A chain is no stronger than its weakest link
The importance of a robust supply chain and efficient logistics in a post-pandemic world
The last few years have been difficult for logistics in most sectors. Covid wreaked havoc on supply chains, to the point where many companies have completely changed how they build and manage them. Port congestion was commonplace, and it was all but impossible to avoid delays due to lockdown and quarantine measures. The pandemic pushed logistics into the spotlight, and many companies have turned to powerful digital tools and revamped management strategies to ensure that they can withstand the next major disruptive global event.
The supply chain disruptions caused by the pandemic seem to have largely subsided. Additionally, for many Singaporean stakeholders, their supply chain woes appear not to have been as severe as those of their Western counterparts. Vinod Agnihotri, managing director at LANXESS, observed: “Our manufacturing business in Singapore and Southeast Asia proved more stable and resilient, largely due to the more robust Asian supply chains.”
Many have reported that supply chains have returned to somewhat smooth operations, albeit not as smooth as before the pandemic. In addition, many companies have completely new and revamped strategies around their supply chain management. “Particularly for the chemical industry, now is a time of transition where they are moving from a stable systematic approach to a more resilient regional approach, and onshoring and nearshoring will remain hot topics in the industry moving forward, moving away from just efficient production to more sustainable, resilient, and probably more regionalized production,” explained Alexander Donau, APAC regional head at the global logistics solutions provider Leschaco.
This has led to some companies relocating their operations. Vimala Arumugam, managing director, BASF South East Asia and BASF (Malaysia), explained: “We will produce products that were previously manufactured in Europe in the Tuas site to better serve the Asian market.”
Lubrizol Southeast Asia’s managing director Paul Nai also shared Lubrizol’s approach: “As supply chains move from a ‘just-in-time’ model to ‘just-in-case’, we expanded the blending capacity at our Singapore site to improve product mix and supply resilience in the region."
“The landscape changed dramatically in 2020 when numerous businesses experienced significant losses due to logistical challenges and disruptions in the supply chain. As a result, there is now a heightened focus on establishing a robust and efficient supply chain.”
Raj Kaushik, Director, FRP Services (Asia)
Service providers, meanwhile, are invested in improving their logistics capabilities, characterized by several trends, including the adoption of digitalization, AI, and automation. Another is the expansion of services beyond freight forwarding and customs brokerage to cover additional services such as reverse logistics, e-commerce management, and analytics capabilities. Atul Chandna, EY’s Asia-Pacific supply chain leader, said: “We are seeing fully networked ecosystems of suppliers, carriers, and companies working together.”
Artificial intelligence in particular has exploded in popularity when it comes to supply chain management. Atul Chandna continued: “Large enterprises today are pushing for 50-60% of their key decisions to be AI-assisted or fully automated.” Shipping
The Maritime and Port Authority of Singapore (MPA) reported that Singapore's container throughput in 2022 was 37.3 million twenty-foot equivalent units (TEUs), a slight decline of 0.7% from the record throughput of 37.6 million TEUs in 2021. The port's performance was resilient compared to the decline in global container trade of about 3 to 4% in 2022. Nevertheless, the maritime industry in Singapore has had its challenges. “Shipbrokers have recently seen a decrease in chemical charterers, especially on the commodity side,” said Sudheer Vijapurapu, managing director at New Asia Shipbrokers.
“Digitalization is a cornerstone of our strategy, along with decarbonization and talent development. We have various collaborations with research institutions underway to develop cutting-edge tech.”
Kenneth Lim, Assistant Chief Executive (Industry and Transformation), Maritime and Port Authority of Singapore (MPA)
“The most efficient way of capturing data is digital, directly from the primary source. In the maritime supply chain, the primary source is when the ship is in port, and this is where we want to capture data.”
Chye Poh Chua, Founder, ShipsFocus
To maintain Singapore's dominance in the maritime space, the MPA has announced a flurry of new digitalization and automation initiatives to improve the fluidity and efficiency of port operations. Kenneth Lim, the MPA's assitant chief executive of industry and transformation, is focusing on AI-powered vessel traffic management systems and wider rollouts of 5G networks.
Chye Poh Chua, the founder of ShipsFocus, a local technology company that seeks to transition the maritime industry into the digital world, explained: “A cargo owner’s biggest problem is lack of visibility, and in mitigation, they incur significant costs on contingency planning. If the cargo owners can capture data on a real-time basis, it will allow for better planning, and over time, they will be able to cut down on the necessity of putting contingencies in place.”
The logistics industry has been transforming rapidly in response to global challenges and technological advancements. The adoption of automated technology and the expansion of logistics services beyond traditional services are trends that we can expect to see continuing in the coming years.
Article header image by Travel mania at AdobeStock