Contents
- Introduction. 5
- An overview of Singapore Maritime Industry. 6
- Current Growth in the Singapore Maritime Sector. 9
3.1. Vessel Arrival Tonnage. 10
3.2. Container and Cargo Throughput. 11
3.4. The Singapore Registry of Ships. 12
4.2. Current Growth in the Ship Repair Industry. 15
4.3. Success factors of Ship Repair Industry. 17
Abstract
The preceding paper discusses the Singaporean marine industry in detail. It also analyzes the ship repair industry of Singapore and puts light on the current growth of both the Singapore marine industry and the ship repair industry of Singapore. In addition to that, it also examines the critical factors that have an influential impact on the ship repair industry of Singapore.
Critical Success Factors for Singapore Ship Repair Industry
1. Introduction
It has been identified by a number of studies that the shipping industry is one of the most rapidly growing global industries. Singapore, because of its location, sits at the centre of the web of world trade routes. In addition to that, Singapore is connected to more than six hundred trade routes in more than twelve hundred countries. (Maritime and Port Authority of Singapore, 2012)
Apart from being a world-class trade route, Singapore also has the highest vessel arrival tonnage, and in terms of vessel arrival, it is one of the busiest countries. In the year 2011, the annual vessel arrival tonnage at Singapore port crossed two billion tons. The Singapore shipping industry has made great progress in the previous years, in terms of both performance and infrastructure. (Maritime and Port Authority of Singapore, 2012)
In addition to that, Singapore has a 20 per cent share in the ship repair industry of the world. Another significant development in the Singapore shipping industry is the establishment of a Marine & Offshore Technology Center of Innovation (COI (MOT)). This agency is located in Singapore and is responsible for enterprise innovation and development. (Kuchiki & Tsuji, 2010)
This paper aims at identifying the success factors for the ship repair industry of Singapore. The primary purpose of the paper is to identify the factors that contributed to the rapid growth of this industry in the past decade and are essential for the sustainable and stable growth of the industry in the present competitive era. (Maritime and Port Authority of Singapore, 2012)
2. An overview of Singapore Maritime Industry
Singapore has transformed from a small and regional shipping into a dynamic hub and superstore for international maritime and offshore activities. In the year 1862, Singapore became an important trade center because of its central location. In addition to that, it was considered as an attractive trade center because of the absence of the transportation charges or fees.(Laaksonen & Mäkinen, 2013)
In the year 1959, Singapore attained self-rule, and in order to fight off high unemployment rates, the government of Singapore rendered supreme efforts to grow the Singapore maritime industry. In the era of 1960s, the ship repair and conversion business and the ship building business started to flourish in Singapore. This was due to the efforts of government and diffusion of technology from Japan and Europe.(Laaksonen & Mäkinen, 2013)
After 40 years of rigorous and commendable improvement and development, Singapore, today, stands as the central hub for maritime activities. It does not only operates efficiently at regional level by connecting various countries, including ‘Australia, India, Indonesia, Malaysia, the Philippines and Vietnam, but also has developed as the center of global maritime activities and logistics.(Laaksonen & Mäkinen, 2013)
As indicated by a number of studies, Singapore is one of the best centers for ship repair and ship conversion. In addition to that, it is also regarded as a leading candidate in the building of offshore structures and rigs. It is also considered as a leader in the conversion of floating production and storage and offloading units. In relation to the ship building business, Singapore is a key player in the development and production of customized and specialized vessels. These customized and specialized vessels include supply and support offshore vessels. (Laaksonen & Mäkinen, 2013)
The table below indicates the growth in the total turnover of the Singaporean maritime industry from the year 1998 to the year 2012;
(Association of Singapore Marine Industries, 2013)
In addition to that, in the year 2013, the Singapore port was once again awarded the title of the best port of Asia. (Laaksonen & Mäkinen, 2013) The port was awarded this title because of the following reasons;
- The cost effectiveness and productivity of the port. (Laaksonen & Mäkinen, 2013)
