Long-term vision vital for Maritime Singapore

MPA chief executive Andrew Tan said Singapore's maritime industry has to take advantage of the current downturn to look at what it can do when the upturn comes.
MPA chief executive Andrew Tan said Singapore's maritime industry has to take advantage of the current downturn to look at what it can do when the upturn comes.ST PHOTO: MARCUS TAN

Some very difficult adjustments will have to be made to boost ailing sector: MPA chief

Thinking outside the box - and into the future - is exactly the mindset Singapore's maritime industry should adopt, given the headwinds buffeting today's market, a top local port official has advised.

Pointing to the ailing offshore and marine sector, Mr Andrew Tan, chief executive of the Maritime and Port Authority of Singapore (MPA), noted that "some very difficult adjustments will have to be made".

"But we're hoping that the companies will be able to turn around, go into new areas or businesses. We can't just wring our hands in despair. We have to take advantage of this downturn to look at what we can do when the upturn comes."

Speaking to The Straits Times in a recent interview, he added: "The key here is that the clock doesn't stop for us. It is a continuous process of invention and reinvention. It is hard for us to predict how the industry will change, but with each shift there is, we want to make sure that we are part of that narrative."

In fact, it was this way of thinking that paved the way for the Singapore port to reach the point it is today, noted Mr Tan, who took up his post in January 2014.

When PSA Corp - known then as the Port of Singapore Authority - decided in 1966 to build its first container terminal, containerisation had not yet taken off, and none of the shipping lines had committed to building container ships for the Europe-Far East run.

But by the time Singapore's first container berth in Tanjong Pagar was ready in 1972, containers were starting to become the way to go.

"It was a risky decision at that time, but we benefited from this dynamic and long-term vision led by PSA's then chairman Howe Yoon Chong," said Mr Tan.

Today, Singapore is the world's busiest transhipment hub, accounting for nearly one-seventh of container transhipment throughput globally, and more than 4 per cent of container throughput worldwide. The Port of Singapore handled 30.9 million 20-foot equivalent units (TEUs), or standard-sized containers, last year.


Singapore's maritime industry, backed by its strategic location in the heart of major trade routes, has grown into a thriving ecosystem, including the global hub port and a host of shipping and maritime services, as the MPA celebrates its 20th anniversary this year.

Singapore is the world's top bunkering or ship-refuelling hub, and hosts one of the highest concentrations of global shipping groups, such as Maersk Line, Oldendorff Carriers, Mitsui O.S.K. Lines and China Cosco Shipping.

Beyond containers, the Republic is the third-largest petrochemical refiner globally, and operates the most technically advanced and efficient shipbuilding and ship-repair facilities in South-east Asia. All of this, in turn, has opened the doors for firms in shipping finance, shipbroking, risk management and marine insurance.

Mr Tan noted that the expansion of the industry, known collectively as Maritime Singapore, has provided some buffer amid the current industry downturn. The global economic recession during the 1980s had been "a lot more severe" in comparison, given that the industry then was much less diversified.

"We only had the shipyards, and not the international shipping cluster that we have today," he said. "The shipyards are still very much exposed to the downturn this time round, but we are much more diversified as a maritime cluster today. In fact, some companies have expanded their presence in Singapore, like CMA CGM," he said.


The key here is that the clock doesn't stop for us. It is a continuous process of invention and reinvention. It is hard for us to predict how the industry will change, but with each shift there is, we want to make sure that we are part of that narrative.

MR ANDREW TAN, chief executive of the Maritime and Port Authority of Singapore.

CMA CGM, the world's third-largest shipping line, recently shifted its regional headquarters from Hong Kong to here, following its $3.38 billion buyout of Singapore's Neptune Orient Lines (NOL). The French shipping giant has also said it will move about one-third of its traffic through Malaysia's Port Klang to Singapore. The acquisition of NOL comes at a time when shipping players worldwide have been hit hard by the sluggish global economy amid a capacity glut.

The industry is also being shaken up by profound trends - in particular, the move towards mega alliances that call at specific ports, and the deployment of mega vessels.

"It can be a bad thing for some of the ports that cannot handle these ships, but we can handle it," said Mr Tan, adding that work is under way to beef up Singapore's maritime capabilities.

Growing competition makes this all the more important, he added. "There is no lack of aspiration on the part of our neighbours to handle these large vessels. So if you are not building a port that can handle these ships, you will lose out. You will be bypassed."

Pointing to the vagaries of today's volatile economic climate, Mr Tan stressed: "We cannot stand on the basis of all these uncertainties, so we have to take a strategic step to move ahead - the same way how, in 1972, we had the first container ship call at Singapore, based on the belief that containerisation would be the way to go."


Mr Tan's vision is for the Singapore port to continue playing a pivotal role in the global trading network.

"We also hope that the rest of the maritime cluster could grow even faster than the port, and be able to contribute a much larger proportion to the Singapore economy than it does today."

Central to that vision is the need to "stay ahead of the game", he said, adding that work to strengthen Singapore's position as a premier global hub port is under way.

PSA is expanding the Pasir Panjang Terminal in a $3.5 billion project that will be completed next year, while a new mega port in Tuas is set to house all container operations from the next decade.

The new Tuas port - earmarked as the centrepiece of Singapore's Next Generation Port vision - will allow Singapore to handle up to 65 million TEUs annually, up from 40 million units today. It will incorporate new features such as automated yard cranes and port equipment to help increase productivity and reduce labour costs.

Mr Tan added: "With the larger vessels, fewer port calls will be made around the region. This is why it is important for Singapore or PSA to anchor the big players here, whether through joint ventures or other arrangements."

Already, PSA has formed a joint venture with Chinese shipping giant Cosco Pacific, which is investing in three new container berths here designed to handle mega container ships, as well as a separate joint venture with CMA CGM to operate and use four container berths at Pasir Panjang terminal Phases 3 and 4.

To ready Singapore's port for the advent of liquefied natural gas (LNG) as an alternative marine fuel, the MPA has awarded two LNG bunker supplier licences to Pavilion Gas and a joint proposal of Keppel Offshore & Marine and BG Group. It is also working with stakeholders to develop LNG bunkering standards and procedures at both the national and international levels.

Mr Tan said: "The hardware part, it is a matter of putting in the resources. To me, the biggest challenge is ensuring that we have a continued pipeline of talent in the maritime sector - people with a global mindset, because shipping is a global business."

To help tackle this, the MPA has in place the Maritime Cluster Fund, aimed at supporting the industry's manpower and business development or productivity efforts. Funding for manpower development has grown to $115 million since 2007.

Another key challenge would be the opening of new trade routes - such as those in the Arctic, which could disrupt global trade patterns.

"But even as these routes are being discussed or created, we are not being complacent," said Mr Tan. "We are looking at other ways to entrench our role and relevance, such as servicing the mega alliances, expanding the maritime cluster, and offering the widest range of maritime and port services.

He added: "Building an international maritime centre is not something that can be done overnight. It will require more than just a good location and a port - which is why for Singapore, we have to make sure we continue to put in place the building blocks for us to sustain our competitive advantage going forward."

A version of this article appeared in the print edition of The Straits Times on September 13, 2016, with the headline 'Long-term vision vital for Maritime Singapore'. Print Edition | Subscribe