Building a Logistics/Supply Chain Hub– The Singapore Experience

Hum SinHoonNUS Business School

National University of Singapore

BACKGROUNDSingapore Rankings

World Business Environment

Rank Country Total Score

1 Denmark 8.75

2 Finland 8.72

3 Singapore 8.70

3 Canada 8.70

5 Switzerland 8.66

6 Australia 8.65

7 Hong Kong 8.64

Source: EIU Country Forecast, February 2008

Singapore Rankings

Most Cost-Competitive Place for Business

Country Cost Index RankSingapore 77.7 1Canada 94.5 2France 95.6 3Netherlands 95.7 4Italy 97.8 5UK 98.1 6United States 100.0 7Japan 106.9 8Germany 107.4 9

Source: KPMG Competitive Alternatives Study, 2006

Singapore Rankings

Top Economies in terms of Ease of Doing Business

Rank Country1 Singapore2 New Zealand3 United States4 Canada5 Hong Kong6 United Kingdom7 Denmark8 Australia9 Norway10 Ireland

Source: World Bank Report: "Doing Business 2007"

Singapore Rankings Bureaucracy and Red Tape in Asia

Country Level of Red TapeSingapore 2.48Hong Kong 2.52Taiwan 5.21South Korea 5.49Malaysia 5.9Japan 6.07Thailand 6.39Philippines 7.54China 7.67India 8.2Vietnam 8.23Indonesia 8.62

Source: Political and Economic Risk Consultancy, June 2006

Singapore Rankings Perceptions of Corporate Governance Standards

Country Level of Red TapeSingapore 2.4Japan 3.8Hong Kong 4.2Taiwan 5.8South Korea 5.9Thailand 5.95Malaysia 6India 6.1Philippines 6.85Indonesia 7.5China 8Vietnam 8.8

Source: Political and Economic Risk Consultancy, June 2006

Singapore Rankings Level of Corruption

Country Level of Red TapeSingapore 1.3Japan 3.01Hong Kong 3.13Macau 4.78South Korea 5.44Taiwan 5.91Malaysia 6.13India 6.76China 7.58Thailand 7.64Philippines 7.8Vietnam 7.91Indonesia 8.16

Source: Political and Economic Risk Consultancy, March 2006

Singapore Rankings

World's Most 'Network Ready' Country

Rating Country

1 United States

2 Singapore

3 Denmark

4 Iceland

5 Finland

6 Canada

7 Taiwan

8 Sweden

Source: Global Information Technology Report 2005/06,World Economic Forum

Singapore Rankings

Quality of Air Transportation

Country RankingSingapore 1Bavaria 2Hong Kong 3Germany 4Denmark 5Finland 6Australia 7Austria 8Iceland 9Netherlands 10

Source: World Competitiveness Yearbook 2006

Singapore Rankings

Quality of Port Infrastructure

Rank City1 Singapore2 Netherlands3 Hong Kong4 Germany5 Belgium6 Denmark7 Finland8 Japan

Source: Global Competitiveness Report 2006-2007

Singapore Rankings Logistics Performance Index

Country LP Index RankSingapore 4.19 1Netherlands 4.18 2Germany 4.10 3Sweden 4.08 4Austria 4.06 5Japan 4.02 6Switzerland 4.02 7Hong Kong 4.00 8United Kingdom 3.99 9Canada 3.92 10India 3.07 39

Source: World Bank Report on “Connecting to Compete”, Nov 2007

Singapore As Logistics/SCM Hub

In 2004(2007): Contributed 9.1%(9.4%) ofSingapore’s GDP; Employed Over110,000(180,000) People

Nearly 180 Global Companies Basedtheir Procurement & Marketing inSingapore to Reach Out to Asian Markets

Over 9,000 Logistics Establishmentswith 21 of the World’s Top 25 3PLCompanies Operating in Singapore

As Logistics/SCM Hub

World’s Busiest Port for Shipping Tonnagesince 1986; New Record of 1.15 billion grosstons in 2005

World’s Leading Bunkering Port since 1988;Supplied Record Total of 25.48 million tons in2005

One of the World’s Busiest Container Portswith a Record of 23.19 million TEUs Handled in2005

Best Seaport in Asia by Asian Freight & SupplyChain Awards 2006 (18th Time)

As Logistics/SCM Hub

Sixth Busiest Airport in Asia; Served 32.4million Passengers and Handled 1.83 milliontons of Cargo in 2005

Manages 82 Scheduled Airlines Operatingmore than 4,000 Weekly Scheduled Flightsto 181 Cities in 57 Countries (as at 1 April2006)

Changi: Best Airport Asia; SATS: Best AirCargo Terminal Operator in Asia by AsianFreight & Supply Chain Awards 2006 (20th &10th Time respectively)

STRATEGIC PARAMETERSOverall Considerations

ConnectivityAir, Sea and IT Infrastructure; FTAs, DTAs, MRAs and IGAs

OpennessGlobalisation; Cultural & Economic Infusion;

Cosmopolitanism; Foreigner-Local Ratio (1:4)

ReliabilitySafe, Stable, Pro-Business, Transparent, Consistent

Environment that Protects Physical & IP Investments

EnterpriseConcentration of International Enterprises, HQ Operations,

Startups; Enterprise Ecosystem Spurs Interaction & Growth

Impetus as Logistics/SCM Hub

Supports Singapore’s External Trade(Three Times the GDP)

