The Port of Singapore: a Reflective Essay

This document discusses the Port of Singapore and the strategic importance of its location to the modern traders. It also discusses the government incentives and the Advanced Information Technology that the port has been using to attract new shipping companies in the recent past. Anything beyond is not discussed for the limitation of the term paper.  The port of Singapore Over the last 40 years, the world has been awestruck with the unbelievable growth of the island nation into a major transportation epicentre of global trading. In the 1970s, the Port of Singapore pioneered the first container port in the history. By 1980’s the port hit its first milestone of handling 1 million TEUs and within the next 10 years by 1990’s (Port of Singapore Annual Reports), the port was handling 5 million TEU (Twenty-foot equivalent container units)per annum.

Today, about 20 years after the big landmark, the port handles over 28 million TEUs (Port of Singapore Annual Reports) per year making it the second-largest port in the entire world after the Port of Shanghai in terms of Container traffic. The container shipments from the Port of Singapore comprise one-fifth of the world’s container shipment volume (Authority). The port also takes immense pride in shipping half of the world’s annual crude oil supply. In terms of total cargo volume, the port handles about 500000 thousand freight tonnes per year (Authority) which makes it the second busiest port in the world after the Port of Shanghai. Today Port Singapore is connected to 123 ports of the world spreading over 123 countries and 6 continents, making it one of the most important parts of the world. Singapore: Strategic Importance of the Geographical Location The importance of the geographical location of Singapore has been largely significant since trading started between Asian, North American and the European continents. The Singapore Strait has been used heavily for trading by the Romans, Chinese, Arabs, Greeks, and the Indians since time immemorial (Gupta).

After the Suez Canal opened in the mid-1800s, the Singapore Strait has become a vital linkage of trade between the powerful European nations and East Asia. The Singapore Strait is attractive to traders because it is the shortest and cheapest sea-link between the Pacific Ocean and the Indian Ocean (Gupta). With the advent of the large Japanese car manufacturing industry, the textile industry of South Asia and the heavy outsourcing of the North American manufacturing plants in the last 30 years, Asia is no longer a continent which mainly exports low-valued raw materials to be processed in the West. The flow of more expensive manufactured goods from the East to the West have proliferated in the last 30 years. (Sie) As a result, shipping and transportation costs have become even further less inelastic fostering the immense growth of the shipping industry of Singapore.

Although it is often not in the limelight, the South-east Asian nations have a large base of oil- refineries which have led to the heavy shipping traffic of the crude oil through the strait of Singapore. Taiwan has an oil refining capacity. 54 million b/cd and South Korea has a capacity of 1 million b/cd alongside Singapore. Japan and China top the list with a capacity of 4. 7 and 2. 2 million b/cd respectively. (Olson) Apart from China which has a self-sustaining production of crude oil, every other nation depends on the Middle-Eastern countries for their oil supplies. Japan alone imported 130 million tonnes and 195 million tonnes of crude oil from the Middle-East and the African nations in the years 1990 and 2010 respectively (Olson). Owing to this heavy demand for crude oil, the Port of Singapore has been responsible for transporting half of the world’s oil supply in the year 2010.

Owing to its the prime geographic location and heavy government incentives and a base of Information Technology discussed later in the paper, the majority of the exports from Singapore are based on re-exports from other countries. There are about 60000 ship movements annually in the Strait of Singapore. In 2010, the Port of Singapore transhipped 17447,000 TEUs which constituted almost 82 (Statistics)% of Singapore’s annual export. Today, the Port of Singapore is the busiest port in the World in terms of the transshipment of containers.

Port of Singapore: Operations The Port of Singapore has 6 terminals to accommodate all types of vessels-ocean liners, lighters, cargo freighters, coasters, breakbulk carriers and container ships. The 6 terminals are Keppel Terminal, Brani Terminal, Pasir Panjang Terminal, Sembawang Wharves, and Pasir Panjang Wharves. The Wharves terminals can facilitate all kinds of vessels while the other terminals are specialized meant for the containers vessels.

The Port of Singapore’s container’s facilities are listed as follows:

•  Number of Terminals: 4
• Area: 436 hectares
• Designed capacity: 24700 TEU
• Quay cranes: 143
• Maximum draft: 16 m
• Quay length: 12800 m

According to the Global Competitive Report published by the World Economic Forum, Port of Singapore ranked the best port in terms of facilities and received a rating of 6. 76 out of a maximum 7. The adoption of information technology Over the last few years The Port of Singapore has invested heavily in Information Technology which means that processes now are much faster, more reliable, and more cost-effective for the consumers.

Making the most out of the latest automation technology, information technology, and wireless communications, the Port of Singapore combined its large domain knowledge in container operations with the latest technology such as CITOS(Computer Integrated Terminal Operations System), POSTNET and Flow-through Gate Technology. Singapore Port’s massive network and heavy shipping traffic are very efficiently controlled by Computer-Integrated Terminal Operations System(CITOS). CITES is a Resource Planning System that keeps track of every asset from prime movers to yard cranes to quay cranes to containers and drivers. Before CITOS was introduced, resources were allocated to a certain place in the port and they stayed there unless it was needed somewhere else. With CITES, resources can be much easily coordinated and allocated. 60 different vessels harbor the Singapore Port on a given day. Although a lot of these vessels arrive out of schedule, CITOS makes sure that they don’t have to wait in the harbor for a minute. When any shipping line applies for a berth, the ship stowage and the shipping connection information is sent to the port through POSTNET. The CITOS system begins planning the berth of the shipping line almost 72 hours prior to arrival which means that the system also computes other alternatives in case the vessel is off schedule. This means that for almost all the vessels that harbor the Port of Singapore, there is almost zero waiting time. (Authority) Once a ship is harbored, the quay cranes operated by the CITOS system start discharging containers destined for other ports and load boxes brought in by other vessels.

