Speech by DPM Tharman Shanmugaratnam at the YCH Logistics Diamond Anniversary on 22 October 2016.
Dr Robert Yap, Executive Chairman, YCH Group
Mrs Josephine Teo, Senior Minister of State
Mr Teo Ser Luck, Minister of State
Ladies and Gentlemen,
It is a real pleasure to join you here this evening to celebrate YCH’s diamond anniversary, and the journey it has taken to get here.
It is a journey with many stories:
- The story of a small local SME that transformed an ‘old economy’ business into ‘new economy’, through technology, innovation and international expansion.
- The story of how a whole range of players in the logistics industry have progressed and made Singapore Asia’s leading global logistics hub.
- And it is also a story of generational change, in YCH and many of our other local businesses, a change that builds on the foundations that our pioneering entrepreneurs left us, that opens up new opportunities, and that creates better jobs and careers for the future.
I commend YCH Group for being a leader in innovation in our logistics industry.
It was also one of the first companies in Singapore to implement a progressive wage model, and is an early adopter of our SkillsFuture Initiatives.
Next Generation Logistics
We have developed a highly reliable and well-regarded logistics sector. But we have to evolve and change, if we are to continue doing well.
The regional and global playing field is getting more competitive. Our local industry is also grappling with manpower shortages. We must develop new strengths to differentiate Singapore’s logistics hub from others, and take bold steps to cope with the reality of tight manpower.
Most fundamentally, technology is transforming logistics chains. It will disrupt many businesses, but also provide huge opportunities for others. Advances in sensors, robotics and cloud computing will allow logistics companies to overcome many current constraints and grow.
We are indeed at the cusp of a new phase of transformation in Singapore’s logistics sector. It will involve significant transformation in every node of our logistics landscape. To summarise the changes:
- We are investing in the air and sea port infrastructure of the future, both hard and soft infrastructure, to enable new value creation in industry.
- We will help our logistics players to innovate, use new warehouse technologies and develop deeper specialised capabilities and talents.
- We will transform today’s inefficient and fragmented domestic logistics sector – the system from the warehouse to the ‘last mile’ of delivery - through integrated, shared delivery systems.
Air and Sea Port Infrastructure of the Future
We are making significant and bold investments with the expansion of Changi Airport, Terminal 5 and the development of Tuas port. It will put Singapore in a strong position for the coming decades.
The expansion of Changi airport will not only serve passenger traffic, but also anchor new economic opportunities in Singapore. We will develop industries which have strong synergies with the airport, such as aerospace and the air logistics sectors. Changi will become a significant economic hub.
In our sea ports, we have ongoing trials to use new automation technologies such as Automated Guided Vehicles (AGVs) and better analytics to enhance labour productivity.
It is not all about hard infrastructure. We must optimise and integrate our software systems. We are enhancing the existing trade systems (TradeNet for B2G and TradeXchange for B2B), to build a new, national level digital infrastructure. It will enable a frictionless supply chains, including both B2G and B2B processes. .
- The new system will enable our manufacturers and traders to exchange information more efficiently with their business partners.
- It will enhance supply chain visibility and support optimisation of import, export, logistics and financing processes, thereby improving the sector’s productivity.
- It will allow for more use of analytics. Companies can also use supply chain data to uncover new insights on trends and gain competitive edge.
We can look forward to this new infrastructure and the value it will bring by 2018.
An innovative logistics sector with deep specialised capabilities
Our second thrust is to accelerate innovation and the development of deep specialised capabilities among our logistics firms.
Innovation. We have several schemes to support technology adoption across the spectrum of logistics companies.
- For example, for smaller SMEs who lack in-house expertise, we are providing consultancy services through the Centre of Innovation for Supply Chain Management (COI-SCM) at Republic Polytechnic.
- A Supply Chain innovation Lab at the COI-SCM was just launched this month to showcase the latest solutions in warehousing technologies such as driverless forklifts and automated picking systems.
- A number of highly-automated, state-of-the-art warehouse facilities will be operational over the next three years. For instance, YCH Supply Chain City will have an integrated automated storage and retrieval system with a ramp-up warehouse - a solution which has I understand been patented.
We are also embarking on two further pilots to see how new technology can be used to help companies overcome land and labour constraints.
- Singapore Logistics Association (SLA) is taking the initiative to work with the industry to pilot the use of Automated Guided Vehicles (AGV) in warehousing. The AGV will be deployed in the feeding area of the warehouse to reduce repetitive work in storage and retrieval. The Government will support this with a $15m grant for the pilot project and its subsequent roll-out.