- The friendly fee culture and infrastructure in relation to container shipping. (Laaksonen & Mäkinen, 2013)
- The appropriate and effective support services which enhance the business activities at the port. (Laaksonen & Mäkinen, 2013)
- The timely inflow of investments which guarantee that the trends in demand for services would remain sustainable in the future, as well. (Laaksonen & Mäkinen, 2013)
Even though the Singaporean maritime sector has demonstrated tremendous growth in the last forty years, this sector still has certain weaknesses. The two most prominent weaknesses of this industry include, the lack of productivity and skills of the workers and the inefficient use of land in relation to maritime activities. (Laaksonen & Mäkinen, 2013)
The maritime industry can overcome these weaknesses by using their strengths appropriately. The major strengths of the maritime industry include, the strategic central geographic location of the Singaporean port which makes it a true hub for the integration of regional and global maritime activities. In addition to that, rapid growth of technology and appropriate diffusion of knowledge are also one of the key strengths of Singaporean maritime industry. Moreover, stable inflow of investments and appropriate economic growth can also be considered as the strengths of this economy. (Laaksonen & Mäkinen, 2013)
The figure below highlights the strengths, weaknesses, opportunities and threats that are confronted by the Singapore maritime industry;
(Laaksonen & Mäkinen, 2013)
3. Current Growth in the Singapore Maritime Sector
In the year 2012, the global maritime industry confronted a number of challenges including unstable global economic conditions. Despite these unfavorable conditions, the port of Singapore was able to maintain a competitive advantage over other players of the industry. It maintained its lead in the sales of bunkers and tonnage of vessel arrival. In addition to that, the Singaporean maritime industry also maintained stable growth in the throughput of containers and cargo. (Maritime and Port Authority of Singapore, 2013)
In addition to that, the registry of ships at the port of Singapore is also increasing at a rapid pace, and Singapore is now among the top ten countries in relation to this factor. The government of Singapore has rendered a supreme effort to transform Singapore into an international center for maritime activities. (Maritime and Port Authority of Singapore, 2013)
Singapore continues to attract a diverse range of shipping businesses to come and operate at its port. Today, Singapore is a home for about one hundred and twenty international shipping companies. The maritime cluster in Singapore employs about 170000 people. In addition to that, the Singaporean maritime industry contributes 7 percent to the gross domestic product of Singapore. (Maritime and Port Authority of Singapore, 2013)
The total turnover of the Singapore maritime industry was 15.01 billion dollars. The highest contribution to the total turnover was from the offshore sector which amounted to 9.08 billion dollars. It was followed by the contribution of ship repair sector which amounted to 4.80 billion dollars. The lowest contribution was from the shipbuilding sector, and it reached an amount of 1.13 billion dollars. (Association of Singapore Marine Industries, 2013)
The table below indicates the contribution of various sectors to the total turnover of the Singapore maritime industry from the year 1998 to the year 2012;
(Association of Singapore Marine Industries, 2013)
The current growth of the Singaporean maritime industry is discussed below;
3.1. Vessel Arrival Tonnage
In the year 2012, the annual tonnage of vessel arrival at the port of Singapore reached the highest record of 2.25 billion gross tons. There was an increase of 6.1 percent in the annual vessel arrival tonnage in the year 2012 as compared to the year 2011. In the year 2011, the annual vessel arrival tonnage was reported to 2.12 billion gross tons. (Maritime and Port Authority of Singapore, 2013) The table demonstrates the vessel arrival tonnage at the Singapore port;
(Marshall Cavendish Business Information Pte Ltd, 2013)
3.2. Container and Cargo Throughput
The container and cargo throughput for the year 2012 reached the amount of 31.6 million twenty-foot equivalent units. It was for the first time in history that the container throughputs cross the limit of 30 million of twenty-foot equivalent units. (Maritime and Port Authority of Singapore, 2013)
The container and cargo throughput in the year 2012 increased by 5.7 percent as compared to the container and cargo throughputs in the year 2011. The container and cargo throughputs in the year 2011 were reported to be 29.9 million twenty-foot equivalent units. In addition to that, the total tonnage of cargo handled by the Singapore maritime industry also reached its highest record in the year 2012. The total cargo tonnage in the year 2012 was reported to be 537.6 million tons.(Maritime and Port Authority of Singapore, 2013)