Once containers are unloaded on the dock, they are not randomly stacked in the yard. The Information about the container is fed into the system and CITOS generates a ship stowage and yard layout plans based on the following factors in order of importance :

• Special requirements (e. g. Dangerous goods, tight connections, etc)
• Destination
• Ship stability (for further stowage planning)
• Size
• Weight The CITOS system provides many competitive advantages to the Port of Singapore. It allows the system to keep track and locate every single container on the port.

It allows the maximum use of land and optimizes efficiency. Last, but not the least, it ensures maximum utilization of each individual resource since it is pre-planned by the system beforehand. POSTNET is a network service that provides internet connectivity to the entire port community with a single sign-on network portal. The system provides interconnectivity between vessels, freight forwarders, government agencies, and haulers. This helps them to synchronize and manage information much better. Singapore has about 8000 users who use the system to get real-time, detailed information on all port, logistics, and shipping processes and use it to make critical decisions in their business.

• The main functions of POSTNET Singapore are summarized below:
• Enable shipping companies to monitor their own performance
• Provide a documentation portal between the consumers and the shipping company
• Managing efficiency for transshipment processes of the vessels
• Supporting real-time information exchanges between shipping line alliances.

FLOW THROUGH GATE

The Flow-through gate system is a sustainable paper-less system that helps truck drivers to identify the specific containers that are needed to be loaded onto the truck within a p of 20-25 seconds. On average, the system processes about 8000 trucks per day. Before the driver arrives at the dock, he submits a requisition for the containers through the POSTNET system. After the driver arrives at the Port gate, he verifies his identity through a fingerprint biometric reader or by punching in his unique identification number. The gate scan’s the truck’s dashboard and identifies the truck. The Container number Recognition system captures the container number with a close circuit camera. The system then matches this information against the information provided during requisition and clears the truck for entry. After the driver enters the port, the system sends a text message to the driver’s mobile phone with the precise information about the location in the dock where the containers would be ready to be stacked onto the truck. Government incentives The Government of Singapore had a major role to play in the boom of the shipping industry in the last 40 years.

Singapore has 5 Free Trade Zones to encourage Re-exports of goods from other countries. Under the Free Trade Act, goods could be cleaned, sorted, distributed, repacked, assembled, or sold in accordance with the Act. Under the Act, transshipment goods can be stored in Singapore free of charge with very little custom bureaucracies. In 1991, The Singapore government enacted the Approved International Shipping(AIS) Enterprise incentive under which shipping companies based on Singapore could be exempted from corporate taxes for the initial 10 years and can be renewed even if they don’t own their own vessel. In 2009, the Government of Singapore announced their goal of making Singapore the ‘’global maritime knowledge hub’’ of the world. Since then the government has heavily invested in research and development of Information Technology in the shipping industry and the Port of Singapore. It has introduced the Maritime Cluster Fund which offers financial funds for training, various research, engineering, and innovation under this field. Such HR incentives have definitely smoothened the transition of a lot of shipping companies to Singapore in the last two and a half years.

COMPETITION

As discussed earlier, the Singapore Strait has grown massive importance in the last few decades. Today, Singapore faces massive competition from the neighbouring ports especially from the port of Tanjung Peepas in Malaysia. In early 2000, 10 % of Singapore’s container volume moved to the port in Malaysia owing to the cheap handling charges in the neighbouring country. Statistics show that handling charges were about 30-40% lower than Singapore. Many of the neighbouring ports have below-par facilities compared to the Port of Singapore. Hence many of these ports can afford to have much lower handling and receiving charges. Although Singapore has a much better reputation, the comparatively more expensive nature of the Port of Singapore is going to continue to pose a threat to the port in the years to come. COnclusion The Port of Singapore has a great reputation being the trade epicenter of the world and for being one of the best seaports in the world. Although the port has an excellent past reputation, the 21st century will bring about new challenges and competition from neighbouring ports such as Malaysia.

The Government of Singapore is doing its best by harnessing advanced Information technology at the Port and providing different government incentives to hold it’s competitive standing. In response, many of the foreign companies such as Clarkson, Swiss Re, Shipowners’ P&I club, and Rolls Royce have moved their marine headquarters to Singapore in the last few years. As the supremacy for leading ports unfolds, more shipping companies will be taking government incentives and Information Technology for granted. Today more firms are showing interest in ports which have established the legal, financial, and logistics sector. It will be interesting to see ho the Port of Singapore respond to these new challenges in the years to come. Appendix

Table 2. Containers handled at the PSA terminals (source: PSA annual report 2000)

Ranking of ports on port facilities as presented in the global competitiveness report published by the world economic forum.

Reference

1. www.singaporepsa.com. Gupta, Sen. The Malacca Straits and the Indian Ocean: A Study of the Strategic and Legal Aspects of a Controversial Sea-lane. New Delhi, 1974.
2. Olson, Hal F. “Tanker traffic and shipping routes”. ” n. d. “Port of Singapore Annual Reports. ” Port of Singapore, 1970-2010.
3. Sie, Chia-Lin. “The Straits of Malacca and Singapore: Navigational, Resources, and Environmental Considerations”. ” Southeast Asian Seas: Frontiers for Development, 1981. Statistics, Singapore Department of. “Yearbook of Statistics?” 2011.