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ABSTRACT
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The authors would like to stress that the views presented in this work do not represent those
of their respective organisations.
1. INTRODUCTION
The British East India Company founded the modern port of Singapore in
1819 as a centre for entrepôt trade. The port served mainly as a regional
distribution centre for cargo traffic originating from and destined for the
Malayan hinterland (Huff, 1994). From the late 1960s, however, Singapore
began to focus on positioning itself as a transhipment centre for interna-
tional cargo. Hence, the throughput of the port now consists not only of
local cargo from Malaysia and neighbouring Indonesian islands, but also
includes cargoes that are transhipped through the port to and from Europe,
East/North-East Asia, Australasia and the Indian subcontinent. Over the
years, Singapore has become recognised as a focal point for some 200 ship-
ping lines with links to more than 600 ports in over 120 countries worldwide.
The aim of this chapter is to provide an overview of the port of Singapore.
Section 2 provides a background to the port, analysing the sources of its
hinterland and transhipment cargoes, its overall performance across a
number of parameters and the nature of the operations that take place
within it. This is followed in Section 3 by a focus on the governance struc-
ture for the port, focussing in particular on the role of the relevant reg-
ulatory agency, the ownership structure of the container handling sector and
the potential for privatisation within this sector. Section 4 analyses the ma-
jor challenges facing the port, while Section 5 concludes.
2. BACKGROUND
The port of Singapore has gained significant advantage from its strategic
location on one of the world’s busiest shipping lanes, the Malacca Straits.
Geography alone, however, does not guarantee success. The port owes
much of its success to the resident port and maritime-related community
that strives to provide world-class and competitive products and service
standards to meet the stringent requirements of port users. This has enabled
the port of Singapore to remain one of the world’s busiest in terms of vessel
arrivals, bunker sales, cargo tonnage handled and container throughput.
Table 13.2 shows a summary of port performance between 1999 and 2004.
The total tonnage of shipping calling at the port grew to a new world record
of 1.0 billion gross tons (GT) in 2004. Average vessel size increased by 26.3
percent compared to five years previous in 1999. The most significant in-
creases in the average size of vessel calling at the port over this period were
in LPG/LNG carriers and in container vessels.
Strong growth was also achieved for total cargo handled; this grew by
13.1 percent from 2003 to reach 393.4 million freight tonnes (FT) in 2004.
Containerised cargo, which totalled 223.5 million FT or 21.3 million TEUs,
continued to account for the largest share of the total tonnage handled at
56.8 percent. This was followed by bulk oil cargo, which accounted for 32.9
percent. Together, these two cargo categories accounted for almost 90 per-
cent of the total tonnage of cargo handled in the port of Singapore.
Bunker sales also grew to a new world record of 23.6 million tonnes in
2004. This is mainly attributed to various measures that have been introduced
to strengthen the integrity of the bunker trade – a strategy prompted by the
prospect of greater competition in the region, mainly from new Malaysian
and newly privatised Sri Lankan bunker suppliers (Anonymous, 2002a).
These measures include more stringent bunker checks for ‘ship-to-ship’
transfers and bunker tankers loading at terminals. Constituting one of Asia’s
largest flag fleets, the Singapore Registry of Ships (SRS) also grew from the
11th largest merchant fleet in 1999 to become the world’s 6th largest fleet in
2004, totalling 27.7 million gross tons.
Local cargo handled by the port of Singapore comes mainly from what is
referred to as the SIJORI region (SIngapore-JOhor-RIau; refer to Fig. 13.1).
This Indonesia–Malaysia–Singapore growth triangle, officially formed in
1994, is based on the concept of trilateral cooperation that emphasises sub-
regional development within the wider regional context of the Association
of Southeast Asian Nations (ASEAN). Through strategies that engender
mutual cooperation, the main aim of establishing SIJORI is to facilitate
economic development by enhancing the attractiveness of the region for
foreign investments. The SIJORI triangle now constitutes one of Southeast
Asia’s most vibrant economic zones, with Singapore as its focal point.
