Page 11 - TLND2021_24Sept
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 S ingapore’s reputation as a global reach a record 2.12 million tonnes in 2017,
logistics hub is sustained by 5,000
companies and the 85,000 people in their employ. Through the provision of various services covering contract logistics, freight forwarding and trucking, the logistics sector contributed about S$7 billion in VA (Value Added) in 2018, which corresponds to a compound annual growth rate of 3.3 percent since 2015.
According to the World Bank, Singapore is the highest-performing logistics hub in the region. It is a prime location for major logistics firms, with the top 25 global players such as DHL and Schenker anchoring their logistics and supply chain operations here. It is also the logistics and supply chain management hub for manufacturers across various industries, e.g., Dell, Hewlett Packard, LVMH, Novartis, Panasonic and Siemens Medical Instruments.
This vibrant ecosystem is facing headwinds. Logistics services are sensitive to trade flows. Heightened trade tensions, notably between the United States and China, are negatively impacting world trade. The World Trade Organization (WTO) downgraded its forecasts for trade growth steeply in 2019 and 2020. A more severe blow to the global economy, caused by the COVID-19 pandemic, could produce an even bigger downturn in trade. WTO warned global trade could fall by up to a third.
Trade Winds of Change
The effects of deteriorating trade conditions are spilling over to Singapore, one of the world’s most open economies with the highest trade to GDP ratio and an extensive network of Free Trade Agreements. Cargo movements, the barometer for trade volume and velocity, reflect such a decline. After a 7.9 percent increase to
 the increase in air cargo traffic through Changi Airport moderated to 1.4 percent in 2018 to reach 2.15 million tonnes. In 2019, this figure was 2.01 million tonnes, a fall of 6.5 percent. Sea cargo charted similar movements in cargo throughput; a 5.8 percent increase in 2017, moderated to 0.4 percent in 2018 and a decline of 0.6 percent in 2019. As freight needs decline, the revenue outlook for the logistics sector will be challenging. COVID-19-induced effects are likely to be temporary, but global trade tensions raise the spectre of protracted trade depression.
The rise in global protectionism does not leave countries defenceless. On the contrary, very positive developments are unfolding in this part of the globe. The Belt and Road Initiative (BRI) holds much promise for the creation of intra-regional trade opportunities, facilitated by connectivity and the network effect. The BRI comprises a Silk Road Economic Belt - a trans- continental passage that links China with South East Asia, South Asia, Central Asia, Russia and Europe by land - and a 21st century Maritime Silk Road, a sea route connecting China’s coastal regions with South East and South Asia, the South Pacific, the Middle East and Eastern Africa, all the way to Europe. The programme is expected to involve over US$1 trillion in investments, largely in infrastructure development for ports, roads, railways and airports, as well as power plants and telecommunications networks. These projects would require massive logistics support and augur well for our companies. In addition, the creation of the Asean Single Window, a single online platform aimed to streamline processes, will facilitate intra-Asean trade. Traders and their logistics partners can look forward to faster cross-border customs cargo clearance and reduction in transaction costs.

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