The future growth of Maritime Singapore
Find out how Singapore’s maritime sector is transitioning, and the role innovative financing can play.
What must Singapore do to retain its status as the world’s busiest transshipment hub1 in the face of challenges posed by COVID-19, and a changing global landscape? At the Marine Money Week Asia 2021 conference in Singapore, Quah Ley Hoon, Chief Executive of the Maritime and Port Authority of Singapore (MPA), shared insights with Abhishek Pandey, Global Head of Shipping at Standard Chartered, on Maritime Singapore’s vision for achieving this through a high-tech port ecosystem, and by accelerating decarbonisation.
The future of the port of Singapore
More than 80% of goods are transported by ship2; and Singapore is an important global node in that process. Singapore is the world’s busiest container transhipment port, and has been ranked as the world’s leading port and top maritime centre by the Xinhua-Baltic index for the past eight years.3 It receives many vessel calls annually4 and hosts some 5,000 maritime businesses,5 ranging from ship owners and operators to broking and chartering services, to port operations agencies, to marine insurers and reinsurers.6,7
At the same time, Singapore’s maritime industry faces several challenges, and the pandemic has exacerbated them. These include the need to improve intermodal connectivity8 – which affords a range of transport alternatives that unconnected systems do not – to retain and enhance the city’s share of global container traffic9; expedite the process of digitalisation across the sector; and attract, retain and upskill talent in a rapidly changing industry.10
The MPA has had to deal with these issues as part of its overarching mandate to develop the country’s status as the gateway to Asia. In turn, the agency sees its role as building a strategic partnership with the maritime ecosystem rather than simply setting rules for businesses within it. “The MPA is one of the few agencies in the world that acts as both a regulator and a promoter,” Ley Hoon told the conference, while adding that it is not always easy to strike a balance between the interests of different parties.
The ongoing pandemic, for example, has required the MPA to straddle the conflicting priorities of maintaining Singapore’s status as a global shipping hub and shielding its citizens from external sources of infection at the same time. To this end, the government has introduced the Sea Crew Vaccination Initiative, whose aim is to work with shipping companies and unions to vaccinate as many seafarers as possible, including non-resident ones,11 while also putting in place safe crew change procedures. Nevertheless, the disruption to supply chains caused by the pandemic has demonstrated why it is now so important to remove friction points that slow down the world’s trade.
Digital processes can minimise friction
Digital innovation is seen as central to the effort to remove supply chain bottlenecks. “First, we need interoperability,” Ley Hoon told the conference. “We actually see shipping in Singapore not just as ‘shipping’ or ‘transporter’, but as a key component of the global supply chain, meaning therefore that there must be integration and interoperability with logistics players.”
This interoperability requires different digital platforms to be able to talk to one another, for instance, between the platforms used by shipping companies, shipping agents and logistics operators. “I was once told that there are 18 touchpoints across the entire global supply chain,” she said. “[We] can only advance as fast as the weakest link, meaning that everyone needs to level-up.”
The MPA’s strategy for driving this interoperability revolves around digitalOCEANS™, an initiative that facilitates cross-border data exchange and automated services between supply chain participants, clearance authorities and other national windows.12 The idea is that digitalOCEANS™ will forge system-to-system interoperability that forgoes the need for form-based submissions so that when a ship or cargo needs clearance, the system is as seamless and paperless as it possibly can be.
“We are looking at how to enhance connectivity all the time, and that includes layering physical connectivity with digital connectivity,” Ley Hoon said.
Green finance to the rescue
However, this hyper-connectivity places greater demand on the investments required across the supply chain. As Abhishek pointed out: “Most of the well-known European shipping banks have either exited shipping or curtailed their operations and returned to their core markets, leaving a gap.”
One way of filling this gap is the rapidly expanding world of green finance. Decarbonisation is now a significant priority for the shipping industry, and many companies have dedicated teams to determine the best path forward. In August, the MPA established the Global Centre of Maritime Decarbonisation (GCMD) with SGD120 million fund from MPA and six founding partners. GCMD is dedicated to collaborating with the industry to explore ways to reduce emissions in the sector.13
Singapore is also leading efforts to promote the use of greener fuels such as LNG and funding research to develop zero-carbon fuels.14 In addition, the MPA is looking at building waterfront facilities in Singapore to support the Global Centre for Maritime Decarbonisation’s research and testing of green marine technologies.
