Maritime Transportation in Singapore - Essay Example

Maritime Transportation With employment opportunities for over a million workers and a significant contribution to Singapores GDP, the maritime industry is a formidable force in the progress of Singapores status as the most favorable country for business ventures in Asia. It is crucial to evaluate the reasons and factors that are essential for the growth of Singapore in coming years. Introduction on Singapore’s Maritime Transport Singapore is a home to one of the world’s fastest growing maritime industries. It is a home to over 4,400 shipping companies. The maritime industry contributes about 7% to Singapore’s Gross Domestic Product and provides employment for over 100,000 workforces. It was forecasted to rise between 6.5-7% per annum over the next ten years (MPA, 2012). The reason behind Singapore’s maritime industry’s vibrant success is its strategic location and constant competition evolved into a strategic center for maritime business. Situated in the center of a complex global web of trade routes and connected to over 600 ports in over 120 countries, Singapore is nothing less than a global hub. A ‘hub’ can be defined as a well-connected node in a network, and throughout history, successful hubs have been the ones that offer focal points of opportunities, growth and innovation. Singapore has been identified as not only one of the 40 mega regions, which signify large markets with significant economic potential, but it is also one of the world’s most important maritime countries as per the UN Conference on Trade and Development. Singapore, apart from being a premier global hub port, is also the busiest port in the world considering shipping tonnage alone, which amounts to more than 120,000 vessel calls annually. In 2004, only the total vessel arrivals at the port exceeded one billion gross tons for the first time in Singapore’s maritime history. Moreover Singapore offers around 20 million tons of bunkers supplied each year to ships globally. Additionally, Singapore offers reliable and efficient cargo handling, the Global Competitiveness Report 2006-7 ranks Singapore as having the best Quality for Port Infrastructure. Singapore holds 70% of the global jack-up rig-building market and more than 65% of the world’s floating production storage and offloading (FPSO) conversion market. Its technological adeptness is observable through the wide range of maritime services available, including pilot age, towage, fresh water supply, crew changes, ship supply and repair as well as expert building facilities (Tan, 2005). Singapore is also a fast developing Petrochemical hub, being the world’s third largest oil refining center with its very own dedicated petrochemical complex on Jurong Island, it is home to more than 70 chemical companies with a total investment value of S22 billion. This makes Singapore the world’s third-largest petrochemical refiner. In addition to this, Singapore operates one of the most technically advanced shipbuilding and repair facilities in the Southeast Asia region (Port of Singapore Authority, 1984). Port and Terminals The Port of Singapore is a collection of facilities and terminals that play a crucial role in maritime trade handling in Singapores harbors; it also handles Singapores shipping. Singapore is located amidst the world’s major shipping lanes, including the Southeast Asia-Australasia, Far East-Europe, Intra-Asia and Trans Pacific lanes. Linked with more than 250 shipping lines to over 600 ports in 123 countries, the port of Singapore is the world’s second busiest container terminal port in terms of total shipping tonnage alone, second to Hong Kong. Moreover, being the world’s busiest port, Singapore transships around one fifth of the worlds shipping containers and almost half of the worlds yearly supply of crude oil, making it the worlds busiest transshipment port as well. The port operations in Singapore are under two authorities, the PSA International and the Jurong Port. Both the sea authorities combined operate about six container terminals and three general-purpose terminals. PSA Singapore has 44 container berths with a designed capacity of 24700 KTEU, while Jurong Port has 23 berths with warehouse capacities of 280,000 meter square. Additionally, the Jurong port is equipped to handle cement and steel products, project cargo and copper slag (Al Hilal Pub, 1990). The ports vast network of pipelines and conveyor systems allows speedy and environment-friendly discharge and loading through both ports. Terminals under construction include PSA Singapore’s Pasir Pan Jang Container Terminals Phase Three and Four. Moreover, they also have a 40 year contract to operate the tax free Gawadar Port in Pakistan (MoT, 2012). Imports and Exports The PSA has quite a few terminals which operate to regulate the movement of cargo containers for international export and import. Singapore due to its position as a global shipping hub hosts several global shipping giants, including Neptune Orient Lines (NOL), Pacific International Lines (PIL), APL, NYK, Mitsui, and P&O Nedlloyd etc. This makes Singapore’s port an economic necessity because it allows access to resources that Singapore lacks in. The Ports advanced facilities allow Singapore to import natural resources, which can then later be exported after they have been refined, for example, oil refining in Singapore. This also allows smooth operations in Singapore’s service industries which also contribute to its economic boon status, such as hospitality services which are typical of any port of call, for example, the restocking a ships food and water supply. Shipping Lines Singapore’s maritime business environment operates under a pro-business environment with the help of the government to maximize growth opportunities. The regulation and licensing of port and marine services and facilities is managed by the Maritime and Port Authority of Singapore (MPA). The MPA also effectively manages vessel