Diversify supply chain or stagnate, UPS tells Singapore
Failure to diversity its supply chains could cost Singapore an estimated US$225bn in the run-up to 2030 a UPS study suggests.
The value of Singapore’s trade with Southeast Asian markets has the potential to grow by up to 50% by 2030, the study says.
It estimates Singapore’s trade with the rest of Southeast Asia could grow from US$450bn in 2020 to USD $679bn by 2030, underpinned by the country’s strategic location and strong trade relationships.
But the study also says serious barriers to growth also exist and that unless addressed, potential growth might instead become stagnation. UPS says that, as a regional trade hub, Singapore is highly dependent upon the free flow of goods and people, and that geopolitical tensions or restrictive trade policies across Asia – including tariffs and other punitive measures – could impact its long-term trade prospects.
UPS urges Singapore-based stakeholders and businesses with trade interests in Asia to “build resilience against potential headwinds while at the same time being ready to capture opportunities presented by the growth in intra-Asia trade”.
Barriers to supply chain growth in Singapore
Three key action points outlined include:
- Digitalising businesses
- Diversifying supply chains
- Promoting the integration of small to medium-sized businesses into regional supply chains.
The study – Clearing the Runway for Intra-Asia Trade – probes trade-growth drivers and the multi-stakeholder action required to unlock the 2030 opportunity, as well as potential headwinds.
Singapore is an essential hub for facilitating regional trade flows, being a major logistics hub in Southeast Asia through its strategic location, advanced infrastructure, and business-friendly environment.
The logistics industry in Singapore has been growing steadily in recent years, driven by the increasing demand for e-commerce and international trade.
Data from the Singapore Economic Development Board shows the logistics industry in Singapore contributed US$21.6 bn to the country's GDP in 2019, up from $21.4 billion) in 2018. The industry also employs an estimated around 250,000 workers.
The Singapore government has been supporting the growth of its logistics industry through its Logistics Industry Transformation Map to guide the industry's growth and transformation.
Asian governments must navigate global trade
Through its global network and customs brokerage expertise, UPS has been helping Asian governments, industry partners, and customers navigate global trade over the past five decades.
Its study shows a key driver of the Intra-Asia trade boom for Singapore is the huge economic success that other regional economies have seen in recent years.
It shows that the four segments driving the surge in intra-Asia trade are retail, industrial manufacturing and automotive (IM&A), high-tech, and healthcare. These segments account for 76% of Singapore’s trade with the rest of Asia, and 75% of total intra-Asia trade in 2020.
“Small businesses are vital to the Singapore economy, and this report highlights the importance of making sure all businesses get the support they need so that the full potential of intra-Asia trade can be realised over the next decade,” says Chika Imakita, UPS Singapore MD.
“At the macro level, Singapore has consistently made strategic moves to position itself as an essential hub for regional trade flows.
“Our role at UPS is to combine our suite of digital, small business-ready solutions with our expertise in customs brokerage and supply chain mapping to ensure our customers continue to optimise the current trade environment in a way that keeps them profitable, successful and sustainable for the long term.”