Many forces are combining to make a Singapore logistics hub important for companies that need to reach customers in Southeast Asia. In this article we examine why, along with the benefits of Singapore and its ports to companies transporting goods to, from and within Southeast Asia.
Singapore: A World-Leading Hub for Global Trade, Global Logistics
Singapore is consistently rated by the World Bank and others as a top logistics hub for Southeast Asia. Each of the world’s top 25 logistics companies has operations there. A big reason is that Singapore connects directly to many more global ports than other cities in Southeast Asia, making it faster and easier to move cargo in and out.
Other reasons for Singapore’s reputation as a highly efficient distribution hub:
- Business-friendly government
- Fast customs clearance
- Southeast Asia is a dense region for manufacturing and these companies need a reliable gateway to ship goods out quickly to global customers
- Changi Airport is one of Asia’s largest cargo airports and it’s currently building a 5th terminal, which will add 100 additional departure gates when it’s completed in 2025.
- The new Tuas Megaport is under construction and, upon completion in 2040, will be the world’s largest seaport with the capacity to handle 65 million TEUs per year. It will also be the world’s first intelligent port, with advanced robotics for container handling. Sections of the new port have already been opened to provide ocean freight services in Asia.
The Regional Comprehensive Economic Partnership (RCEP) trade agreement will drive more companies to consider a Singapore logistics hub. Signed into force on Jan. 1, 2022, RCEP is now the world’s largest free trade deal, creating favorable conditions for trade between the 15 RCEP members, which include China, Australia, Japan, South Korea and Southeast Asian countries. To support the expected increase in trade volumes among RCEP members, companies will most certainly need an efficient intra-Asia logistics and shipping network – and a Singapore logistics hub offers perhaps the best path to this goal.
Beyond RCEP, Singapore has Asia’s most extensive network of Free Trade Areas, covering 60 percent of the world’s gross domestic product. This provides Singapore-based businesses with access to new markets and free or reduced import tariffs.
Compared to China, where all systems run in Chinese, Singapore doesn’t have the same language barriers, so things like customs declarations tend to go smoother there. Compared to Malaysia, Vietnam and other Southeast Asia options, a Singapore distribution hub allows direct connections with destination ports around the world. Indirect connections from other countries slows down supply chains and increases the amount of inventory companies must carry.
On the negative side, space for distribution warehouses is more limited in this small island nation – especially compared with China, which can accommodate even the largest warehouses. However, with the completion of the Changi Airport expansion and the Tuas Megaport, the Singapore government intends to open up land surrounding these ports for industrial development.
A Singapore Warehouse Serves a Variety of Distribution Needs
Companies may choose a Singapore distribution hub for a few different functions:
- To get component parts from outside the region to factories throughout Asia
- To store finished goods coming from within the region and then re-distributing them inside and outside the region
- To receive and store eCommerce goods and ship them to households throughout Southeast Asia
One thing many companies seek from logistics warehouse partners in Singapore is free trade zone (FTZ) status, which allows goods made within the region to be stored in Singapore without incurring duties – as long as those goods are eventually shipped to another country.
Dimerco entered Singapore in 1980 and currently operates both a freight terminal and an FTZ warehouse in the Airport Logistics Park of Singapore (ALPS). This contract logistics facility, which also offers temperature and humidity control, has been used by high-tech manufacturers looking for a clean, temperature-controlled warehouse that offers advanced security for high-value products. This warehouse has the added advantage of being steps from Dimerco’s airfreight terminal.
Dimerco’s Singapore operation is an example of how Singapore has moved towards higher value-added logistics services, such as contract logistics, that provide customized and end-to-end solutions for companies.
In an article in Singapore daily newspaper, The Straits Times, Singapore Trade and Industry Minister Chan Chun Sing said, “In Singapore, given our size and given our connectivity, we are not going to compete on every dimension of the logistics (sector). What we are going after and what many companies are going to increasingly use us for are… those products that are high-value, time-sensitive and need high assurance (of the reliability) of the supply chain.”
Distributing Goods from Singapore Throughout Southeast Asia
Goods that ship from a Singapore warehouse to countries both inside and outside the region, have the advantage of an advanced air and ocean port infrastructure to support fast, reliable shipments. But for shipments to other Southeast Asia countries, and even shipments to China, an attractive option companies often don’t consider is cross-border road freight.
For high-tech manufacturers, in particular, the road freight option offers safe, secure transport from Singapore to and from China, Malaysia, Thailand, Laos, and Vietnam. The service provides a cost-effective alternative to air freight for intra-Asia shipments.
One large technology product distributor uses Dimerco’s Singapore logistics hub for outbound distribution, including truck shipments to customers throughout Southeast Asia. Unlike air or ocean freight, this strategy allows for multiple stops along the route as trucks travel into Malaysia and north to Vietnam and other countries. Unlike other trucking solutions from Singapore, Dimerco’s solution also includes full visibility to shipments. Truckers record key milestones using Dimerco’s mobile scanning device and these updates are uploaded immediately to the tracking portal.
Ultimately, the solution improved this company’s on-time delivery and cut total transit time by a full day.
Are You Thinking About a Singapore Logistics Hub?
Singapore is investing billions of dollars to sustain its well-deserved reputation as the premier distribution hub for Southeast Asia. As the RCEP trade agreement increases intra-Asia trade and as the continued adoption of a China Plus One strategy drives more manufacturing to Southeast Asian countries, it will be pivotal for companies to have a superior distribution capability in this region.
Having a Singapore logistics hub could be the competitive advantage you need for the future. If you’d like to explore that option, Dimerco already has logistics infrastructure and market know-how in Singapore to get you up and running faster. Let’s start a discussion.