Setting Sail for Brighter Horizons

With more than 90 per cent of the world's trade carried by sea, it is no wonder the fortunes of the global shipping sector are inextricably linked to that of the wider economy.

Moderate Economic Growth Globally

However, looking forward to the future, the outlook for the global economy is less than certain with the International Monetary Foundation (IMF) lowering its 2015 economic growth forecast from 4.0 per cent in July 2014 to 3.8 per cent in October 2014.

In its economic survey released in November 2014, Singapore’s Ministry of Trade and Industry (MTI) echoed these sentiments, stating that global growth will pick up moderately, though the pace of recovery is likely to remain uneven across different economies. In December 2014, International Enterprise (IE) Singapore forecast non-oil domestic exports (NODX) to contract between 1.0 and 1.5 per cent in 2014, and gain between 1.0 and 3.0 per cent in 2015 on the back on a modest pickup in global growth.

Asia Pacific Still a Bright Spot

Meanwhile, the economic outlook for Asia-Pacific is more positive, with the region expected to be a key economic growth engine for years to come. The rapid growth of Asia’s middle class is fuelling global demand for goods, energy, and raw materials, while many of the governments in these countries have placed economic growth at the top of their agenda.

Besides emerging economic powerhouses China and India, Southeast Asia is also expected to see strong economic and trade growth in 2015. With the ASEAN Economic Community (AEC) set to take shape in 2015, creating a single market with free movement of goods, services and investments, experts are predicting intra-regional trade flows to surge ahead. All this is expected to create greater demand for the Singapore shipping industry, which in recent years has been grappling with depressed freight rates due to overcapacity, and tight margins caused by high fuel and manpower costs.

A Premier Shipping Hub

From its humble beginnings, Singapore has risen to become one of the world’s premier hub ports and a leading international maritime centre. Its maritime industry is an important component of the domestic economy, contributing around 7 per cent of Singapore’s GDP and providing over 170,000 jobs. The Republic is also home to about 130 international shipping groups, and 5,000 maritime companies.

The Port of Singapore is one of the busiest in the world and has received many accolades over the years. In June 2014, it received the “Best Seaport in Asia” award for the 26th time at the 28th Asian Freight and Supply Chain Awards (AFSCA), edging past strong contenders from China. The contenders were judged on a host of factors, including cost competitiveness, container shipping-friendly fee regime, provision of suitable container shipping-related infrastructure, timely and adequate investment in new infrastructure to meet future demand, and the facilitation of ancillary services.

Staying Ahead of the Pack

With the maritime sector being such an important component of the Singapore economy, the government is continually looking for different ways to enhance the competitiveness of the Port of Singapore. This constant drive for improvement is one of the key reasons Singapore has been able to maintain its position as a premier international maritime centre.

One way Singapore has maintained its competitiveness is investing in maritime research and development (R&D), to meet future challenges and tap on future growth opportunities. In 2003, the Maritime and Port Authority of Singapore (MPA) established the S$100 million Maritime Innovation and Technology (MINT) Fund for a period of 10 years. Since then, the MPA has extended the MINT Fund for another 5 years with a top-up of S$50 million.

Two other aspects in which Singapore is enhancing its competitiveness are increasing productivity and manpower development. They are critical given the limited manpower and land resources, as well as the universal challenges of cost pressures. To support the industry’s productivity efforts, MPA launched a S$25 million Productivity Programme under its Maritime Cluster Fund (MCF) in 2013. There are also many academic and internship programmes, as well as scholarships and recruitment schemes for the sector.

Building for the Future

With shipping set to be the lifeblood of Singapore’s economy far into the future, it is of vital importance that Singapore’s port infrastructure development keeps pace. In 2004, Singapore made the decision to develop the Pasir Panjang Terminal to meet future growth in container volume, with total completion of all phases expected in 2020. The new port development will feature best-in-class infrastructure and the latest technology, to serve the next generation of container ships, increase productivity and promote environmental sustainability.

With the port leases for the City Terminals at Tanjong Pagar, Keppel and Pulau Brani set to expire in 2027, Singapore has already announced that it will work towards consolidating all its container port activities in Tuas – located at the western part of the island – over the long term. With its sheltered deep waters and proximity to major industrial areas and international shipping routes, Tuas is an ideal location with the planned port set to handle up to 65 million TEUs per annum.

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