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Speech by DPM and Minister for Trade and Industry Gan Kim Yong at Singapore Supply Chain Connect 2024

Speech by DPM and Minister for Trade and Industry Gan Kim Yong at Singapore Supply Chain Connect 2024

Distinguished Guests, supply chain and business leaders

 

Introduction

 

1. Thank you for inviting me to the inaugural edition of Singapore Supply Chain Connect.

 

2. This event has gathered leaders from across the logistics value chain to share the latest trends and innovations shaping the future of supply chains in the Asia-Pacific region, especially in the areas of digitalisation, sustainability and resilience.

 

a. From shippers to logistics service providers and carriers, each of you play a vital role to ensure that Singapore remains a leading logistics hub.

 

b. This is not only critical to our status as a global trade and transhipment hub, but also supports key sectors of our economy – for example, by enabling the efficient flow of raw materials, components and finished goods for our manufacturing sector.

 

3. Over the years, Singapore has built up a strong reputation as an efficient, reliable and well-connected logistics hub.

 

a. We were ranked first in the 2023 World Bank Logistics Performance Index.

 

b. We were also ranked first in the 2024 DHL Connectedness Index.

 

c. These achievements are a result of careful long-term planning and decades of sustained investment into our infrastructure, capabilities and connectivity.

 

d. It is therefore not a coincidence that almost all of the top 25 globally leading third-party logistics providers have established a presence here in Singapore.

 

4. To stay ahead, we must anticipate and plan ahead of the fundamental shifts happening in global supply chains.

 

Shifts in Global Supply Chains

 

5. As manufacturers around the world strive to mitigate risk, build resilience, manage costs, explore new locations for production, and develop new markets, the impact on global supply chains is profound.

 

a. Some companies have leaned towards strategic diversification, sourcing from and producing in different parts of the world for stronger resilience.

 

b. Some have adopted an “in-market, for-market” strategy, building localised production and supply chains so that in-market supply can match in-market demand as far as possible.

 

i. One such company is Unilever, which has increasingly shifted its manufacturing closer to key consumer markets.

 

  1. For example, in India, Unilever operates a fully localised supply chain, sourcing raw materials locally and manufacturing most of its products within the country.

 

2. This also allows the company to cater its products to the market’s unique needs and preferences, such as packaging shampoo and detergent in smaller-sized sachets.

 

c. Some have decided on a “market-plus” strategy, anchoring a substantial footprint and supply chain in one region, supplemented by imports and exports as needed from other geographies.

 

i. Apple is one such example.

 

ii. While China remains the company’s key production hub to tap on the country’s manufacturing knowhow and infrastructure, Apple has also expanded into India and Vietnam to strengthen resilience in its supply chain outside China.

 

iii. Apple is producing its newly launched iPhone 16 series in India. According to market analysts, India is projected to account for 23% of the company’s total production volume by the end of 2025.

 

6. Amidst the re-shaping of global production and supply chains, Southeast Asia stands to benefit from increased manufacturing and trade flows.

 

a. Announced greenfield investment into ASEAN grew more than 50% from 2022, to a record US$175 billion in 2023.

 

b. This was driven by projects in manufacturing, which comprised about two-thirds of total announced greenfield investment value.

 

c. This shift in Foreign Direct Investment towards Southeast Asia will drive the demand for infrastructure and logistics services.

 

7. Singapore is keen to work with companies to strengthen their regional and global supply chain ecosystem. We want to attract and anchor shippers to establish supply chain management (SCM) hubs here in Singapore.

 

a. According to the 2023 Gartner Trends in APAC Supply Chain Network Survey, close to 50% of respondents indicated that they are planning to expand, or set up, at least one more supply chain function hub in South Asia or Southeast Asia region within the next three years.

 

b. We are heartened that global companies are choosing Singapore as their SCM hub.

 

i. For instance, companies like 3M, Schneider Electric, Applied Materials, Asahi and Zuellig Pharma have built supply chain capabilities in Singapore to bolster their international manufacturing networks.

 

c. We want to work with companies to further deepen their supply chain activities here in Singapore.

 

i. In this regard, the Singapore Economic Development Board (EDB) is partnering with global shippers to establish Supply Chain Innovation Teams, or Centers of Excellence (CoEs) in Singapore to drive new capabilities and build more efficient, resilient and sustainable supply chains.

 

ii. For example, 3M established a supply chain CoE in Singapore, which also serves as a significant manufacturing hub for the company. These facilities are integral to 3M's strategy of producing "region for region" products, tailored to meet the specific demands of the local and regional markets. 3M’s Singapore operations employ over 1,400 people, including more than 700 in its supply chain CoE.

 

iii. We welcome shippers to discuss their plans with Singapore, and how Singapore may support you to set up new supply chain management functions here or expand existing ones.

 

8. We will also build on our strengths as a globally leading logistics hub. Let me outline how we will do so along three thrusts – connectivity; capabilities; and capacity.

 

Connectivity

 

9. Our excellent air and sea connectivity has been a key competitive strength.

 

a. Today, we are the world’s busiest transshipment hub, with extensive connections to 600 ports globally via 200 shipping lines, enabling daily sailings to every major port worldwide.

 

b. We are also the largest air cargo hub in Southeast Asia, boasting over 6,900 weekly flights globally, operated by close to 100 airlines.

