Speech by SMS Koh Poh Koon at the Logistics Forum 2019
Speech by SMS Koh Poh Koon at the Logistics Forum 2019
Ladies and Gentlemen,
1. Good morning. It is my pleasure to join you again at the Logistics Forum. I officiated the inaugural forum last year and am happy to join you all again this year. This year the impression I get is that it has grown much bigger and the programme has also enriched itself. Hopefully all of you will take home a lot more learnings and networks from this year’s event.
2. Logistics is a cornerstone of Singapore’s economy. By connecting suppliers to manufacturers, and consumers to businesses, we support the growth of various industries. In turn, it plays a critical role in enabling the growth of our economy. So you play a very important role in keeping us at the forefront of economic growth.
3. As a global logistics hub, Singapore has more than 5,000 enterprises in the sector. These cover areas including contract logistics, freight forwarding and trucking working together to make sure the supply chain is well-taken care of. Together, the sector contributed about $7 billion in VA in 2018, representing a compound annual growth rate (CAGR) of +3.3% since 2015. Significant growth potential and I am sure if we can work to transform ourselves, we can capture even more upsides together. The sector we believe will continue to generate good jobs for our people, employing more than 85,000 workers in 2018.
DESPITE HEADWINDS IN OUR GLOBAL ECONOMY, THERE REMAIN OPPORTUNITIES FOR GROWTH
4. You must all be aware of the headwinds in our global economy – ongoing trade tensions, risk of a “no-deal Brexit”, amongst others. As an open economy, Singapore is subject to these external fluctuations. Nonetheless, amidst the challenges, there are real bright spots and opportunities for growth in the logistics sector. Let me elaborate on the opportunities in two areas – cross-border trucking and e-commerce.
5. First, we anticipate a rise in demand for cross-border trucking, especially in the Asia Pacific region. This demand is driven by the relocation of production from China to Southeast Asia, and the growth of consumer markets in the region. As Southeast Asian countries continue to develop their road infrastructure, overland services are set to become an attractive and competitive mode of transport that is faster than sea freight, and cheaper than air freight so there is a value proposition here Global logistics players are investing in road freight to boost their regional connectivity. So there is an opportunity we can capture here.
6. We are actively helping our trucking companies capture opportunities in this area, such as by handling higher-value cargo via land transport. For instance, Enterprise Singapore partnered global logistics player Kuehne + Nagel to support a group of local logistics SMEs in building capabilities in cross-border trucking.
7. Through this partnership, the SMEs were able to gain market insights on cross-border trucking opportunities in Malaysia and Thailand and build competencies in handling specialized cargo which gives more value for companies to capture. The SMEs were also able to gain access to Kuehne + Nagel’s business networks and platform solutions. This is the first of several such partnerships facilitated by Enterprise Singapore, and we aim to benefit many more SMEs going forward. I hope that our SMEs here with us today will take a serious look at some of these opportunities, and perhaps work with Enterprise Singapore as well at the trade associations to see how we can capture these opportunities by hunting as a pack.
8. Second, e-commerce is another key area that can power the growth of logistics solutions and services. The confluence of a rising middle-class, proliferation of smart phones and improvement of reliable telecommunication services in Southeast Asia is expected to spur the growth of e-commerce in the region. In the car ride here, Class 95 was talking about 10.10 and 11.11 – all these are huge opportunities for e-commerce players and therefore logistics fulfillment to take place. While it may seasonable, I think it signals that consumers are more interested and engaged in the e-commerce space now. Singapore is well-placed to provide end-to-end supply chain solutions to international brands and merchants looking to expand into Southeast Asia via e-commerce.
9. Enterprise Singapore supported the formation of the Singapore e-Commerce Enterprise Development consortium in April this year for the European market. The consortium comprises 13 Singapore companies with solutions including on-line marketing, channel management, e-payment systems and logistics management services. Together, they can provide end-to-end cross border e-commerce solutions to European brands and retailers looking to access this growing Southeast Asian market. I am heartened to see our local players coming together to capture new opportunities. The consortium has gained good traction in Europe, and there are plans to expand the approach to other markets like Japan, Korea and Australia. These are markets that are reasonably close to our shores and I think that our players should leverage on the proximity and their understanding of the markets to gain real insights and opportunities there.