The total number of container throughput under the flag of Singapore is represented by the following table;
(Marshall Cavendish Business Information Pte Ltd, 2013)
3.3. Bunker Sales
In the year 2012, the total number of bunkers sold at the port of Singapore amounted to 42.7 million tons. There was a decrease of 1.2 percent in the number of bunkers sold in the year 2012 as compared to that of those sold in the year 2011. The total number of bunkers sold in the year 2011 amounted to 43.2 million tons. Irrespective of the decrease in the sales of bunkers at the Singapore port, Singapore still remained the leading bunkering port of the world. (Maritime and Port Authority of Singapore, 2013)
3.4. The Singapore Registry of Ships
The total registry of ships under the flag of Singapore, in the year 2012, amounted to 65 million gross tins. There was an increase of 13.2 percent in the registry of ships at the Singapore port in the year 2012 as compared to the Singapore registry of ships in the year 2011. The registry of ships in the year 2011 was reported to be 57.4 million gross tons. The increase of 7.7 million gross tons in the registry of ships placed Singapore among the top ten ship registries of the world. (Maritime and Port Authority of Singapore, 2013)
The table below indicates the growth in the vessel arrival tonnage, cargo throughput, container throughput, bunker sales and registry of ships in Singapore from the year 2008 to the year 2012;
(Maritime and Port Authority of Singapore, 2013)
4. Critical Success Factors for the Singapore Ship Repair Industry
This section discusses the Singapore ship repair industry and trends in the growth of this industry. In addition to that, this section also highlights the factors that are critical to the success of this industry.
4.1. Ship Repair Industry
The development of the Singaporean ship repair industry is closely interrelated with the economic development, which occurred in the era of 1960s and 1970s. This industry developed as the leading center for the ship repair activities of the world in the 1960s. (Ong, 2000)
The economic growth in Japan led towards an increase in the consumption of fuel which in return expanded the trade between Japan and Middle Eastern and Gulf Countries. The government of Singapore seized this opportunity immediately to develop its marine industry by providing service to the large oil carriers or VLCCs that passed through the port of Singapore. (Ong, 2000)
The growth in the marine industry provided an incentive for growth to the ship repair industry, as well. This is because the ship repair industry as indicated by a number of studies, always grow in alignment with the growth of the shipping business or the marine industry. (Ong, 2000)
The ship repair industry in Singapore is still developing as the shipyards are investing in the repair business. In addition to that, the older docks have been shifted to overseas countries for the purpose of cost effectiveness. Moreover, the government is building new and enhanced docks in Singapore. (Ong, 2000)
The Singapore ship repair industry is going through a consolidation phase. Most of the shipyards in Singapore have gone through massive and evident structuring for the purpose of streamlining their operations appropriately. This restructuring of the shipyards consisted if many components, including mergers between some of the significant shipyards of Singapore. These mergers have been regarded as positive moves as they have led towards a decrease in duplication. Moreover through mergers, the shipyards can optimize their resources in an effective manner and can enhance their efficiency. (Ong, 2000)
In addition to that, another reason behind the restructuring of ship yards is better repositioning. Through restructuring the shipyards aim at repositioning themselves on the niche markets and in return enhance their profitability and competitiveness. (Ong, 2000)
By deploying the strategy of restructuring the shipyards have also expanded their activities of ship repair and ship conversion to a number of locations. These locations include the locations of Batam and Karimun in Indonesia, China and Philippines. (Ong, 2000)
4.2. Current Growth in the Ship Repair Industry
The ship repair sector of the Singapore marine industry is supported by a compendium of marine engineering contractors and companies, marine equipment suppliers, shipyards, offshore equipment suppliers and marine equipment suppliers. In the year 2012, the ship repair market remained sluggish because of the weak and inappropriate performance of the shipping industry. (Association of Singapore Marine Industries, 2013)