Hinterland cargo from the SIJORI region comprises mainly container and
liquid bulk cargo and, as its name implies, the structure of hinterland
transportation can be split into three smaller geographical areas, namely
Johor–Melaka, the Riau Islands and internal to Singapore.
Cargo originating in the Johor–Melaka area is mainly containerised. De-
spite the presence of a railway line running north–south from Kuala Lump-
ur to Singapore, the primary form of hinterland transportation from this
area is road haulage. Most hauliers prefer to use the North–South Express-
way and Federal Highway Route 2 that run parallel to the railway line. In
recent years, the Malaysian government has achieved some success in en-
couraging industries in this area to use Port Klang as their gateway port in
preference to the port of Singapore (Robinson, 2005; Robinson & Everett,
1997). The motivation for this is obviously national self-interest, but the
comparative success of this strategy can be largely attributed to continuing
290 KEVIN CULLINANE ET AL.
amount of liquid bulk cargo is also transported via both road haulage and
pipeline.
Transhipment cargo is sourced mainly from Singapore’s traditional hint-
erlands in Southeast Asia. However, as illustrated in Fig. 13.2, the geo-
graphical position of Singapore on the mainline Europe–Far East shipping
route has meant that the port is also able to serve as the transhipment point
for cargo originating from, or destined for, the European, East/Northeast
Asian and Australasian markets. In the case of container traffic, Singapore
has benefited greatly from the significant transhipment potential it offers for
container traffic movements between Europe and East/Northeast Asia.
As can be seen in Fig. 13.3, in general, port facilities in Singapore are mostly
concentrated in the southwestern part of the country. Containers are mainly
handled at five locations in the southern part of the island. Through its
Singapore-based subsidiary, PSA Corporation, PSA International operates
the Tanjong Pagar, Brani, Keppel and Pasir Panjang terminals, while
Jurong Port Pte Ltd runs a comparatively small container terminal at Da-
mar Laut. Conventional cargo is handled at the multi-purpose terminals
located at Pasir Panjang Wharves, Sembawang Wharves and Jurong Port,
while petrochemicals are handled at Jurong Port and Jurong Island. The
major shipyards are located at Tuas View and cruise facilities are located at
the southern tip of the country at the Singapore Cruise Centre.
Annualised
Westbound Eastbound Traffic:
Slot
Traffic: 2.86 m 8.84 m
Capacity:
Asnnualied Slot 9.55 m
Capacity: 4.16 m Westbound Traffic: 3.56 m
Westbound
Traffic: 6.33 m
SEMBAWANG
WHARVES
JURONG
INDUSTRIAL
ESTATE SHIPYARDS
CRUISE TERMINAL
years up to 1994, after which the next doubling occurred only in 2004. It
should be acknowledged that the early rapid expansion in container
throughput (pre-1994) at the port of Singapore was facilitated by the rapid
adoption of the containerisation concept within the main economies (Thai-
land, Malaysia and Indonesia) whose trade feeds into the hub of Singapore.
Although Singapore is widely acknowledged as offering one of the highest
service standards in the region, the recent past has seen both Maersk–Sealand
and Evergreen relocating their Southeast Asian regional transhipment hubs
to the Port of Tanjung Pelepas (PTP); a brand new port development lo-
cated on what was once a greenfield site lying just across the border in
Malaysia.
Maersk–Sealand announced its decision to relocate its hub from Singa-
pore to PTP in August 2000. This decision had the immediate effect of
diverting about 2 million TEUs of container throughput, or about 10 per-
cent of PSA International’s volumes handled in Singapore. In pursuit of its
global strategy of vertical integration into the ports sector, Maersk–Sealand
simultaneously took a 30 percent stake in PTP, which was estimated to be
worth US$165 million (The Business Times, 2000). Nevertheless, the strong
connectivity offered by Singapore has ensured that Maersk–Sealand con-
tinues to tranship a significant share of its container traffic through the port
of Singapore (Yap & Lam, 2004).
294
250,000
200,000
'000 Freight Tonnes
150,000
100,000
50,000
Fig. 13.4. Cargo Volume at the Port of Singapore. Source: MPA (2005).
