistics professionals through its comprehensive executive education programs. Since 2003, TLI-AP has been conferred Asia’s Best Education Course Provider for six consecutive years at Cargonews Asia’s annual Asian Freight & Supply Chain Awards.
TLI-Asia Pacific also conducts regular outreach programs with the industry to promote thought leadership, knowledge dissemination and executive learning. Together with industry associations such as the Singapore Chemical Industry Council, a series of outreach programs training workshops and conferences are organized to ensure that the industry’s professionals and workforce are kept abreast of best practices in areas that are crucial to supply chain management in the region (e.g. safety, sustainability).
Drawn to Singapore’s world-class logistics infrastructure, a vibrant ecosystem of leading players, and its thought leadership, the world’s top 3PLs and manufacturers have set up regional distribution centers and headquarters in Singapore. In this regard, Singapore has established its position as Asia’s trusted hub in delivering competitive and innovative supply chain solutions for the world’s leading players in key industries.
As companies and manufacturers experience challenging times in today’s economic downturn, the Singapore Government has introduced key initiatives to sustain companies’ workforce and enhance the skills of their employees. These include the Job Credit scheme, which was announced as a key Budget initiative to subsidize a portion of employees’ salaries; as well as the SPUR and PREP-UP training schemes to train the Logistics/SCM workforce and pre-position companies for new opportunities presented by the upturn when the global economy improves.
Kelvin Wong is Director, Logistics, Singapore Economic Development Board. www.edb.gov.sg