 

10. We aim to deepen both our air and sea connectivity.

 

a. By the latter half of this decade, Changi Airport will be operational with three runways. This will allow us to increase Changi Airport’s flight handling capacity significantly.

 

b. We are also building a new terminal at Changi Airport.

 

i. PM had announced last month that we will be breaking ground for the construction of Terminal 5 in the first half of next year.

 

ii. When ready in the mid-2030s, T5 will give us capacity for another 50 million passengers each year.

 

iii. These passenger flights will also add to our cargo connectivity, given that almost 70% of our airfreight is carried in the bellyhold.

 

c. We are also expanding Tuas Port so that we may be able to handle more ships and therefore more connections.

 

i. We are building Tuas Port in four phases.

 

ii. 11 berths will be operational by the end of this year.

 

iii. When fully operational in the 2040s, Tuas Port will have a total handling capacity of 65 million Twenty-Foot Equivalent Units (TEUs).

 

d. These investments in Changi Airport and Tuas Port will enable us to deepen our regional and global connectivity, further anchoring Singapore as a leading air and sea hub in the region.

 

Capabilities

 

11. Next, we must strengthen the capabilities within our supply chain ecosystem to respond to key trends and developments in automation, digitalisation and sustainability.

 

a. We are working with companies to drive innovation within the logistics sector, by embracing new technologies such as AI, which could enhance productivity and even catalyse new business models.

 

i. For example, EnterpriseSG is collaborating with companies like PSA to develop and adopt AI-enabled transport management solutions.

 

ii. This will not only optimise trip planning, but also improve asset utilisation, and drive productivity improvements in the port logistics ecosystem.

 

b. Besides embracing new technologies, we also want to help the sector reduce its carbon footprint.

 

i. This is not only critical for Singapore to achieve its climate ambitions, but will also be an increasingly important competitive advantage for logistics companies, given the growing demand from their clients for green supply chains.

 

ii. Earlier this year, EnterpriseSG and Singapore Logistics Association launched the Sustainability Playbook for Logistics Enterprises in Singapore. This playbook provides a step-by-step guide for companies to develop sustainability plans, and provides resources for them to implement and sustain these efforts.

 

iii. We have also introduced incentives under the Commercial Vehicles Emission Scheme and Enhanced Early Turnover Scheme to encourage companies to switch to lower-emission commercial vehicles. We hope that this will encourage hauliers to accelerate the replacement of their diesel-powered fleet with cleaner alternatives.

 

c. At the same time, we must continuously refresh the skills of our workforce.

 

i. Since 2017, over 570 employers and 6,700 individuals from the sea and air transport, supply chain and logistics sectors have benefitted from Workforce Singapore’s (WSG) Career Conversion Programme (CCP).

 

1. WSG has partnered Versafleet, a fleet management solutions provider, to support companies in digitalising and optimising their fleet management processes.

 

2. Through the CCP, companies collaborated with WSG and Versafleet to reskill workers to take on higher value-added responsibilities.

 

3. Versafleet also onboards companies onto its Transport Management System to help them with better traceability and visibility in their fleet management operations.

 

ii. We will be rolling out a Logistics Job Transformation Map (JTM) by next year.

 

1. The JTM will help companies improve their workforce planning by providing insights on how trends such as digitalisation and sustainability impact their workforce needs.

 

2. We will also pilot job redesign sandboxes for companies to conduct trials on new roles in emerging areas such as green logistics and procurement.

 

Capacity

 

12. Finally, we will increase our capacity to grow our logistics hub.

 

a. We will be developing a second Airport Logistics Park (or ALPS2) from 2030s onwards. This will augment the capacity of our existing Airport Logistics Park (or ALPS1) and boost Changi’s role as a regional air cargo transshipment hub.

 

b. ALPS2 will give us significant new capacity to anchor more logistics companies and activities, including Regional Distribution Centres and freight forwarding activities.

 

c. The addition of ALPS2 will increase the vibrancy of the Changi air cargo hub ecosystem and help to maintain Singapore’s relevance and centrality as a critical node in global supply chains.

 

d. We plan to make ALPS2 a Free Trade Zone (FTZ) like ALPS1. This will allow third-party logistics players (3PLs) to respond more swiftly and turn around time-sensitive products for redistribution quickly.

 

e. The upcoming Changi East Industrial Zone and ALPS2, together with the existing ALPS1 and Changi Airfreight Centre, will allow cargo to flow seamlessly through the Changi Aviation Park and strengthen Singapore’s position as a leading integrated logistics and air cargo hub in the region.

 

f. This will increase Changi Airport’s overall cargo handling capacity from 3 to 5.4 million tonnes per annum.

 

g. We are happy to discuss with 3PLs and carriers how these developments at the Changi Aviation Park can support your regional expansion plans.

 

Conclusion

 

13. Over the years, Singapore has leveraged its strategic location at the crossroads of global shipping and trade routes to position ourselves as an efficient, reliable and well-connected logistics and supply chain hub.

 

14. We will build on these strengths to reinforce our value proposition amidst the re-shaping of global production and supply chains – this includes strengthening our regional and global connectivity; enhancing our capabilities through technology, playing our part on sustainability, and building a skilled and relevant workforce; and last but not least, investing in new capacity.

 

15. I invite all of you gathered here today – shippers, logistics providers and carriers – to expand your presence here in Singapore, so that we can grow together, and deepen Singapore’s position as a competitive, resilient and trusted supply chain and logistics hub for the region and the world.

 

16. Thank you.

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