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Making the links

Given the centrality of trade and infrastructure in this cluster's development, the government plays a major role, with a strategy that covers three areas: physical connectivity, trade links, and digital connectivity.

Future Economy Council's trade & connectivity cluster subcommittee co-chairs Alex Hungate (left) and Koh Poh Koon.

(Above) Frederic Marcerou, Singapore managing director of French firm Bollore Logistics; and StorBest Holdings' business manager Timothy Fang and supply chain manager Dave Ang.

Frederic Marcerou, Singapore managing director of French firm Bollore Logistics; and StorBest Holdings' business manager (left) Timothy Fang and supply chain manager Dave Ang (right).

INSTEAD of a collection of five discrete industries, the trade and connectivity cluster - one of six Future Economy Council groupings - is better seen as a web. As the name suggests: "Everything is about interconnection," says cluster subcommittee co-chair Koh Poh Koon, Senior Minister of State for Trade and Industry.

Its five industries are closely linked: wholesale trade is facilitated by the logistics industry, and movement of goods relies on air, land, and sea transport. The cluster's significance extends to other fields too, from manufacturing to financial flows.

Given the centrality of trade and infrastructure in the cluster's development, the government plays a major role. Its strategy covers three areas, says Dr Koh: physical connectivity, trade links, and digital connectivity.

The first is being improved both in terms of "hardware" - with the expansion of Changi Airport and supporting industries, as well as the Tuas Megaport - and "software", such as regulations and "enabling platforms".

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One example is the Maritime and Port Authority of Singapore's digital platform, which cuts paperwork for ships and is expected to save 100,000 man-hours a year. While this is a government initiative, its success relies on industry players getting their trading partners onboard, says Dr Koh.

There are also group efforts such as Pharma@Changi, in which partners pursue international certification for excellence in pharmaceuticals air cargo handling. A similar initiative for perishables is underway. Not only do these efforts improve Singapore's positioning as a trade hub, they complement other sectors such as pharma manufacturing, notes Dr Koh.

In trade, the government is improving Singapore's network of free trade agreements - but here, too, firms themselves must tap the opportunities arising from such pacts.

Digital trade platforms are another opportunity. Three seafood associations are working with a tech partner to develop a seafood B2B e-marketplace, allowing merchants to trade with customers abroad. Traditional small firms can thus be part of "something that is more forward-looking, more digital, that helps them to potentially tap into new markets outside Singapore, without physically needing to leave our shores", says Dr Koh.

In the area of digital connectivity, government schemes help firms and workers get up to date - though even more of the onus is on industry.

The government's commitment to improving the logistics scene is one key reason that the island is important to French firm Bollore Logistics, says Singapore managing director Frederic Marcerou: "The vision for logistics for Singapore has been fantastic."

Each of Bollore's 11 facilities here is dedicated to a specific sector, from aerospace parts to perfume and cosmetics. The rise of Asia's consumer class means growing business demand - and growing client demands.

Much of the transformation in logistics has been consumer-driven, says Supply Chain Employees' Union executive secretary Cham Hui Fong. "As the needs of consumers are fast-changing, it is important that companies transform together with their workers so that they can keep up."

In cosmetics, the rise of e-commerce has required logistics firms to go from handling pallets and cartons only, down to individual items, notes Mr Marcerou. Deliveries are made not just from warehouses to other warehouses or stores, but to customers too. "So this adds a lot of complexity."

To cope with all this, automation is invaluable. Instead of workers having to search for items, the automated system at Bollore's latest Blue Hub facility brings items to workers instead, via shuttles and conveyors.


The automated system has the added advantage of capturing detailed item data. Bollore can thus offer more value, as such data lets clients optimise their stock, says Mr Marcerou.

In the past, logistics firms simply provided basic information by fax or e-mail. "Now what we need to provide is completely different," he adds.

At the cluster level, data is what unlocks the highest layers of value, says subcommittee co-chair Alex Hungate, president and chief executive officer of Changi Airport's ground handling and catering provider SATS.

"The way of competing, initially, was to have a state-of-the-art individual facility," he says. Then efforts focused on high-value cargo. The next level was e-commerce, requiring digital links and data flows: "It starts to create a layer of value around sharing information that's beyond just the movement of physical goods."

The latest level of value-add: auction facilities for goods that may never even pass through Singapore. Drawing parallels with flower-trading in the Netherlands or fish in Japan, he says: "Here we sit, for example, with access to a lot of flower imports from Africa, which are very attractive for the South-east Asian market - there's no real hub for them to come in."

Singapore is exploring this possibility: "Just by providing price discovery to potential buyers, we're creating an opportunity for the sellers to realise the best possible price."

Data also feeds into the use of artificial intelligence (AI). At Changi Airport, AI helps minimise the mishandling of bags by informing decisions on what to do when aircraft arrive late or land at unexpected gates.

"So we've still got humans making the decisions, but their decisions are facilitated by very complex AI which gives them recommendations so that they can make more optimised decisions in real time," he sums up.

Even without AI, simple data flows can aid firms. By moving to a digital fleet management system, cold-chain specialist StorBest has reduced errors and improved flexibility, letting it cope better with last-minute orders, says supply chain manager Dave Ang.

The nature of logistics is that data passes through many hands, adds business manager Timothy Fang. The digital system improves responsiveness by offering full transparency: "The last guy doesn't need to wait for the guy before him to get the information to understand what's going on."

Data-driven studies also help to get management buy-in for change, adds Mr Ang: "We show them: How much do we save, how much do we gain?" As tech is not one-size-fits-all, studies are vital before adoption.

Firms must also ensure that new equipment fits into the workflow, and redesign processes as necessary to reap the rewards, adds Mr Fang.