The second strand of support is the MPA’s Maritime GreenFuture Fund, an SGD40 million (USD30 million) pot of money that will support this kind of R&D activity.15 The GreenFuture fund can be particularly helpful to small and medium-cap firms who may find it difficult to source affordable lending from a bank. One example is electrified harbour craft, with three consortia awarded funding to research these low-carbon vessels.16
There is also potential for Singapore to develop its capabilities in maritime green financing, by leveraging the existing green finance strengths of the nation. Parallels can be drawn from how MPA grew Singapore’s MarineTech ecosystem, where angel investors and venture capitalists were brought in to be matched with start-up companies based on the unique suite of needs from each of the organisations. The future Green Ship Finance Hub in Singapore can potentially explore the growth of these connectors and intermediaries such that companies of all sizes with project proposals can be linked with financiers, thereby increasing financing flows to our ecosystem of companies.
Standard Chartered, a signatory to the Poseidon Principles, a global framework aligned with the International Maritime Organization’s goal to reduce the shipping industry’s total annual GHG emissions by at least 50% by 2050,17 is likewise working to extend sustainable loans to shipping companies that are investing in technologies that reduce their carbon footprints.18
The need for multi-faceted solutions – technological, financial, regulatory, cultural – explains the importance of umbrella concepts such as Maritime Singapore, which can unify these different strands under a common agenda, solving complex problems in the process. This disciplined, coherent approach has driven Singapore to its current status as a world-class shipping hub, and is likely to form the basis of its future success.
1 http://www.maritimesingapore.sg/about-maritime-singapore/
2 https://unctad.org/topic/transport-and-trade-logistics/review-of-maritime-transport#:~:text=Around%2080%25%20of%20the%20volume,higher%
20for%20most%20developing%20countries.
3 https://www.balticexchange.com/en/news-and-events/news/press-releases-/2021/singapore-tops-international-maritime-centre-rankings.html
4 https://www.mpa.gov.sg/web/portal/home/maritime-singapore/introduction-to-maritime-singapore/premier-hub-port
5 https://www.mpa.gov.sg/web/portal/home/maritime-companies
6 http://www.maritimesingapore.sg/maritime-industry-overview/
7 https://www.mpa.gov.sg/web/portal/home/maritime-singapore/what-maritime-singapore-offers/global-maritime-services/marine-insurance-services
8 https://www.spglobal.com/platts/en/market-insights/latest-news/shipping/011421-singapores-2020-maritime-performance-resilient-despite-global-covid-19-hurdles-minister
9 https://theloadstar.com/singapore-eyes-rebound-in-intermodal-traffic-after-2020-box-volume-dips/
10 https://www.mpa.gov.sg/web/portal/home/media-centre/news-releases/detail/e441e601-6021-466f-a47a-ed4348768534
11 https://www.straitstimes.com/singapore/transport/singapore-to-offer-covid-19-vaccines-to-non-resident-foreign-seafarers
12 https://www.mpa.gov.sg/web/portal/home/maritime-singapore/what-maritime-singapore-offers/digitaloceans
13 https://www.mpa.gov.sg/web/portal/home/media-centre/news-releases/detail/bf2aaf98-833a-4515-8f3f-64d534fa36c3
14 https://www.spglobal.com/platts/en/market-insights/latest-news/shipping/011421-singapores-2020-maritime-performance-resilient-despite-global-covid-19-hurdles-minister
15 https://www.sgpc.gov.sg/media_releases/mpa/press_release/P-20210203-1
16 https://www.porttechnology.org/news/mpa-and-smi-award-funding-for-electric-harbour-vessel/
17 https://www.globalmaritimeforum.org/poseidon-principles
18 https://www.globalmaritimeforum.org/poseidon-principles
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