Future of transshipment in Singapore

Date17 August 2012
DOIhttps://doi.org/10.1108/02635571211255032
Pages1085-1100
Published date17 August 2012
AuthorAlbert Wee Kwan Tan,Olli‐Pekka Hilmola
Subject MatterEconomics,Information & knowledge management,Management science & operations
Future of transshipment
in Singapore
Albert Wee Kwan Tan
Department of Education, Malaysia Institute for Supply Chain Innovation,
Shah Alam, Malaysia, and
Olli-Pekka Hilmola
Kouvola Research Unit, Department of Industrial Management,
Lappeenranta University of Technology, Kouvola, Finland
Abstract
Purpose – Transshipment points in container transport are a vital part of the functioning and
competitiveness of global logistics systems. However, competition between different geographical
locations is ongoing and therefore competitive landscape and leading actors are continuously changing.
The purpose of this paper is to understand one of world’s leading transshipment points, Singapore, and
its competitiveness in the future as lower-cost alternative locations try to challenge its position.
Design/methodology/approach – Observations are based and mostly drawn upon qualitative case
study interviews among 11 key companies involved in Singapore’s transshipment business. Along
with this, second-hand national statistics are used to support the findings.
Findings – As Singapore is the largest container sea port in the world, it has several advantages at its
disposal to defend its position against the others. These are mainly due to connectivity around the world,
and second, the high frequency of these connections. However, even though the customs procedures are
generally argued to be smooth and state of the art, in some comments from real life actors, problematic
areas and further room for improvement were inferred. Longitudinal statistics from national consensus
also show, for example, that the electronics industry transshipment volumes are on the decline, and the
main reason could possibly be due to the relocation of manufacturing sites to China or Vietnam,
changing in turn the transshipment point in Asia. For future consideration, Singapore should enhance
its capabilities in localization of value-added services or manufacturing while goods are in-transit, and
also invest in technologies enabling higher container fill rates for airline shipments.
Research limitations/implications – In most qualitative research, amount of observations is
always limited and this work is not an exception with this regard. However, reliability caveat is tried
to be covered with careful selection of interviewed organizations and using second-hand national
statistics to verify the interviewees’ inputs.
Practical implications – This research has value for all countries with high-cost transshipment
points, in building their operations to sustain against new lower-cost entrants. Also, the functioning of
global supply chains with respect to cost, lead time and technical capability are better understood
through this case study, as all the examples are drawn from real life.
Originality/value – The paper shows how global logistics networks have changed significantly in
recent decades, and it is increasingly in line with case study findings after major sea ports such as
Dubai and Shanghai have grown into leading position throughout the world.
Keywords Singapore, Freightforwarding, Docks, Harbours,Containers, Sea ports, Transshipment,
Re-export, Logisticshub, Multi-modal,
Paper type Case study
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0263-5577.htm
The authors acknowledge the researchers in The Logistics Institute, National University of
Singapore and Singapore Logistics Association and SPRING Singapore.
Future of
transshipment
in Singapore
1085
Received 15 January 2012
Revised 12 April 2012
Accepted 12 April 2012
Industrial Management & Data
Systems
Vol. 112 No. 7, 2012
pp. 1085-1100
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635571211255032
1. Introduction
Global supply chains have experienced major changes in recent decades – for example,
earlier most of the international volume was handled between two different sides of
Atlantic Ocean. However, recent decade time period we have witnessed manufacturing
concentration to Asia Pacific, and particularly to China (mostly enabled by enlarging of
World Trade Organization, see Ghosh and Rao, 2010). If we look ten years back,
Hong Kong sea port along with Singapore were the definite leaders in Asian based
logistics. Thisis not any longer the case growth of Hong Kong has stopped in late1990s
(Fai, 1998), but on the other hand it has been channelled to other sea ports of China,
like Shanghai and Shenzhen (Table I). Also Singapore has experienced levelled off
development after year 2008 credit crunch crisis. Other well developed economies
(Table I) have also experienced problems in container trade, which examples from the
USA (Los Angeles) and Taiwan (Kaohsiung) illustrate. Interestingly, regional hub of
Dubai (United ArabEmirates) has surpassed in volumes against Kaohsiung, Los Angeles
and Rotterdam.
It is not surprising to find out that container transport in global scale is terribly
unbalanced (Lopez, 2003; Lun et al., 2009; Hilmola,2011b) and containers typically return
from the USA and Europe empty back to Asia (and freight rates are low for cargo, which
is still being transported; see United Nations, 2008, 2010, 2011). Some companies in West
are nowadays using container vessels as their inventory holding place, due to always
surely available capacity and long delays in transportation process (Hilletofth et al.,
2011). These major changes in global trade and container flows have not changed the
need for transhipment – its volumes are still on the long-term growth track, but we are
looking at rather moderate growth alongside with actual container shipments (in year
1990 one container on the average was loaded and unloaded 14 times during the year,
after two decades this has increased to 19 times (United Nations, 2011).
Mostly growth of emerging markets in logistics is due to factory offshoring and
production outsourcing wave for low cost and market potential from emerging
markets, but also the efficiency of logistics branch have played decisive role (Arvis et al.,
2007, 2010). For example, Vietnam, Thailand, Philippines, India and China are much
friendlier for general cargo logistics than what the level of GDP would indicate
(Hilmola, 2011a). This along with free trade area arrangement in emerging markets has
attracted global logistical hubs in the new locations (reported in form of case study by
Gebauer et al. (2011) and Kittipanya-ngam (2011)) – also the role of transhipment
points is needed to be evaluated again as new locations could use entirely new routes or
having direct calls to long distance (for example, Maersk is currently having “Daily
Maersk” programme, where ships leave for example from China and continue directly
to Europe every day at the same time; see Maersk, 2011). All these factors create great
challenges for logistics development in higher cost locations, where competitiveness
could only be assured with other dimensions such as lead time, technological
advancement and connectivity.
The aim of the research is to verify if Singapore transshipment activities is been
threatened by countries with lower handing costs or other factors. Key questions in this
study include:
RQ1. What are key factors for selecting Singapore as transshipment point?
RQ2. Is transshipment volumes in Singapore declining?
IMDS
112,7
1086

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