The Port of Singapore and Its Governance Structure 295
petroleum refining centres in the world, with total crude oil refining capacity
of 1.3 million barrels per day. The three main refineries include those op-
erated by
Exxon Mobil with a capacity of 580,000 bbl/d
Royal Dutch/Shell with a capacity of 430,000 bbl/d
The Singapore Refining Corporation with a capacity of 285,000 bbl/d
To maintain Singapore’s long-term status as the energy hub in the region,
Jurong Island was created in the 1990s by reclaiming land to conglomerate
seven smaller islands to produce a cost-competitive location for highly in-
tegrated, world-scale petrochemical plants. Representatives of the petro-
leum and petrochemicals industry that have operations on Jurong Island
include Exxon Mobil, Shell, Chevron Texaco, BASF, Sumitomo Chemical
and Mitsui Chemical. The aim of the government is to develop Jurong
Island into a self-sufficient petrochemical complex that incorporates all of
the key accompanying support facilities. Reclamation work is scheduled for
completion by the end of 2005, when the size of Jurong Island will be
3,200 ha. By 2010, the island will be able to accommodate five refineries and
150 companies with an estimated fixed asset investment of US$24 billion.
One problem on the horizon, however, is that the demand for oil products in
Singapore’s traditional export markets has gradually been met by import
substitutions from more local production facilities, such as the refineries that
have been established and developed in India, Malaysia and Thailand.
assurance of high product quality and instil greater confidence in its bunker
customers. In an effort to achieve this objective, revisions have been made to
the Singapore Standard for Bunkering (SSCP60) that includes new provi-
sions on health, safety and the environment. In the attempt to boost busi-
ness volumes while keeping bunkering costs low, the Special Bunkering
Anchorage scheme has been extended to include both the Eastern and
Western sectors of the port. In these locations, vessels of 20,000 gross tons
and above stand to enjoy more than a 50 percent concession in port dues.
With such measures in place, the authorities intend to maintain Singapore’s
lead as the world’s busiest bunkering port.
3. GOVERNANCE STRUCTURE
The main organisation currently involved in the regulation of the port is the
MPA. Until 1996, cargo operations and port regulation were handled by
three government agencies. These were the National Maritime Board (a
statutory board in the charge of the Ministry of Transport that overlooked
matters relating to the training of seafarers), the Port of Singapore Au-
thority (a statutory board in the charge of the Ministry of Transport that
overlooked matters relating to cargo operations and port regulation) and
the Marine Department (a department in the Ministry of Transport over-
seeing the ship registry).
In February 1996 the MPA Act (1996) passed into law. The MPA was
established by combining the regulatory functions of the three entities, while
the commercial and marine activities of the original Port of Singapore Au-
thority were separated to form the PSA Corporation, a wholly owned entity
of Temasek Holdings, the investment company of the Singapore govern-
ment. The changes are represented in Fig. 13.5 below.
As the port authority, the MPA manages and administers the port of
Singapore through the regulation of essential port and marine services and
facilities. However, it is not involved in any operational aspects of the ter-
minal businesses. In fact, the MPA performs several functions, including:
(a) Regulating and licensing port and marine services and facilities. This in-
cludes discharging the MPA’s responsibilities with respect to Singa-
pore’s role as both a flag and port State, ensuring that regulations are
kept up to date and complied with as well as adhering to various
298 KEVIN CULLINANE ET AL.
Ministry of Transport
Regulatory
National Maritime Board functions Maritime and Temasek
Port Authority Holdings
Marine Department
100%
Port of Singapore Authority PSA Corporation owned
Cargo
operations
PRE-CORPORATIZATION and marine POST-CORPORATIZATION
services
Although the government has announced that it has ‘‘set aside land for 20
additional berths in Pasir Panjang Terminal for whoever can best run the
berths, be it PSA, Jurong Port, other port operators or shipping lines’’
(Government of Singapore, 2002a), PSA International is by far the most
important container handling company operating in Singapore.
