Other cities eye Singapore’s shipping crown

Other cities eye Singapore’s shipping crown

Singapore Maritime Weeks has kicked off. Chief correspondent Jason Jiang assesses whether the Lion Republic is the world’s most vibrant maritime centre ahead of a new poll to be released in a couple of days.

Singapore can lay claim to being the leading maritime capital of the world, according to multiple surveys carried over the past couple of years, including on this site. However, other cities are eyeing its shipping crown.

The Lion Republic continues to attract a diverse range of maritime businesses and is now home to over 130 international shipping groups and more than 5,000 maritime establishments. The maritime cluster employs more than 170,000 people and contributes some 7% to Singapore’s gross domestic product.

Singapore port achieved a container throughput 30.9m teu in 2016, similar to 2015, while the total cargo tonnage handled increased by 3% over 2015 to reach 593.3m tonnes. The Singapore Registry of Ships also maintained its growth momentum. Compared to 2015, the total tonnage of ships registered with the Maritime & Port Authority of Singapore (MPA) grew by 2% or 1.7m gt to 88m gt, consolidating Singapore’s position as one of the top 10 ship registries in the world.

Norwegian maritime consultancy Menon will launch its 2017 edition of The Leading Maritime Capitals of the World report on Wednesday. In the last edition of the report, Singapore was the clear winner ahead of European cities such as Oslo and Hamburg and Asian competitors in the form of Hong Kong and Shanghai. Singapore was ranked in the top five in all the five pillars the report focused on: shipping, maritime finance and law, ports and logistics, maritime technology and overall attractiveness and competitiveness.

“Singapore still performs well, but the key question is whether the city will be able to keep their leading position with the downturn in both traditional shipping and the offshore oil and gas industry,” says Christian Svane Mellbye, senior analyst at Menon.

Mellbye reckons the maritime cluster in Singapore is seeing large changes in its composition. As an effect of the downturn in offshore oil and gas activities globally, the offshore and engineering sector has experienced a large fall in activity. But he thinks the Singapore maritime cluster still has a leading position globally in maritime services such as maritime law and finance, and the city scores high on innovation, overall attractiveness and competitiveness which gives it strong capabilities to take advantage of market opportunities that the digital transformation of the maritime industry will create.

“This width of business activities within the Singapore maritime cluster makes it less dependent on business cycles,” Mellbye argues.

In Mellbye’s opinion, although Singapore is still one of the leading maritime capitals of the world, other regional competitors are building capacity to challenge Singapore.

“Hong Kong probably used to be the biggest competitor, but has lost importance over the last years. Of these cities, Shanghai will probably be the strongest competitor. China’s importance in the industry is growing, and Shanghai seems to be the strongest center for maritime activity in the country,” Mellbye says.

Shanghai

Zhen Hong, a professor at Shanghai Maritime University and secretary general at Shanghai International Shipping Institute, believes Shanghai has already become an important regional shipping hub and is developing rapidly into an international shipping center.

“The world shipping market has been shifting to Asia and China’s huge demand for bulk commodities is one of main drivers,” Zhen says.

Shanghai port’s container volume saw a year-on-year growth of 1.6% to 37.13m in the year of 2016, once again crowned largest container port in the world.

However, although Shanghai’s port cargo volume is in a leading position, Zhen is well aware of the city’s shortcomings in the maritime center development.

“Since the state council approved the Shanghai International Shipping Center plan, the discussions about how and how long would it take to develop the city into an international shipping center have never stopped,” he relates.

Zhen reckons Shanghai has obvious shortcomings in the key elements to form an international shipping center including law, tax, finance, talent and culture and lacks influences on the international shipping market.

“The development in these areas is still at preliminary stages, especially law and talent. Obviously it is not realistic for us to copy London, Hong Kong or Singapore, which already have mature environments in these areas, we have to find our own way,” Zhen says, adding that the establishment of a Free Trade Zone has greatly improved the situation in recent years.

London

A spokesperson at Maritime London, meanwhile, says the UK faces a number of challenges that present a threat to maintaining its prominence as a leader in maritime services, including more limited local ownership and shipping activity than other major maritime hubs, cost of doing business, tax and regulatory requirements and incentives from other hubs.

He adds that a number of EU-wide strategies have been developed to engage maritime activity across the continent. These include a common maritime transport policy and strategy for marine and maritime research. However, government support in the UK and Europe has not been comparable to that seen in some other hubs, particularly Singapore.

“In general, the UK has lost share over the last five years, although this has been primarily due to the high growth of other regions rather than a decline in activity in the UK,” the spokesperson says.

Benchmarking

A recent benchmarking exercise amongst prominent maritime centers by Monitor Deloitte shows that Singapore outperforms other shipping centers on most parameters, except for taxation (second to Dubai) and skills (second to Hong Kong).

The report finds that Singapore offers the strongest cluster setup for maritime services. On legal services and arbitration, they outcompete Hong Kong, whereas Hong Kong and Shanghai are stronger on the insurance side with the presence of most P&I clubs and the highest share of collected maritime insurance premiums.

“In Singapore, business-friendliness and ease of doing business are seen as high politics. Sector experts highlight that personal service from high-level officials is crucial to Singapore’s ease of doing business in the shipping sector. Hong Kong is similarly very competitive on ease of doing business, but lags behind in comparison with Singapore on ease of registering business property on both cost and efficiency parameters,” the report says.

Stay tuned for Wednesday’s unveiling of the latest Menon report.

Jason Jiang

Jason worked for a number of logistics firms following his English degree, then switched this hands-on experience to writing and has since become one the most prolific writers on the diverse China logistics industry writing for a host of titles including Supply Chain Asia, Cargo Facts and Air Cargo Week. Jason’s access to the biggest shippers with business in China has proved an invaluable source of exclusives.

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