Encourage enterprises to develop specialized logistics capabilities to move up the value chain
10. The Government remains committed to supporting our local companies in seeking these opportunities and translating these into real gains for yourselves. At the same time, it is critical that enterprises continue to strengthen your business fundamentals and capabilities. In doing so, you can differentiate your business and compete more effectively in the region. The opportunities are there but the question we must answer together is how we can more effectively capture these opportunities.
a. For instance, Enterprise Singapore has been working closely with SMEs to develop specialized capabilities in areas such as cold-chain management, retail logistics and pharmaceutical logistics. This requires deep understanding of customers’ requirements and the adoption of standards and technologies to meet customers’ needs.
b. I am happy to note that the Singapore Logistics Association (SLA) will be establishing a Pharmaceutical Logistics work group. The work group will look into ways to uplift the capabilities of local enterprises in this area, such as by driving engagement, co-innovation and standards adoption. Through these efforts, we hope that our local enterprises can move up the value chain to service higher value-added customer segments and handlehigh-end products like pharmaceutical products.
PARTNERSHIPS ARE VITAL TO DRIVE GROWTH AND SUPPORT INDUSTRY TRANSFORMATION
Co-innovation to drive growth
11. From what I have just said, you will realise that partnerships and co-innovation will be increasingly vital to the transformation of the logistics industry.
a. To encourage more of such collaborative efforts, Enterprise Singapore launched the inaugural Trade and Connectivity Challenge this year. Some of the booths outside are products of the Challenge this year and I hope that you can take some time to view the interesting, innovative products that came out of this year’s Challenge.
The response from the startup community has been very encouraging. The Challenge drew 49 submissions from a good mix of local and overseas startups, offering a range of technology-driven solutions. It was not an easy decision for the judges in assessing the proposals for the Challenge, and I look forward to the winner’s demonstration later in the programme.
Sector growth through partnerships with TACs
12. The Logistics Forum is co-organised by the Logistics Alliance, which comprises the Singapore Logistics Association (SLA), Singapore Transport Association (STA), Container Depot and Logistics Association of Singapore (CDAS), SAAA@Singapore and the Centre of Innovation for Supply Chain Management @ Republic Polytechnic. So we see that this is really an effort that is very much together with the industry, supported by Government agencies. This is the way we want to move forward, by working closely with industry, taking your feedback but working with you to really sense-make on what are the challenges that you face and working together to find the solutions that will take the industry forward together.
13. Beyond its contributions to this event, the Logistics Alliance is an important partner to the Government in supporting the sector’s transformation. Over the past two years, we have worked closely together and many of the key leaders in the Alliance are also in various Government committees looking at industry transformation for the Trade and Connectivity cluster. We thank you for all the assistance you have given to us to allow us to move quickly in this together. The video we saw earlier captured some of the key initiatives that the Alliance spearheaded in the past year. Upcoming projects that industry players can look forward to in the next 1 to 2 years include the adoption of electronic payment solutions at container depots, resource-sharing initiatives to improve productivity in the sector and capability building workshops. Enterprise Singapore and IMDA will also be working with the Logistics Alliance to refresh the Logistics Industry Digital Plan to accelerate the digitalisation of the sector. If we are to capture opportunities in the e-commerce space and venture beyond our shores, digitalisation is a basic requirement. Until you are digitalised and able to connect in cyberspace, effectively do e-payments and transactions, I think trying to capture opportunities in the e-commerce space will be a challenge. So we hope that businesses will take the digitalisation journey seriously, level up their competency so that we are all ready to capture it together.
BUILDING UP A FUTURE-READY TALENT POOL FOR OUR LOGISTICS SECTOR
14. Singapore is one of the highest ranked Asian countries on World Bank’s Logistics Performance Index. This is something we are very proud of but we should not rest on our laurels. To position the sector for continued success, we need not only strong enterprises, but the biggest challenge raised when I spoke to industry leaders earlier was to make sure that our people, the human capital, is able to keep up with changes and be able to deliver on the needs of the industry. So a capable workforce and strong industry leadership are crucial to this process.