StorBest plans to upgrade its warehouse management system next, to reduce manual data entry and introduce analytics. Yes, the current system still does the job, says Mr Fang: "But for us, we are looking ahead."

Here for the long haul

Not all SMEs are keen to change, says Mr Ang. "They'll say, 'If I do this every day, I still get the revenue, I get the profit, why do I need to change? If I change, I need to spend money, wouldn't that eat into my margin?'"

To raise awareness so that more SMEs "can see the benefits of transformation", the Supply Chain Employees' Union has been linking its companies up with the National Trades Union Congress's U SME initiative and economic agencies, says Ms Cham.

Mr Ang's own response to the sceptics is this: "It's not about whether it's expensive or not, it's about whether it's necessary to move your business ahead. You can use the same things to work for the next few years, but can it sustain you in the long run?"

The issue of business sustainability is pushing the whole industry to change, with space and labour costs here "starting to be expensive enough that it will make sense to go into automation", says Mr Marcerou.

Automated systems are about both productivity and high-density storage, he notes. In Singapore, the industry is "right at the edge" where cost savings and quality improvements are starting to yield returns.

Sustainability is the impetus for wider changes too. "On top of optimising our existing business, what's very important for us is to be able to look at the future, to look at the evolution, and say: 'Okay, where are you going to be in five years, in ten years?'"

The answer, he says, lies in Bollore's innovation lab, where current research areas include blockchain, robotic arms, and image recognition.

For StorBest, business sustainability includes coping with the labour shortage. Automation can take over repetitive tasks, freeing workers up for more valuable roles such as customer service. Technology can also lower the barrier to entry for jobs, as its fleet management system does.

"People with no relevant experience can come in and do the job," says Mr Ang. Before, an experienced controller was needed to coordinate trucking operations. With the system, "even an intern can use it".

Adds Mr Fang: "Historical data will help to cover for his lack of experience." By capturing and analysing critical data, the system makes up for its human users' lack of experience.

This can also help workers from other industries, with StorBest having hired mid-career workers via the Professional Conversion Programme.

Workers themselves must transform. Traditional operations have close specialisation: a worker might only unstuff containers, or be a storeman. But this means higher minimum labour needs, says Mr Fang. Aided by technology, workers today need to be able to handle multiple functions.

"When it comes to transformation, we notice common challenges like fear and reservations towards new technology amongst workers," says Ms Cham. "Thus, we are looking at forming Company Training Committees, where we can work closer with companies to customise training programmes according to workers' needs, to help them adapt better."

Before making changes, StorBest identified workers who would need more help, and gave them more time, support, and attention. A sudden leap to automation can be overwhelming if workers are not prepared, says Mr Ang. "If you train them well, if you educate your guys well, the step from here to technology is very easy."

Nor should management be hands-off in implementing change: "We sit down and be part of the operations and see: 'If I'm doing it, do I face the same issue?'" After all, if they themselves face issues in adapting, "then the logic of having tech to help new people to come in doesn't work".

Transformation can help with the labour shortage in another way, he adds: by attracting younger workers and those from other industries.

For Bollore, this extends to transforming the image of the industry. "Just because you're working in logistics, in a warehouse, doesn't mean that you have to work in a dark, dusty facility," says Mr Marcerou. Bollore's Blue Hub has large windows that let natural light into the sleek warehouses, as well as a rooftop canteen, gym, and recreation room.

Tie-ups with institutes of higher learning are valuable not just for research, but also as "a way to show students that logistics is not pallets and forklifts only", he adds: "That there are very exciting topics, very digital topics, very high-level topics."

A host of new roles have been created in Bollore, from experts in sustainability, to solutions engineers and systems engineers, to IT developers.

Forging connections

Other forms of collaboration are valuable too, not least for smaller players. The Singapore Transport Association, of which Mr Ang is the second deputy secretary general, is working on a chassis hub project allowing members to pool said equipment. Though still in an early stage, this is an example of partnering to utilise otherwise unused resources.

Every firm has some spare capacity, notes Mr Fang. If you multiply that by all the firms, "the industry as a whole has lots of spare capacity". The chassis hub project aims to reduce such industry-level inefficiency.

This philosophy applies more broadly. Accepting large contracts as a consortium, for instance, might make more sense than investing in extra capacity and ending up with over-capacity afterwards, says Mr Ang.

StorBest itself works with a fellow cold-chain player, providing services that its partner lacks, and vice versa.

Of course, certain levels of trust - and a proper framework - are required for such resource sharing. But Mr Fang believes that over time, more firms will grow open to collaboration.

"Our generation is about collaboration," he sums up. "I'm optimistic about it, because there is no choice. At the end of the day, if you look at 10 years down the road, people who resource-share will be better off than people who have over-capacity."

Collaboration across different parts of the cluster can boost efficiency too. One example of coordination between air and land transport is the one-stop e-acceptance initiative for cargo leaving Singapore by air.

The process used to be an inefficient one with manual paperwork and several stops. With e-acceptance, documents are cleared in advance. The system identifies when trucks arrive and allocates a dock. "They come in, they're identified electronically, they park one time, they unload and then they can leave," says Mr Hungate.

What might enable more such collaborations within the cluster and beyond? His answer: the industry transformation maps (ITMs) that have been published for each of the five industries in trade and connectivity.

One aim of making these plans public "is to build confidence and buy-in of the industry". When firms know that their peers are invested in the ITM, they are more likely to be confident in the roadmap's execution.

Such transparency applies outside the cluster too, with ITMs having been drawn up for 23 industries in total. "And then the other industries - let's say pharmaceuticals, or advanced manufacturing - they can see what we're trying to achieve and we can see what they're trying to achieve."

All of this allows for connections - including unforeseen ones - to arise organically, both within the cluster and with industries outside the cluster, he adds. Making connections, after all, is what this cluster is about.

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