Accounts for 8-9% of GDP

Projected Growth of Asia’s SCM Industryat over 25% annually

Singapore’s Entrepot Heritage

Contributes to Singapore’s Overall HubStatus

SWOT Analysis (as SCM Hub)

StrengthsWorld Class Physical Infrastructure

Strategic Connectivity

Major Shippers and Logistics Players haveRegional HQs and Offices in Singapore

Stable Political, Economic and SocialConditions

Educated Workforce

Strong Legal System and Business-FriendlyTax Structure

Proactive & Pro-Business Government

Source: ERC Working Group on Logistics

SWOT Analysis (as SCM Hub)

WeaknessesRelatively High Costs (Land Rentals & Wages)

Small Geographic Space and Domestic Market

Fragmented Logistics/SCM Industry; Lack ofCollaboration

Lack of Responsiveness to Customers’ Needs

Shortage of Skilled, Experienced andEntrepreneurial Logistics Professionals

Inadequate Technological SCM Capabilities

Weak Marketing of Singapore as Log/SCM Hub

SWOT Analysis (as SCM Hub)

OpportunitiesStrong Growth Potential for Logistics

Outsourcing in Asia

Major Growth Oriented Hinterland

Specialised Capabilities for Other SectorExpansion Plans (Biomedics and Chemicals)

Support for Offshore Trade

Establish Reputation as Secure Logistics Hub

SWOT Analysis (as SCM Hub)

ThreatsAlternatives to Singapore as Locations for FDIs

(as in Structural Shift of Manufacturing to China);Affects Potential Cargo Volume

Intense Regional Competition (HK, Taiwan,Malaysia, Thailand, Philippines)

Technological Advances (as in Increase of Sizeof Ocean Liners and Jetliners) may result inVessel/Aircraft Operators Bypassing Singapore

Singapore’s Vision for Log/SCM

“ To Develop Singapore into a LeadingGlobal Integrated Logistics Hub, withRobust Maritime, Aviation, and LandTransport Capabilities Supporting theGlobal Economy ”

Global Integrated Logistics HubAs Nerve/Brain Center Controlling and

Managing Activities and Assets of GlobalSupply Chains Across an Expanded Hinterland

INFRASTRUCTURAL ELEMENTSOverall View

Pillars and IntegratorsSCM Capabilities and Technologies are the

Integrators of the Three Pillars of Maritime,Aviation, and Land Transport

Three Key Foundational EnablersPolitical, Economic and Regulatory Stability

Excellent Physical, IT and FinancialInfrastructure

Critical Mass of World Class LogisticsProfessionals with Strong Customer Orientation

Physical & Virtual Hub

Leveraging Strong Physical HubCapabilities and Integrating these withKnowledge Intensive SCM Skills andTechnologies to Build a Strong Physicalcum Virtual Hub

Physical HubReview and Manage Costs (Fees and Charges)

Review Government Regulations (Policies thatHinder Logistics Businesses)

Physical & Virtual Hub

Virtual HubValue in Cargo Movement Versus Value in

Controlling and Optimising the Flow of Cargothrough Information Management

Next Lap of Development: Providing SpecialisedValue-Added SCM and Supporting ServicesCatering to the Needs of a Broader HinterlandBeyond Singapore

Beyond Actual Handling of Goods, Singapore tobe the Brain Controlling the Logistics Limbs(Planning & Control Functions) that ExtendsBeyond Singapore

Physical & Virtual Hub

Virtual HubLondon-Plus Framework

Building a Vibrant Transport & Logistics Sector withHighly Skilled and Experienced Professionals (the ‘soft’focus)

Maintaining and Leveraging on Excellence in PortHandling Facilities, Ship Registry, Bunkering, ShipRepairs and Logistics, and Transport & Logistics IT

IT for Logistics Nerve Center

Common Backroom Infrastructure; Development ofSoftware Developers & Applications; Integrated ITCommunity Platform; Build Knowledge Capital

Physical & Virtual Hub

Virtual HubSCM Nerve CenterDevelopment of Logistics Ecosystem (Knowledge-

Intensive & High Value-Added Activities like Sourcing& Procurement; Assembly & Testing; SC Configuration& Optimisation; Data Hosting; Reverse Logistics;Financial & Treasury Functions)

Thought Leadership Development in SCM Solutions

SCM Talent and Capability Development

Secured Hub

Multimodal Connectivity

Fiscal Considerations

GOVERNMENT INVOLVEMENTAgencies

Regulatory/DevelopmentalMaritime Port Authority (MPA)

Civil Aviation Authority of Singapore (CAAS)

Land Transport Authority (LTA)

Promotional/Marketing Economic Development Board (EDB)

International Enterprises Singapore (IES)

Infrastructural Jurong Town Corporation

Local Enterprise Support SPRING Singapore

Champion Agency

Examples of Govt Supported Programs

Graduate Manpower (NUS BBA Program; TLIAPDual Masters Program)

Strategic Manpower Conversion Program(SMCP; IE Singapore and MOM)

Local Enterprise and AssociationDevelopment Program (LEAD; IE Singaporeand SPRING Singapore)

Logistics Enhancement and ApplicationsProgram (LEAP; Multi-agencies)

Logistics Capability Development Program(LCDP; Spring Singapore)

THANK YOU