Opening Speech by Senior Minister of State for Transport, Mr Chee Hong Tat, at the International Chamber of Shipping (ICS) Leadership Insights Series “Global Trade In 2021” Webinar

Mr Esben Poulsson, Chair of the International Chamber of Shipping,

Distinguished guests,

Ladies and gentlemen,

Introduction

1.     COVID-19 has been the defining challenge of this generation. As we grapple with its effects on the global economy, the shipping industry can draw lessons from our experience in dealing with the pandemic, to help prepare for future disruptions.

Re-establishing reliability and cost-effectiveness of sea freight

2.     When a patient is suffering from COVID-19 and has difficulty breathing, doctors must first tackle the immediate threats, by providing oxygen and using the ventilator. Similarly, the shipping industry must act swiftly to tackle the disruption to global supply chains due to port congestion and shortage of containers, as well as incidents such as the Suez Canal blockage in late March this year.

3.     The good news is that the shipping industry has not been too badly affected by COVID-19, as we focus mainly on transportation of cargo and not movement of people.  

a.     Global merchandise trade fell 5.3% in 2020, but the World Trade Organisation has forecast an increase of 8% in 2021.

b.     There will be a further boost as the global economy recovers and international trade rebounds.

4.     However, our customers have been badly affected by an inadequate supply of sea freight. They have experienced prolonged vessel delays, congestion in major ports, and sky-high freight rates. This situation must not persist for too long, as it is bad for international trade and global supply chains. 

5.     The shipping and port industry must take decisive actions to re-establish the reliability and cost-effectiveness of sea freight as the main mode of connectivity for global trade. The congestion must be cleared up so that the world economy can breathe again.

a.     Carriers are adding new containers and ships. Container manufacturers are doing their best, but their production facilities are fully booked till at least August. 

b.     Orders for new container ships in the first five months of this year were nearly double that for all of 2019 and 2020 combined. However, this additional capacity will take time to come on-stream. 

c.     In the meantime, industry stakeholders are taking steps to mitigate the capacity crunch. As a major transhipment port, Singapore is playing our role as a catch-up port to keep global supply chains moving.  

i.     PSA has opened up more berths, and deployed more equipment and more manpower to meet demand peaks. 

ii.    For example, over the course of 15 days in April, PSA handled 45 Singapore-bound container vessels that were badly behind schedule due to the Suez Canal blockage. 

iii.   PSA worked with shipping lines to reduce port stay in Singapore through proactive planning, communication and enhanced productivity. 

iv.    Shipping lines were also able to adjust their services by leveraging on Singapore’s connectivity and network intensity to connect their containers from Singapore to omitted destinations.

v.     PSA is also providing cargo owners with real-time visibility of their cargo movement and status, and cargo solutions to facilitate their planning and management. 

vi.    In January this year, the China Energy Engineering Group faced delays and even total stoppage in their shipments from Northeast Asia to Singapore. PSA worked with the company and facilitated priority discharge of containers carrying their supplies, and expedited delivery to their construction sites.

vii.   Thanks to the dedication of our workers, companies, and partners, the port of Singapore has recovered. Container throughput from January to May 2021 grew by 4.6% compared to the same period in 2020, and increased by 3.9% compared to the same pre-pandemic period in 2019.

viii.  There is scope for PSA to further enhance its position as a preferred catch-up port and mitigate the delays faced by its customers.  

ix.    The Ministry of Transport and the Maritime and Port Authority of Singapore will give PSA our fullest support to achieve this important mission.  

d.     Singapore is also contributing to international efforts to protect the well-being of seafarers and mitigate crew shortages, through crew change and vaccination. These in turn strengthen the resilience of global supply chains.  

i.     We have implemented safe travel corridors for ocean-going crew to sign off and sign on through Singapore. Since March 2020, we have done more than 145,000 crew changes in Singapore, without any infection spreading from crew members to the community. 

ii.    Through tripartite efforts with unions and industry associations, the Singapore Shipping Tripartite Alliance Resilience (SG-STAR) Fund Taskforce was set up to accredit upstream isolation facilities in major seafaring nations such as the Philippines and Indonesia. 

iii.   Our next move is to support international efforts to vaccinate ocean-going seafarers around the world against COVID-19. This is important for several reasons. 

iv.    First, it adds an additional layer of protection for seafarers against the virus. 

v.     Second, it reduces the risk of exposure for port workers and shore-based personnel working onboard vessels in our port. 

vi.    Third, it enhances global supply chain resilience, by allowing ports to remain open and ships to continue sailing. 

vii.   Singapore was one of the first countries in the world to prioritise vaccinations for frontline maritime personnel, including local and foreign seafarers residing in Singapore.

viii.  The International Maritime Organization is working hard to set up a global programme for a network of seaports that can assist in the vaccination of international sea crew. As a global hub port and international maritime centre, Singapore strongly supports this initiative.

ix.    It is key that we continue to balance public health risks and providing vaccination to the crew. Let me share with you  three key considerations that are guiding our work in this area.

1.     First, we will need the IMO or the shipping industry to secure allocation of vaccines for ocean-going seafarers, as these supplies must come from a separate pool beyond our national stockpile.  

2.     Second, unvaccinated seafarers could receive their vaccinations as part of our crew change sign-on protocol when their vessels call at the port of Singapore. In this way, the vaccination procedure remains safe and tight, because it rides on our tried-and-tested crew change process. 