Most of the major shipyards of Singapore have established stable partnerships with the long standing and developed players of the Singaporean marine industry. The reason behind these partnerships is to ensure a steady and sustainable inflow of income through ship repair operations. (Association of Singapore Marine Industries, 2013)
Most of these partnerships or alliances are established in the various niches of the ship repair industry, such as repair of tankers, passenger ships, cruise liners and LPG and LNG carriers. These partnerships have also guaranteed a stable base load of repair activities in the local shipyards of Singapore. These alliances and the regular customers accounted for about 80 percent of the total workload of the repair activities. (Association of Singapore Marine Industries, 2013)
The statistics of Singapore port, issued by the Maritime and Port Authority of Singapore, indicated that the number of vessels called for repair in Singapore declined by about 19.2 percent in the year 2012 as compared to the vessels called for repair in the year 2011. The number of vessels called for repair in the year 2012 amounted to 6657, whereas, those called for repair in the year 2011 totaled 8235. (Association of Singapore Marine Industries, 2013)
The reason behind this decline was the overall sluggish growth of the shipping sector. This sluggish growth had a deteriorating impact on the number of vessels that were sent for repair to the port of Singapore. As a result of this decline, the total tonnage of vessels that called for repair amounted to 34.89 million gross tons. (Association of Singapore Marine Industries, 2013)
The total tonnage of vessels called for repair in the year 2012 was 6.4 percent or 2.37 million gross tons lower than the tonnage of vessels in the year 2011. In the year 2011, the total tonnage of vessels called for repair amounted to 37.26 million gross tons. (Association of Singapore Marine Industries, 2013)
The table below indicates the total number of vessels that called for repair and were sent to the Singapore port;
(Marshall Cavendish Business Information Pte Ltd, 2013)
The total turnover of the ship repair and conversion industry amounted to 4804 million dollars. The turnover of the ship repair and conversion industry contributed about 32 percent to the total turnover of the shipping industry. (Association of Singapore Marine Industries, 2013)
There was a decrease of 7.5 percent in the turnover of the ship repair and conversion industry in the year 2012 as compared to the turnover of the year 2011. The turnover of the ship repair and conversion industry in the year 2011 amounted 5195 million dollars. In addition to that, the contribution of ship repair sector to the total turnover of the marine industry also declined by 7 percent in the year 2012. The contribution of ship repair sector to the overall turnover of the marine industry was reported to be 39 percent in the year 2011. (Association of Singapore Marine Industries, 2013)
In the year 2012, 11 floating production, storage and offloading operations, in relation to conversion and upgradation, were completed at the port of Singapore. These operations consisted of eight floating production, storage and offloading vessels, one floating storage vessel, one floating storage and offloading vessel and one unit of floating storage regasification. (Association of Singapore Marine Industries, 2013)
The table below indicates the total floating docks or ship lifts capacity of the Singaporean ship repair sector as of march 2012;
(Marshall Cavendish Business Information Pte Ltd, 2013)
4.3. Success factors of Ship Repair Industry
If the Singapore ship repair industry is examined carefully, it becomes evident that this industry showed great resilience and stability and went through almost 30 years of development to become the top ship repair industry of the world. (Ong, 2000)
The rapid growth of the Singapore ship repair industry is attributable to a number of factors. Some of these factors are discussed below;
4.3.1. Responsiveness
The responsiveness and flexibility of the shipyards of Singapore to adjust to the changes in the external and internal environment is regarded as the major asset for the industry. This responsiveness enables the shipyards to accommodate to the economic shifts and technological developments in an effective manner. The reason behind this responsiveness is the strong infrastructure of the shipyards and the contractors. Apart from that, it is also attributable to the ability of the shipyards to gain the required manpower and material support at a short notice. (Ong, 2000)
4.3.2. Repositioning