- Singapore Transport Association is developing an innovative sharing arrangement – an industry chassis pool, to help local truckers achieve better resource utilization and manage rising costs. The chassis pool will encourage companies to size their chassis fleets according to their typical utilization needs, and tap on the chassis pool in times of peak demand. This will result in better chassis utilization and lower costs. STA targets to launch the first chassis pool within the next 1~2 years, with the long term vision of develop multiple chassis pools to effectively serve truckers island-wide. The government will work with them, and will support this initiative.
Next generation logistics talent. To grow top-line revenues in an increasingly competitive field, we must develop niche capabilities and deep specialisation.
l. We are seeing the development of a good base of local logistics players with knowhow in specific geographical markets and in industry verticals such as Marine/Oil & Gas, Food, Biomedical and Retail.
Underpinning the changes in the sector will be a transformation of our logistics workforce. Today, the sector faces a high attrition rate and has a large proportion of low-skilled jobs.
We must change the nature of jobs in the logistics sector. As our companies develop new specialised capabilities, and as new technologies such as robotics and autonomous vehicle become mainstream, jobs will change.
The future jobs will have more technology and skills embedded in them. Many of these jobs will demand higher skills, including a deep knowledge about specific industry domains. But there will also be demand for inter-disciplinary knowledge and soft skills in leaderships, communication and collaboration.
We will put much effort into the Sectoral Manpower Plan for logistics, which is being worked on by a tripartite committee, to develop our next generation logistics talent.
- For example, in pre-employment training, Republic Polytechnic will be piloting the Logistics SkillsFuture Enhanced Internships from April 2016 for their students. Apart from a standardised core curriculum, companies will train interns in customised skills based on the company’s capabilities and emerging needs. YCH will also be supporting this new programme.
- The committee is also looking into helping our existing PMEs develop the deeper skills needed for new jobs in the logistics industry - whether it be deeper knowledge of markets, technologies or vertical specialisations.
Transformation of the domestic logistic sector
Lastly, domestic logistics - everything from the warehouse to the shops and customers. It is currently a highly fragmented business, with each company maintaining more resources than is needed and excessive use of trucks, drivers and delivery personnel.
o. Every day in Singapore, there are an estimated 4,000 trucks performing more than 20,000 delivery trips and taking up about 25% of road space.
p. What is often happening is that many different trucks are delivering small amounts of cargo to the same location. It not only means more manpower than necessary, but also bottlenecks along roads outside of malls.
- In major cities in Japan, logistics companies consolidate and coordinate the delivery and reception of packages from warehouses to malls and vice versa. They ensure that they do not have multiple trucks to the same location.
If we implement such systems in Singapore, we can achieve significant time, manpower and cost savings. IDA and SPRING have studied this, looking at entry and exit data at malls, and interviewing drivers. By using integrated delivery systems, they estimate that we can achieve a:
- 25% reduction in number of trucks on the road
- 40% reduction in delivery manpower (not counting fewer traffic marshals being needed at the malls)
- 65% reduction in waiting and queuing time
We will make a big move in this area, to raise productivity and lower costs.
- We will pilot such systems with 2-3 malls over the next year.
- The Government will provide a grant of $20m to support these pilots and the development of software and platforms.
- We will use the pilots to sort out any impediments, and develop the industry platforms needed before the new systems can be rolled out to the majority of malls in Singapore.
I have described the next generation logistics sector that we can and must develop. The Government will work with our industry associations and leading companies to get there.
It will help the logistics industry to grow despite our constraints in manpower and land, and will create exciting new jobs. It offers transformation for both companies and employees.
Most fundamentally, it is about the human factor - new skills and capabilities; an enterprise culture, starting from owners and top management, of wanting to minimise wastage, develop the potential of their people, and look for new ways to create value; and an industry-wide culture, where companies are willing to pool resources and work together to raise workers’ skills. We will use SkillsFuture to support these shifts.
I know Robert Yap believes deeply in this vision. I’m glad that YCH has been not only one of the first few companies to sign up for SkillsFuture, but also intends to play an active role in the industry-wide upskilling of our workforce. I have heard about your YCH60 CSR initiative – YCH is committing to train 600 students and industry professionals over the next three years.
That is the spirit we need to as we progress on our SkillsFuture journey, and transform our economy for a better future.
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