3.     Third, the industry needs to take the lead in working out the indemnity arrangements for each vaccine type, based on commercial arrangements. These vaccine types for ocean-going seafarers can differ from what we have approved under our national vaccination programme.

x.     Our shipping association, port operator and maritime unions are currently working out the protocols and concept of operations together with the Maritime and Port Authority of Singapore, based on the above approach. 

xi.    We had earlier used this same tripartite partnership to help us work out our crew change protocol, so I am confident that this approach will enable us to come up with a safe and effective vaccination protocol for ocean-going seafarers.   

xii.   This is the right thing to do, and we want to make sure we do it right.  

Enhancing resilience through digitalisation

6.     Even as we address these near-term challenges, we must also enhance our resilience to deal with other crises in future. This is similar to how we protect our communities against COVID-19 through mass vaccinations to achieve herd protection, so that the pandemic can gradually become endemic.

7.     COVID-19 has sparked a re-evaluation of the risks of “just-in-time” supply chains, where different parts of a product are sourced from and produced in different locations around the world, before being assembled and shipped to consumers. 

8.     Governments and companies may respond to these risks by seeking greater resilience in their supply chains, resulting in shifts to global trade patterns. Some postulate that there may be more localised or regionalised supply chains, or what some people call the shift from “just-in-time” to “just-in-case”. 

9.     However, I think the challenge for governments and companies will be to make supply chains more resilient without weakening their competitiveness. This is because consumers will continue to want low prices. It is also not practical to localise every part of the supply chain. 

10.    In my view, we need a balance between “just-in-time” versus “just-in-case”, to a hybrid model which comprises elements from both paradigms. What I would refer to as “just enough” – with adequate resilience to deal with “just-in-case” scenarios, as well as sufficient efficiency and cost competitiveness to achieve the benefits from “just-in-time” operations.  

11.    We can discuss different ways to achieve this outcome, but I believe digitalisation will be a key enabler to enhance both the resilience and efficiency of global supply chains. Through the use of digital tools like data analytics and artificial intelligence, we can better coordinate and optimise our supply chains in the event of disruptions.

12.    Digital connectivity is just as important as physical connectivity. Let me share an example.

a.     In September 2019, India imposed a ban on exports of some perishable staple goods such as onions in order to meet its own domestic demand, after a bad crop affected onion production. This disrupted supplies of such goods to other South Asian destinations, which needed to urgently import from other sources. 

b.     Through the use of PSA’s global supply chain platform, CALISTA, an optimised route was found to ship these perishable staple goods to South Asia from Southeast Europe. 

c.     This optimised route reduced the number of transhipment ports required and more than halved the transit time compared to the original route, from 51 days to 23 days.

d.     Without these time savings, the onions would have taken a much longer time to arrive at their destination markets in South Asia. By then, the onions could have sprouted and become spring onions!

13.    As different jurisdictions implement electronic data exchange systems, we need to harmonise data standards across the various systems, so they can communicate easily with one another. 

a.     At the port level, Singapore has implemented Phase 1 of digitalPorts@SG™ to enable faster regulatory clearance for ships calling at our port. 

b.     We are now rolling out Phase 2, which comprises a B2B platform to support just-in-time arrival and departure planning for vessels. 

c.     Singapore also launched the digitalOCEANS™ initiative in July 2020 with like-minded government and industry partners around the world to advocate data exchanges based on common data standards and specifications. 

d.     At the trade documentation level, Singapore has paved the way for digital maritime trade documentation like electronic bills of lading (eBLs), through amendments to the Electronic Transactions Act in February this year. 

e.     Singapore and Rotterdam successfully completed a trial where an eBL was transferred across two different digital ecosystems. This reduced the time taken significantly, from an average of six to ten days using hardcopy documents to less than 24 hours using eBL.

14.    By collaborating and connecting our digital systems, we can accelerate the digitalisation of trade and shipping, and reap the collective benefits of greater efficiency, productivity and resilience. 

Collaborating on the long-term challenge of decarbonisation

15.    Finally, even as we fight the battle against the current variants of COVID-19, we must be prepared for new variants. Scientists are working on a “multivalent vaccine” that can protect against future corona-viruses, not just COVID-19. 

16.    We must adopt a similar long-term view in shipping and port operations. While we cannot be certain what the next major crisis will be, there is one longer-term challenge we know we will have face: that is climate change and the environmental sustainability of shipping.

17.    It is not yet clear what the zero-carbon shipping fuel of the future will be. There are some promising candidates such as ammonia and hydrogen, but further research and testing will be needed before they can be commercially viable at scale. 

a.     Singapore is establishing a maritime decarbonisation centre to drive and catalyse these efforts, in partnership with the industry and overseas research centres.

b.     On the international front, Singapore has supported the industry’s proposal to establish an International Maritime Research and Development Board and an IMO Maritime Research Fund at the global level to encourage the development of zero-carbon fuels through a mandatory contribution of US$2/tonne of fuel. This would generate much-needed funds to support research and development.

c.     Singapore also supports the introduction of a global carbon tax in the medium- to longer-term. This offers greater certainty for maritime businesses while reducing the price differential between traditional fuels and greener alternatives. 

18.    With the recent surge in freight rates, the shipping industry is currently very profitable, especially container lines. But we know from experience that this sector goes through cycles of feast and famine.

a.     When the harvest is good, we need to set aside some resources to prepare for the next crisis, whether to keep as reserves for a rainy day, or to invest in new capabilities like making shipping more environmentally sustainable.

b.     Making changes in good times will help us to change in good time, and to be ready for the future.

Conclusion

19.    Ladies and gentlemen, please allow me to conclude with an observation that the maritime community has proven itself to be rugged, pragmatic and flexible during this pandemic. 

20.    I am also reminded of the saying that: “The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.” 

21.    Being an optimistic realist, or perhaps a realistic optimist, I have every confidence that the shipping industry will be able to come together to ride the winds of change and waves of opportunity ahead. Thank you.