Singapore Port, Factors Contributing to Success
“The Port of Singapore is a free port, and the trade thereof is open to ships and vessels of every nation, equally and alike to all.”
So wrote British colonial agent Sir Stamford Raffles in 1819 after he established by treaty the port of Singapore, having purchased the island from a local sultan. Almost exactly two centuries later, Singapore remains one of the world’s busiest and most strategically important maritime hubs.
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Located on the southern extremity of the Malay Peninsula, 30km south-west of the Port of Johor in Malaysia, the site processed five million 20ft equivalent units (TEUs) in a year for the first time in 1990, also becoming the world’s largest container port. Four years later, it achieved the landmark of 10 million TEUs annually and continued to grow by establishing its first overseas project in China.
Today, the port attracts 130,000 vessel calls on average a year, while the maritime industry accounts for 7% of Singapore’s GDP and 170,000 jobs, a figure that is set to grow after Minister for Manpower Josephine Teo revealed that 13,000 more jobs be created in the aviation and maritime by 2025.
“Singapore commands a strategic position as a maritime hub in the regional and global arena,” says head of Baltic Exchange Asia Lu Su Ling. “The maritime industry is, and will remain, a big contributor to Singapore’s economy, and it is therefore important that we continue to innovate and invest in this sector to achieve long-term success.”
Size matters: inside the Tuas mega-port expansion project
That investment shows no signs of drying up anytime soon. The next significant landmark in the Port of Singapore’s evolution, the Tuas mega-port expansion project, is due for completion by 2040. Slated to be the world’s largest container terminal, the complex is being constructed in four phases, with the 20 million-TEU first stage set for delivery in 2021 at a cost of S$2.42bn (US$1.76bn).
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By GlobalDataConsolidating container handling at the site, it will improve efficiency and vessel turnaround times, enabling the port to handle 65m TEU annually, compared with 45m at its four existing box terminals.
The Maritime and Port Authority of Singapore (MPA) has said that the new terminal will result in greater economies of scale, optimise the deployment of resources for port and marine services by automating both wharf-side and yard operations, and reduce the need for inter-terminal haulage.
Local restrictions on price increases and PSA International’s need to remain competitive in South East Asia means that shippers are unlikely to have to pay more when cargo operations start at Tuas.
“For local import and export cargo, PSA will not be permitted to hike costs and drive up the overall cost of the domestic supply chain,” explains Andy Lane of CTI (Container Transport International) Consultancy. “For trans-shipment demand, a large hike in handling costs would reduce Singapore’s competitiveness against the port of Tanjung Pelepas and port Klang, and reduce the barrier to entry for other prospective hubs such as Kuala Tanjung or Craney Island.”
“The country is upping the ante and making a huge bet on its maritime future,” stated Asia Pacific Connex CEO Andre Wheeler recently. “The Tuas Mega Port… is a natural extension of Singapore’s strategy to entrench its regional dominance as a leading trans-shipment port. In details outlined in development documents, it is quite clear that Tuas mega-port is positioning itself to be a leading trans-shipment port that connects and feeds containers to smaller regional ports.”
Position of strength: Singapore tops the 2019 Xinhua-Baltic ISCD Index
Singapore recently cemented its global standing as one of the world’s most important commercial maritime destinations – along with Hong Kong, London, Shanghai and Dubai – by topping the Xinhua-Baltic International Shipping Centre Development (ISCD) Index for the sixth successive year.
A collaboration between the Chinese state news agency Xinhua and international freight benchmark provider the Baltic Exchange, the index independently ranks the performance of the world’s largest cities that offer port and shipping business services, based on objective factors such as throughput and facilities, and professional maritime support services, as well as general business environment.
Singapore displayed strength in ship management and shipbroking, while, more generally, shipping centres in emerging economies in the Asia-Pacific region continued their strong upward trend.
“It is a vote of confidence to the quality of services offered by the Port of Singapore, as well as the conducive business environment that facilitates an array of maritime activities in Singapore,” Dr Lam Pin Min, Singapore’s Senior Minister of State, Ministry of Transport and Ministry of Health, said of the 2019 Xinhua-Baltic ISCD Index ranking. “This would not have been possible without the strong support from the maritime establishments, industry partners and unions.”
Piloting next-generation technology at Tuas Terminal
The Port of Singapore is looking to consolidate and build upon its success by employing a new generation of technologies designed to optimise operational efficiency at the new Tuas Terminal.
Innovations being piloted for the mega-port include a next-generation vessel traffic management system that is able to predict congestion hotspots and assists vessel route planning. Tuas is also trialling a maritime ‘single window’ that improves port clearance by streamlining the submission process, and a ‘just-in-time’ planning and coordination system for faster vessel turnarounds.
Remote-controlled vessel pilotage, and a maritime sense-making system to boost port operations by preventing illegal bunkering and optimising anchorage utilisation are among the other innovations.
“The development of the first phase of Tuas port will incorporate intelligent and innovative systems, a ‘smart grid’ with sustainability in mind,” Ong Kim Pong, PSA International’s regional chief executive officer for Southeast Asia, told JOC.com.
Lane says that Tuas may also profit from the shift by Chinese-owned manufacturers to South East Asia, as well as China’s switch to making higher-quality products and more domestic consumption.
“This will potentially increase demand on the Asia-Suez-US East Coast trade, from which Singapore could benefit,” he explains. “As export demand from South East Asia grows and new economies of scale emerge, we will see more direct deep-sea vessel calls at ports which are today primarily served by feeders and Singapore as a hub.
“We will not see, however, the sudden introduction of scores of direct services to the likes of Tanjong Priok, Cai Mep or Laem Chabang, so there will still be healthy trans-shipment demand.”
