survivor island
Maybe you've never cruised across Singapore's harbor, watching the tropical sun set over waters swarming with homebuilt sampans and sleek containerships, but it's a sure bet that at least one item in your home or office has. Today, a high percentage of the goods entering or leaving Asia go through Singapore's seaport, one of the busiest in the world.
Why Singapore? Part of it's the nation's unique geographic location—an island near the southern tip of the Malay Peninsula, between the South China Sea and the Indian Ocean; but part of it's a well-orchestrated bid to become the distribution hub for all of Asia. Stung by the defection of several of its biggest ocean carrier customers to Malaysia's Tanjung containerport two years ago, Singapore is setting its sights on the broader logistics and supply chain management field—betting its future on efforts to become the region's premier transshipment hub, one that moves goods through with amazingly little friction.
And that pitch seems to be working, at least with North American businesses. Though some in Shanghai sneer that Singapore offers "logistics for beginners," that jab contains a veiled compliment. "North Americans are very comfortable in Singapore," says Harvey Donaldson, director of The Logistics Institute at the Georgia Institute of Technology. It's easy to see why: English is nearly universal (all education is conducted in English), the government bends over backward to accommodate private businesses and the nation boasts some of the most advanced telecommunications and banking systems in the Asia-Pacific region.
Chamber of e-commerce?
Behind this drive to expand Singapore's presence as a distribution hub is Singapore's aggressive Economic Development Board (EDB), an agency responsible for attracting business and investment to Singapore. The board has set itself the ambitious goal of building Singapore into a supply chain management "nerve center," and some are betting it wi ll succeed . "Their intention is to become the business center for the Asia-Pacific region," says Donaldson. "They have the resources and assets to do that."
As part of a broader national strategy to build a knowledge-based economy —one whose strength lies not in copra exports but in biomedical sciences, electronics, and IT and communications—the EDB has set a deadline of the year 2010 for developing Singapore into a major international integrated logistics hub. To jumpstart the process, the EDB, along with Singapore businesses and other agencies, is dangling incentives to lure both logistics service providers and customers to its shores.
Some of its initiatives have already taken root: Several major logistics players, including United Parcel Service, Exel and BAX Global, have established a major presence in Singapore, lured there in part by economic incentives. BAX Global Singapore, the international forwarder's Asia-Pacific subsidiary, for instance, has registered itself in a program called the Major Exporter Scheme, which allows companies to defer Singapore's goods and services tax on goods that are re-ex ported. (That tax wi ll jump to 5 percent from its current 4 percent next year.) "Singapore is the ultimate free trader, implementing practically no barriers to the free flow of goods across its borders" says Clayton Noble, the forwarder's vice president, logistics, Asia Pacific. He points out that Singapore has completed free trade agreements with many of the world's trade heavyweights including the United States, New Zealand, Japan, Mexico, Canada, Australia and the European Free Trade Association.
The country is also getting wired, making a big push to bring its IT infrastructure up to speed. Noble reports that the government is driving the development of an integrated and globally connected IT infrastructure designed to help companies conduct e-commerce and e-business. Already in place, he says, are efficient trade and IT facilitation systems such as TradeNet, TradeNet Plus and Singapore ONE.
High on the ALPS
Of course, in the logistics game, the infrastructure that really counts is the transportation network. And Singapore has kept up its end here, even in the face of its worst recession in 40 years. The country recently opened the Airport Logistics Park of Singapore, or ALPS, located at Singapore's Changi Airport. ALPS, a 64-acre free trade zone that can accommodate up to 20 third-party logistics providers, was built in hopes of attracting companies that handle high-value goods requiring fast flow through and value-added services. In addition to its proximity to the airport, ALPS boasts links to major seaport facilities.
ALPS's first tenant was Menlo Worldwide Logistics, a major California-based third-party logistics provider, which opened a regional logist ics hub there in October. In November, Exel added its name to the list, breaking ground on a $13.1 million supply chain hub scheduled for completion in August.
Though Singapore is a relatively high-cost place to do business, ALPS represents a good location for a company like Menlo, says Frank Lange, the company's director of international development. ALPS's proximity to the airport gives Menlo quick access to inbound and outbound transportation. Its free trade zone status means goods moving through are exempt from many customs requirements and taxes. As a result, Menlo reports that turnaround time is 43 percent shorter and costs are 55 percent lower than at non-ALPS facilities.
In another infrastructure upgrade, Singapore has established a chemical logistics hub, the Banyan Logistics Hub, on Jurong Island. A nearly 200-acre marine facility for chemical plants located on the island, it's part of an EDB focus on specific niche areas of logistics, including automotive, chemicals, biomedical sciences and aerospace.
Georgia's on their mind
But efforts to build a knowledge-based economy—and provide advanced logistics and supply chain management services—hinge on the availability of an educated workforce. And that could be a problem: A 2001 survey of Singapore's logistics companies conducted by the National University of Singapore (NUS) and the Singapore Trade Development Board projected a future shortage of university-trained logistics professionals.
To help plug the hole, Singapore's Economic Development Board went in search of a foreign university with which it could develop a collaborative program. It found that partner in Georgia Institute of Technology. Georgia Tech's Logistics Institute (TLI), in turn, established The Logistics Institute-Asia Pacific in conjunction with the National University of Singapore. TLI-Asia Pacific conduct s research into critical areas of logistics and offers advanced education for logistics students, including a joint master's degree program in logistics that is now completing its second year.
Under the program's terms, about 25 students from Singapore and elsewhere in Asia are offered full scholarships for an 18- month program, including a semester in Atlanta. In return, the students agree to work for at least three years in Singapore after they complete their degree program.
John J. Bartholdi, research director at The Logistics Institute at Georgia Tech as well as a staff member at The Logistics Institute Asia-Pacific, says research is underway on air cargo, ocean cargo, chemical logistics, and logistics security and efficiency. Recently, a team from the institute completed research into the logistics industry in China. (See sidebar.)
"We like to think that the research programs raise the level of logistics performance," says Bartholdi, explaining that the goal is to help bring the sort of advanced logistics practices and decision support to bear on the significant assets already available in Singapore. "We're trying to make sure we're a source of trained professionals. Plus, we attend to the higher level things—the kinds of things Georgia Tech has specialized in—the rocket science things. You succeed [in logistics] based on how intelligently you use assets. It is really a battle of IT systems and mathematical models, those that can trim expenses by 2 percent here and 6 percent there. You get better and you get faster. Singapore can no longer compete with cheap labor."
