The city-state is offering incentives to draw $15 billion in investment across all aspects of the marine freight business, with an eye on tech.
Singapore is looking to build on its pivotal role in the world’s oceangoing trade lanes, aiming to bring in investment of $15 billion across all aspects of maritime trade—with an eye on tech.
Senior minister of state for transport Chee Hong Tat last month said the government would provide incentives to attract funding for shipping management firms, maritime lawyers, insurance executives and other companies behind the movement of international freight.
Technology will run through that effort, the city-state hopes. Singapore aims to draw funding for startups in areas such as environmental sustainability, data-processing and cybersecurity.
“Our goal is to be the top maritime startup hub in the world, the Silicon Valley for maritime technology,” Mr. Chee told parliament on March 5. “If we don’t stay ahead of the competition, others will steal our lunch.”
The program comes as more investment is flowing into young companies around the world that are developing digital tools aimed at automating logistics operations, from booking shipments on trucks, planes and ships to managing the flow of goods across global supply chains.
Many of the startups aim to disrupt traditional freight operations, and some shipping businesses are responding with their own investments to keep up with the fast-moving digital trends.
Denmark’s A.P. Moller-Maersk A/S has an investment fund, Maersk Growth, backing tech startups in areas such as warehousing and customs clearance. More than three-quarters of Maersk’s earnings now come from ships moving containers, but Chief Executive Soren Skou has said he wants the split to be more even between ocean and inland distribution services over the next couple of years.
Rival container line CMA CGM SA has a venture fund that invests in 10 to 20 supply chain-focused startups a year and in 2018 set up a startup incubator called Zebox focused on technologies like artificial intelligence and cybersecurity that can be used in transportation operations.
Singaporean officials see the technology trends increasingly affecting shipping, and they have a big stake in the flow of goods.
The city-state is home to the world’s second-busiest port behind Shanghai, according to the World Shipping Council, handling 36.9 million containers in 2020. It is also the biggest transshipment hub for giant vessels sailing from Asia to Europe and is building a large, fully-automated port terminal it believes will be a model for how big ocean gateways will look in the future.
“Shipping is considered a strategic industry in Singapore and they implement policies conducive to enhancing its role as a maritime cluster where shipowners, charterers, brokers, banks and maritime law firms from across the world have set up shop and do business,” said Basil Karatzas, chief executive of New York-based Karatzas Marine Advisors & Co.
The new investments will go toward such things as creating or updating applications that give live feeds on where containers are and when they will be moved, paying freight bills on a cellphone and clearing customs before vessels call in to dock.
“We have spent hundreds of years perfecting the physical movement of cargo, but we are only scratching the surface in terms of how we efficiently handle the movement of data,” said Lars Jensen, chief executive of Copenhagen-based SeaIntelligence Consulting.
Mr. Chee said Singapore will raise its cap for co-funding small and medium-size enterprises for maritime technology to 70% from the current 50% to encourage players to “share expertise and resources to co-develop scalable solutions.” The Singapore plan aims to more than triple the maritime startups there from 30 now to 100 by 2025.
Such subsidies aren’t generally available in other maritime centers like Hong Kong, Greece, Germany and Denmark.
The state has a big stake in the outcome of such businesses.
Singapore’s port plays a pivotal role in global trade, but companies increasingly talk about spreading more manufacturing outside Asia to minimize their risks and lower logistics costs. New technology tools that help improve efficiency and speed trade flows may have a significant impact on sourcing and the direction of shipping in the future.
Globalization “will be under pressure, but the imperative for countries to cooperate, for businesses to operate across many geographies and serve markets around the world, I don’t think it is going to disappear,” Singapore Prime Minister Lee Hsien Loong told the BBC last month.