The Future Of Singapore’s Logistics Industry

Singapore is in the midst of transforming its logistics industry. Through the recently-announced Industry Transformation Maps (ITM), some 20 sectors that cover 80% of Singapore’s economy could become more competitive in the future.

Industry Transformation Map

Government agencies, such as the Economic Development Board (EDB), Spring Singapore, International Enterprise Singapore, and Workfare Development Agency, are supposed to work with companies and workers to transform these 20 sectors into ‘cluster champions’.

Two of the leading sectors, having been described as in the “far more advance stage,”’ are the logistics and precision engineering industries.

Government hand In Singapore’s logistics transformation

Changi Airport is building Terminal 4, 5 and Runway 3 with a total budget of S$3 billion. For logistics players, they’d need government guidance as technology is transforming the industry. Automated guided vehicles and analytics have to be deployed to enhance productivity and ultimately competitiveness.

The government created TradeNet and TradeXchange for the logistics industry to collaborate to form a supply chain but it is in need of an upgrade. There is a need for the government to help nurture talents and share resources among logistics companies in Singapore.

In other words, the national infrastructure is necessary for Singapore’s logistics industry to succeed in the future.

Advances in sensors, robotics and cloud computing means warehouses can do more with less.

This is important to real estate investment trusts such as Cache Logistics Trust (SGX: K2LU), which has a portfolio of 19 warehouses in Singapore, Australia and China.

Meanwhile, Global Logistic Properties Ltd (SGX: MC0) manages over 2,000 modern logistic properties in China, Japan, Brazil, and the USA. The top shareholder of Global Logistic Properties, Recosia Pte Ltd, owns over one-third of the company. Recoasia is also an asset holding company of GIC Real Estate Pte Ltd.

GIC is one of the Singapore government’s investing arms. In other words, Global Logistic Properties can be one conduit for the government to tap into the potential of international logistics real estate.

Foolish Conclusion

Singapore is now facing challenging economic headwinds. Its economy grew by just 1.8% in the first-quarter of 2016. So, it is a case of all hands on deck to see the transformation through to its successful conclusion.

For more investing insights and updates on what's happening in the world of finance, you can sign up here for a FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock SingaporeIt will teach you how you can grow your wealth in the years ahead.

Also, like us on Facebook to follow our latest hot articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Ong Kai Kiat doesn't own shares in any companies mentioned.