The market place is regarded as an ever changing the place where the demands of the customers shift tremendously. The Singaporean shipyards have the ability to reposition themselves in the market and the selected niches according to the non-linear and ever changing demands of the consumers. This repositioning is only possible because of the competence of the shipyards in Singapore. (Ong, 2000)
4.3.3. Reputation
The third factor that contributes significantly to the success of the Singaporean ship repair industry is the trustworthy reputation of the shipyards. This reputation is supported by a number of factors. Some of these factors are good quality of work; smaller turnaround period; strong know how in relation to project management; good safety management and a productive and skilled workforce. All these factors, when combined, provide the ship repair industry of Singapore with a reputation that adds significantly to its success. (Ong, 2000)
4.3.4. Location Advantage
Another factor that adds to the success of the Singaporean ship repair industry is the prime and central location of the Singapore port. Singapore port is blessed with an effective and strategic location. This location makes the port of Singapore a true marine hub that interlaces various locations and acts as a central trade route. (Ong, 2000)
The port of Singapore is located along the shipping lanes situated between the East and West. In addition to that, the port of Singapore also has deep waters and these deep waters allow the ship repair industry of Singapore to provide repair services to almost all kinds of vessels, ships, tankers, LPG carriers and LNG carriers etcetera. (Ong, 2000)
4.3.5. Critical Mass
The fifth factor that contributes influentially to the success of the ship repair industry of Singapore is the critical mass. Critical mass can be defined as the total number of ships that the ship repair industry of Singapore services in various countries of the world. (Ong, 2000)
The ship repair industry of Singapore services more than 2900 ships in about forty different countries of the world. This high critical mass enables the ship repair industry of Singapore to gain economies of scales or economic synergy. As a result, the industry becomes cost efficient and gains high profitability. This cost effectiveness and profitability ultimately provide the industry with appropriate competitive advantage over its rivals. (Ong, 2000)
5. Conclusion
The ship repair industry of Singapore has gone through consistent development over the past thirty years and now it leads the global ship repair industry. The critical factors that have led towards such tremendous success of this industry are the restructuring, responsiveness, critical mass, location factor, reputation and repositioning abilities of the industry. By enhancing these abilities and critically examining the competitive environment, the ship repair industry of Singapore can further enhance its productivity, efficiency and profitability. (Ong, 2000)
References
Association Of Singapore Marine Industries (2013). Association Of Singapore Marine Industries – Industry Statistics. Retrieved from: http://www.asmi.com/index.cfm?GPID=189 [Accessed: 24 Dec 2013].
Association Of Singapore Marine Industries (2013). Association Of Singapore Marine Industries – Singapore Marine Industry Annual Report 2012. Retrieved from: http://www.asmi.com/index.cfm?GPID=329 [Accessed: 24 Dec 2013].
Kuchiki, A. & Tsuji, M. (2010). From agglomeration to innovation. Basingstoke, UK: Palgrave Macmillan.
Laaksonen, E. & Mäkinen, H. (2013). Maritime Sector Developments in the Global Markets. Turku: Union of the Baltic Cities (UBC). pp. 63-69. http://www.cb-smartcomp.eu/download.php/dms/smartcomp/research/SmartComp%20Research%20Report%203,%20October%202013.pdf [Accessed: 24 Dec 2013].
Maritime And Port Authority Of Singapore (2012). Singaporenautilus. Singapore: Maritime and Port Authority of Singapore. pp. 1-30. http://www.mpa.gov.sg/sites/pdf/sn21/sn21_rise-of-a-smart-port.pdf [Accessed: 24 Dec 2013].
Maritime And Port Authority Of Singapore (2013). Singapore’s 2012 Maritime Performance. Retrieved from: http://www.mpa.gov.sg/sites/global_navigation/news_center/mpa_news/mpa_news_detail.page?filename=nr130110.xml [Accessed: 24 Dec 2013].
Marshall Cavendish Business Information Pte Ltd (2013). Singapore Marine Industry Statistics. Singapore: Marshall Cavendish Business Information Pte Ltd. pp. 26-29. http://www.sgprocessindustries.com/Indprof/SSOI/2012/SSSOI%20_ED04.pdf [Accessed: 24 Dec 2013].
Ong, P. (2000). Sustaining Singapore’s Marine Industry’s Premier Position. Cambridge: Massachusetts Institute of Technology. pp. 49-57. http://dspace.mit.edu/bitstream/handle/1721.1/9196/45460576.pdf?sequence=1 [Accessed: 24 Dec 2013].
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