Before 1997, the Port of Singapore Authority was a public port authority
under the Government of Singapore. The Authority not only owned the
terminal facilities, but also managed and controlled the operational aspects
of its container terminals. On 1 October 1997, however, the PSA Corpo-
ration was formed by the corporatisation of the former Port of Singapore
Authority. This corporatisation involved the transformation of the port of
Singapore from its previous status as a government body to one where it is
independent of government. It has commercial objectives and takes deci-
sions on a commercial basis, akin to a private sector company. At the same
time, it does remain an entirely government-owned entity, with a wholly
owned subsidiary of the Government (i.e. Temasek Holdings (Private)
Limited) holding a 100 percent share of the PSA Corporation’s shares
(Cullinane & Song, 2001). The corporatisation also marked the separation
The Port of Singapore and Its Governance Structure 301
4. FUTURE CHALLENGES
High cargo volumes and shipping tonnage generally translate into more
business opportunities for the port. However, the port of Singapore faces
increasing competition from neighbouring competitors who are able to offer
ever-improving service quality at competitive prices.
The major challenges the port of Singapore faces as a consequence of the
increasingly competitive environment in which it has to operate can be
summarised as three main areas:
1. Port competition in Southeast Asia is likely to centre on transhipment
containers, with price being the key determinant of port choice decisions.
Singapore’s ability to overcome the competition it faces from other ports
in the region depends crucially on how well it can leverage the compet-
itive and comparative advantages of each ASEAN member in order to
sustain its position as the region’s premier transhipment hub.
Other than fulfilling customer demand for the delivery of high-quality
services at competitive prices, there is also the need to strengthen feeder
connections within the region and, more importantly, to generate greater
intra-regional and external trade volumes. The current strategy being
The Port of Singapore and Its Governance Structure 305
5. CONCLUSIONS
One could argue that the changes that have thus far been made to the
governance of the port of Singapore have enabled the port to continue to
perform well. Apart from the growth in cargo-handling volumes mentioned
earlier, the port has also been voted the ‘‘Best Seaport in Asia’’ from 1989 to
2004 in the Hong Kong-based Asian Freight Industry Awards and terminal
operator PSA International has also been voted the world’s ‘‘Best Container
Terminal Operator’’ for the past 15 years.
The most important impact of the changes in governance has been that it
has allowed PSA International and Jurong Port to focus on port-related
business, while MPA addresses the broader issue of ensuring that the entire
maritime cluster continues to remain competitive and an important con-
tributor to Singapore’s economic performance. Following the change in its
responsibilities, the MPA has acted on behalf of the government of Sin-
gapore in actively pursuing a policy of developing the country to become an
IMC. The rationale for this is to move up the value chain by focusing on
knowledge-intensive activities that are harder for competitors to emulate
and, in consequence, to propel Singapore’s maritime industry to the next
level of economic competence.
These same higher-level activities also have the potential to generate
stronger and wider positive multiplier effects for the maritime cluster and
the national economy overall. However, a world-recognised IMC usually
possesses a wide range of ancillary services that exhibit no particular de-
pendence on a single or narrow group of activities. In fact, as has been
shown earlier, Singapore’s maritime industry is dominated by its port,
shipbroking and chartering, shipbuilding and repair, shipping lines and
agencies and logistics services. Hence, the government has been focusing
much effort on increasing the breadth and depth of other maritime ancillary
services by leveraging or capitalising on its leading status in the port-related
activities of cargo-handling, bunkering and ship repair. By so doing, it is
attempting to firmly anchor these sectors as the core of the IMC develop-
ment strategy.
In conclusion, Singapore’s rich maritime heritage has allowed its maritime
industry to remain dynamic and competitive until now. That same industry
has also witnessed the nurturing of many companies that have progressed to
become world-renowned international players. However, there are major
challenges that must be faced and while the port will obviously continue to
be one of the main lynchpins of the maritime cluster, it is clearly important
that the cluster’s core is expanded to include other maritime activities that
are knowledge intensive and that generate wide-ranging and extensive eco-
nomic spin-offs. The ultimate goal is therefore to create an environment in
The Port of Singapore and Its Governance Structure 309
NOTE
1. The port sector is defined by the Singapore Department of Statistics to include
exclusively port operation services such as stevedoring and lightering activities.
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