Singapore’s logistics industry is changing to build long-term resilience

Logistics  |  03 Jun 2022

Singapore’s logistics industry is facing significant change led by heterogeneous forces due to the interconnectedness of global supply chains and vast number of players. Focusing on strategies that benefit the long-term such as digitalisation and workplace transformation will propel the logistics industry into future growth and secure Singapore’s competitive advantage as world-class logistics hub for years to come.


Singapore’s logistics industry confronts unprecedented challenges

As a high frequency supply chain node linked to more than 600 ports worldwide, Singapore’s logistics industry has been significantly tested during the past two pandemic years (years 2020 and 2021). Border closures and strict regulations that varied in time and severity across countries caused significant disruptions in trade flows. In addition, ongoing geopolitical tensions and rising fuel costs created more stressors on the supply chain process. On the home front, safe management protocols in Singapore led to a surge in supply chain demands which logistics operators struggled to fulfil due to manpower shortage – an issue that was already present pre-pandemic but now exacerbated by cross-border regulations.

Findings from IndSights Research’s quarterly Business Sentiment Survey (BSS) showed that Singapore logistics companies’ sentiments on their business situation over the last two years have fluctuated in tandem with changes in pandemic and macroeconomic conditions. Still, overall, the logistics industry’s perception has been less negative compared to most other sectors.

READ MORE: Business Sentiments Survey FY21 Q4 Report

Bar chart of percentage of companies in Singapore's logistics industry that had improved views of their own industry’s business situation and are more optimistic compared to companies from other industries.
Business sentiments on current Singapore logistics industry situation

The logistics industry also grapples with enduring business pressures to increase efficiencies in order to meet tight source-to-deliver cycles and maintain dock-to-stock process accuracies, all while managing operational resources. Still, local logistics companies appear to have fared better than most. Our BSS data shows that the logistics industry experienced more positive changes in revenues overall compared to their industry peers throughout the pandemic years. Revenue dips (possibly in reaction to sudden COVID-19 restrictions) rebounded in the subsequent quarters as logistics operators likely managed to adapt to the unabating demands for supply chain services.

READ MORE: Singapore wholesale trade industry weathers pandemic storms

Line graph of percentage of logistics firms experiencing mostly an increase in revenues across periods compared to other sectors in Singapore.
Proportion of logistics firms experiencing increase in revenues compared to other sectors in Singapore


Digital fitness is no longer a choice but a certain future for Singapore’s logistics industry

The pandemic has accelerated the need for digitalisation across the business landscape. As the logistics industry provides key support to a wide range of sectors from infrastructure and construction, healthcare and pharmaceutical, to retail and food services, the rate of digital disruption to traditional supply chain processes will intensify alongside other sectors’ progress.  Further, digitalisation has also facilitated new entrants into the sectors, hence creating increased competition. For example, digital adoption in the retail and food sector spurred the rise of e-commerce and in turn, created a needs-gap in the last-mile delivery market. An example of new entrants to the last-mile delivery market, is Grab, which saw the opportunity to launch GrabExpress, offering agile pricing for on-demand, same-day parcel and courier delivery services for home-based businesses and online retailers.

Industry experts have long recommended that logistics companies adopt technological solutions to strip out inefficiencies throughout the supply chain functions to lift productivity. Findings from the BSS indicated that Singapore logistics players recognised the benefits of embracing new technologies as more are looking to invest in digitalisation in 2022 compared to 2021, and more so than other sectors.

Bar charts of Singapore logistics firms’ budget plans where the industry prioritises initiatives in digitalisation.
Singapore logistics companies’ budget plans in 2022 as compared with 2021

The industry may also be assured of garnering support from the Singapore government to transform – e.g. the launch of the Logistics Industry Digital Plan (IDP) since 2017 supports small medium enterprises (SMEs) in their journey to digitalise. The IDP is part of the larger initiative (SMEs GoDigital programme) to make going digital simple for SMEs, with step-by-step guides on the digital solutions to adopt at each stage of business growth.

READ MORE: Resources


Technology is transforming logistics jobs

Digitalisation by way of automating labour-intensive processes may also address the logistics industry’s perennial reliance on labour. For example, the use of platform technologies to predict supply chain disruptions will optimise transport routes and allow companies to utilise resources more efficiently, thus reducing likelihood of companies overinvesting, or rely on increasing manpower to meet business demands. Ninja Van leveraged on big data algorithms to optimise delivery routes, fuel costs savings and shorter lead times.  With more efficient use of resources, the company is less likely to overinvest in manpower to meet demand surges.

Industry players that IndSights Research spoke to in a series of focus group discussions explained that job seekers tend to avoid logistics jobs as they tend to be associated with repetitive and physically demanding work. Therefore, logistics businesses often must compromise on service levels in the face of manpower gaps. It is hoped that the new job roles created by technological advancements (e.g. data management, automation development) will shift perceptions and attract talents to join the supply chain industry.

However, hiring the right talent will require time. In addition, logistics operators with leaner financial resources may not have the means to invest in new hires. Findings from BSS indicated that more logistics companies intend to increase training budgets and redesign jobs in 2022 compared to the previous period of 2021. This suggests that the industry is looking to future-proof the workforce by re-assessing existing job scopes and providing training to meet skills gaps if any.

Bar charts of Singapore logistics firms’ budget plans where the industry will invest more in training and job redesign in 2022.
Singapore logistics companies’ budget plans in 2022 as compared with 2021

While it is reasonable to focus on near-term strategies to ensure present survival, it is crucial for supply chain players to embark on initiatives such as digitalisation to secure business positions and drive future growth. To better support logistics companies in their transformation journey, in the recent Budget 2022 announcement (18 February 2022), Finance Minister Lawrence Wong stated that the Singapore government will invest in an additional S$200 million to provide greater support to local businesses and workers looking to enhance their tech capabilities.

Looking ahead, the industry is fairly optimistic that their business situation would be better off, as companies push toward integration of digital solutions across supply chain functions to drive business growth, supported by an agile workforce.

Bar chart of percentage of logistics companies that had a similar view of the industry’s future business outlook compared to companies from other industries. 
Business sentiments on Singapore’s logistics industry outlook

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