15. We are aware of the challenges that the sector faces in attracting and retaining talent and workers. Partners in the Alliance have worked very hard to engage our Institutes of Higher Learning, working very hard to engager our students , bringing them on Learning Journeys, working with them on projects, to catalyse interest in the sector. But as one of the leaders told me earlier, if the businesses do not transform and show that their business models are forward looking with a conducive working environment leveraging on technology that interests the young people, then I think brining in the young people into the fold would just convince them not to join the industry. So we have to do our part first and make sure that we are ready, attractive enough to bring people in and convince them that this is a sector worth committing their lives too. Recognising these difficulties is the first step towards finding a solution. I am happy to share that SLA, with the support of the Logistics Alliance and economic agencies, will be embarking on a marketing and communications effort to uplift the public perception and image of the logistics sector. I am sure among all the players here there are already those moving ahead and demonstrating change and we hope to leverage on these transformative efforts to convince the next generation of students and workers to join us in this exciting sector. Through this effort, we hope to partner companies and key stakeholders to co-create the future of Singapore’s logistics sector. It is a collective effort that will ensure the success of this sector.
16. In April this year, the Logistics Alliance also formed a Youth Group comprising members from its associations. The group serves as a platform for engagement of the next generation of leaders and collaboration opportunities.
17. Concurrently, as more enterprises adopt technology to augment their operations, jobs will need to be re-designed, and employees will need to be re-skilled to take on new roles. The Government will endeavour to partner you in these efforts.
a. In July this year, WSG announced the launch of the Redeployment Professional Conversion Programme (PCP) for Logistics and Supply Chain professionals. The programme was supported by ESG, EDB, the Logistics Alliance and NTUC. The Redeployment PCP helps enterprises undergoing business transformation to reskill and redeploy existing employees to new roles within the companies.
b. Agencies are also working with industry partners to tap on a wider pool of workers, such as mid-careerists looking for an industry switch, and retired personnel from the Singapore Armed Forces and the Home Team.
i. A success story is Mr Choo Look Yean, who is in his 50s and used to work in the engineering and construction industry. After undergoing the Redeployment PCP and on-the-job training, he was able to pick up the required skills in cold chain logistics for food products. Mr Choo is now working as a warehouse manager in a local cold chain logistics company, Storbest-SSHK Cold Logistics Pte Ltd. I think this is where employers also need to think out of the box. As the industry transforms, many sectors will have to reshape themselves and workers will have to find new employment in different sectors. If we are open minded about accepting professionals with cross industry experience, and we are willing to reskill and retrain, accept them into our fold and redeploy them, I think we can find quite a lot of good professionals who are prepared to do this as well. So let us work together and make this a success where we transform an industry and also bring our Singaporean workers along.
18. I therefore also urge companies to work with NTUC-affiliated unions to form Company Training Committee (CTCs) within your company. These are in-house committees that will play a crucial role in driving worker-centric enterprise transformation. Because as we said earlier, you can buy technology, you can transform your business process, but ultimately, can your workforce cope with such change? And change management is a very challenging thing for many companies. You have to run your businesses while managing change in your workforce. This is something that we believe a CTC by bringing in companies’ management, together with union and workers representatives, can co-solution and bring in the entire workforce to a new level of reskilling. These CTCs can assess skills gaps and develop training roadmaps to help develop a skilled workforce that can take your companies into the next bound of growth. In doing so, the CTCs will also help workers achieve better Wages, Welfare and Work Prospects in the long-term.
19. I would say that in this period of change, Singapore has all the necessary ingredients to succeed. From my perspective, I believe that the only thing that is holding us back is our own mindset. We have no lack of support from Government agencies, we have no lack of expertise in our industries and trade associations, we also have no lack of a well-educated workforce. But what we need to do is to bring all these three pieces together and then consistently put in place measures that will help our workers and employers to work closely together to undergo this change together. This tripartite model that we have worked on over the last 50 years since the founding of Singapore is indeed one good secret ingredient for us to make this change without extreme disruptions in the mindset space of our workers. I can assure you that NTUC will work with our employers, if you are prepared to work with us, to catalyse mindset change for your workforce.
20. I hope that the developments in the sector and projects that the Government, Logistics Alliance and enterprises have been working on together provide encouragement for you to take your businesses further. Do make use of the opportunities today to learn from one another, network, and to share your challenges with one another, to test out your ideas to find new partners and to expand your networks and scale your businesses. I would like to thank the Logistics Alliance for their continuous efforts in taking the lead on initiatives to uplift the logistics industry. I encourage all our enterprises to participate actively in these projects and activities.
21. Hopefully, through the rest of this week you will have a fruitful and insightful time at this year’s Logistics Forum and I hope that in the coming year you will continue to support the programme. With your support, I believe that in a few years we should see the industry take on a greater sped of transformation to the benefit of both employers and workers. Thank you very much for joining us today.