traffic, which is crucial, for ensuring safety and security. Moreover, Singapore has strict bunkering port standards, which cover documentation, equipment, shipping procedures, quality of bunker fuel and parts supplied, etc. Moreover, a variety of incentives to medium and small enterprises are offered to encourage growth (Lim, 2000, pp.70-120). Incentives for shipping companies in Singapore Approved International Shipping Enterprise (AIS) scheme – offers shipping companies tax exemption on qualifying shipping income for 10 years. Approved Shipping Logistics (ASL) scheme – offers shipping companies a concessionary tax rate of not less than 10% on incremental income derived from providing freight and logistics services. Maritime Finance Incentive (MFI) scheme – offers shipping companies that “finance maritime vessels and sea containers tax concessions for up to 10 years on their qualifying leasing income”(Ngeow, n.d). Maritime Cluster Fund – offers scholarship schemes, course fee subsidies and attachment “programs for the development of manpower, local training infrastructure and capabilities within the maritime industry” (Ngeow, n.d). Maritime Seed Fund (MSF) – offers financial assistance to start-ups or “growing maritime companies that strive to introduce innovative products and services in the industry” (Ngeow, n.d). Logistics Singapore Maritime and Port Authority maintains Singapore’s current development as an international maritime center by facilitating attractive maritime cluster programs and funds, including a $100 million Maritime Innovation and Technology (MINT) Fund established to support maritime R&D and entrepreneurship in the industry. MPA aims to use a logistics cluster comprising different technologies and services to create multiple channels connecting companies globally via air, sea and land based carriers through developing manpower and local training, infrastructure and capabilities in Singapore. Singapore aims to develop its logistics cluster using planning and aggressive marketing strategy to attract multinational manufacturers and investors. Under this strategy, Singapore predicts a fourfold increase in its logistics outsourcing programs by the end of 2012, which will amount to around a value of roughly US80 billion dollars, with forecasts of 15% pa growth. MPA believes that Asias logistics and supply chain management industry, has immense potential for further growth in market size (SMF, 2011). Government Agencies The main government agencies in charge of the Singapore Port and Maritime operations include “the Maritime and Port Authority of Singapore (MPA) which was established in1996” (Straits Times, 2012). It was developed, with the intention, to develop Singapore Port as a global hub port and to secure Singapore’s strategic maritime interests. The MPA works towards maritime development, acting simultaneously as Port Authority, Port Regulator & Planner, and National Maritime Representative. They have been able to drive Singapore to the status of a premier maritime hub by partnering the industry with other agencies, working together to ensure safety and environmental protection. Moreover, the MPA works to facilitate Singapore’s port operations and growth by expanding the cluster of maritime ancillary services, and encouraging maritime R&D and manpower growth as well (Maritime & Port Authority of Singapore, 2007). Conclusion Singapore plays an important role in the global maritime network and faces many future challenges. These can be in the form of competitors in Bangkok, Kuala Lumpur, and Hong Kong. Moreover, countries like Dubai, the most important aviation hub in the Middle East, also serve as tough competition. This makes it important for Singapore to reinvent itself through constant technological improvement and better assimilation of its logistics cluster. Singapore already has the pioneer advantage which has enabled it to gain maximum connectivity in the already dense global networks. Singapore needs to work on advantages acquired in the past so maximize its economic development process through diversification. Diversification would include ship financing and insurance, as well as the various secondary activities that the shipping industry is contingent on. This will ensure that Singapore is capable of dealing with future reservations and rapid changes expected in the maritime industry. Singapore’s sustained success as a premier global hub in the globalized economy depends largely on its connections around the globe. In order to maintain its edge, Singapore must secure its place in the global transportation network through its open access to the global markets via its world class infrastructure and extensive communications network through its global IT linkages to other countries. References Al Hilal Pub, 1990. Building a Nation. Al Hilal Pub. Lim, J, 2000. Singapore Shipping: Past, Present & Future. Singapore Shipping Association. Maritime & Port Authority of Singapore, 2007. Corporate newsletter of the Maritime and Port Authority of Singapore. Nautilus. MoT, 2012. Ministry of Transport. [Online] Available at: http://app.mot.gov.sg/Default.aspx [Accessed 2012 May 2012]. MPA, 2012. Maritime Singapore. [Online] Available at: http://www.mpa.gov.sg/ [Accessed 27 May 2012]. Ngeow, J, n.d. Singapore Flag & Financing Incentives. [Online] Available at: http://www.rodyk.com/usermedia/documents/Rodyk_Ship_Financing_Guide.pdf [Accessed 27 May 2012]. Port of Singapore Authority, 1984. A pictorial history of the port and harbor of Singapore 1819-1984. Portrait of a port . SMF, 2011. MaritimeONE. [Online] Available at: http://www.smf.com.sg/ [Accessed 27 May 2012]. Straits Times, 2012. Search and rescue operation underway near Marina South Pier. [Online] Available at: http://www.thejakartapost.com/news/2012/04/24/search-and-rescue-operation-underway-near-marina-south-pier.html [Accessed 27 May 2012]. Tan, T.Y, 2005. Maritime heritage of Singapore. Singapore: Suntree Media. Read More