The establishment of free trade zones and increased foreign direct investment is leading the growth of the transportation and logistics industry in the emerging markets. Due to having the advantage of its geographic location Singapore is expected to witness strong growth in the 3PL market. The increasing presence of a large number of players in Singapore has allowed the rapid expansion of infrastructure and development in the country. In the near future, Singapore’s growth is projected to be more powerful as the international players are more interested in setting up the regional headquarters in the country.
The third-party logistics low-profit margins are the major restraining factor in Singapore besides the fact that the market is highly competitive in the country. Singapore’s Logistics Services (3PL & 4PL) market size was plunged 86% YoY to $18.96 Million in 2018 from $135.5 Million in 2017 and the revenue edged up from $1.51 Billion to $1.56 Billion with 2.9% YoY. In 2017, the industry recorded $75.11 million profit loss, reversing its $31.84 million gain during the same period in Q4. Total revenue for the quarter year also dipped from $ 381.92 million to $ 374.06 million, 2.1% YoY. Global Logistics Services (3PL & 4PL) market size is expected to increase from US$ 790 Million in 2018 to US$ 910 Million by 2025, at a CAGR of 1.8%.
Developing Processes and Infrastructure of the Singapore Transportation and Logistics Industry:
Singaporean has been able to sustain the market due to the government encouraging private sector participation, innovative infrastructure and innovative infrastructure. In Singapore, this is one of the major reasons behind the sustained development of the freight and logistics industry and supporting the growth of the 3PL market. In the past five years, Singapore has built world-class infrastructure, processes, and policies involved in 3PL for the logistics industry. Several initiatives have taken by the Singaporean government to create a suitable environment in every part of the logistics chain. International 3PL and 4PL are attracting towards Singapore due to its infrastructure development.
Singapore has seen a slight fall in the ranking in the recent Logistics Performance Index. Singapore is still lag behind the EU and Japan when it comes to Customs and Infrastructure; the government’s continuous efforts for growth are expected to boost the performance of the countries during the forecasted period. Across Singapore, there are policies to double the capacity of the airport in the aviation industry. Current transferring services of Singapore, such as TradeXchange and TradeNet are progressively converting to the National Trade Platform (NTP). The NTP is a national trade info-ecosystem which is replaced with TradeXchange as the link between the trade and logistics community and TradeNet as the National Single Window for permit declaration. Singapore 3PL market’s key growth drivers are it’s improving its infrastructure policies and processes involving in 3PL services.
TradeLens is jointly created by the two companies Maersk and IBM to apply blockchain to the world’s global supply chain. It is an open and neutral industry platform underpinned by Blockchain technology to promote more efficient and secure global trade, which is bringing together various parties to support information sharing and transparency, and spur industry-wide innovation. It tracks shipments in real time with greater precision via 120+ dynamic events published directly from the source – without the back and forth.
Singapore-based Ninja Van launched in 2014, consider itself as Southeast Asia’s fastest-growing last-mile logistics company, powering businesses with innovative transport solutions. It is solving the last mile problem via a multitude of strategic tie-ups and a cutting edge technology stack via their reactive and distributed systems. The startup firmly believes that optimization of logistics in Asia revolves around a routing software layer controlling legacy assets while concurrently building their own hardware, infrastructure and assets if necessary to enable the new age of logistics.
Challenges for Transportation and Logistics Industry (3PL & 4PL):
Within the transportation and logistics industry (3PL/4PL) disruption is taking place in several areas. The supply chain is becoming more relevant with the continuous increase of ecommerce sale, which is fueling consumer demands and for new technologies, it is serving as the catalyst. Last-mile deliveries have become more complicated with the passing time as the delivery demands of the customers have been more specific and even they expect faster shipping times. To meet the customer’s last-mile demand most of the logistics and transportation companies have become 3PL providers to fulfil it on time as there is no other solution.
New shopping patterns and changing customer experience is the major challenge for the industry as the customers are striving for more efficiency and transparency at a lower price. Every aspect is changing with the changing technology in the logistics and transportation industry. Those companies who have conceded the utilisation of new technologies within the sector from data analytics to automation and platform solutions will lead the industry. A clear digital strategy will help the companies in competing with the competitors, like so many technologies competing for management attention and investment.
Future Prospect for Transportation and Logistics Industry (3PL & 4PL):
Singapore’s trade GDP ratio is the highest in the world, with the total trade reaching more than the GDP and one of the world’s most open economies. This clearly reflects the nation’s role in the oil and gas, trading port sector and the participation in the regional supply chains; and its significant increase in trade of intermediate goods. The nation is a regional hub for logistics players and its excellent infrastructure and connectivity help companies in driving speed to the global market. Singapore ranks third for logistics competence and seventh in the world according to the World Bank’s Logistics Performance Index (LPI) 2018.
There are major growth driving reasons for the country as its rising demand for warehousing and cold storage, entry of foreign players, increasing trade with other major importing & exporting countries, growing ecommerce and retail industry and rising government support. Startups are also driving new business models as most of the new entrants are the startups to logistics sector with entirely new technology. Many technology players or technology-automotive collaborations may enter the logistics industry with whole new ideas of machine-to-machine parcel-station loading for last-mile delivery or self-driving lockers are some technology examples.
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