Singapore: World’s Biggest Automated Port by 2040!

As the world’s economies struggle to untangle unprecedented congestion in global supply chains, one of the world’s busiest ports is backing an ambitious modernization plan to provide solutions.

Singapore is forging ahead with a S$20 billion (US$14 billion) project to build the world’s biggest automated port by 2040. This will double the existing space and feature drones and driverless vehicles. The city state started operations at two new berths last year, and construction work is continuing on the next phase.

It’s becoming more urgent for ports to add capacity and speed as the pandemic has changed the nature of global supply chains. The just-in-time system for shipping has been in disrepair as exporters in Asia face obstacles getting goods transported to customers in the US and Europe. The situation has worsened in 2022 with Covid lockdowns in China and the war in Ukraine. 

Ports are the most visible choke points in the US$22 trillion arena for merchant trade, and a long-overdue transformation will require tackling a host of problems. Terminals are constrained by fading technology and limited space. Further, inefficiencies are compounded by containers piling up at yards and a short supply of workers and trucks. 

Space presents a significant limitation for ports handling tens of thousands of containers a day, especially when trucking and shipping schedules are disrupted. The need for more room became clear during the pandemic, as docks overflowed with containers, and some ports had to place boxes along roadsides to await transport. 

Singapore, a densely populated island, would seem a difficult place for expansion. But the city state, facing rising competition from rivals such as Shanghai, began allocating funds in 2013 to reclaim land needed to build a new port, Tuas, on the country’s west coast. The port eventually will double its capacity to 65 million twenty-foot equivalent units (TEU) by 2040. 

The plan, set in place long before the onset of supply-chain upheaval, now appears prescient. The expansion has provided much-needed space to run operations efficiently and carry the city beyond the current pandemic.

 Shipping consultancy Drewry expects about 30 million TEU of capacity will be added per year from 2021-2026, down 25% from 40 million TEU added each year during the decade to 2020.

Once Tuas is completed, Singapore will shut all its existing capacity and relocate everything to the larger space there. The three city terminals at Tanjong Pagar, Keppel and Brani will all shut and move to Tuas by 2027, while Pasir Panjang terminal will be consolidated by 2040.

That will help consolidate operations into a more logical structure, allowing for faster handling of containers, which reached a record 37.5 million in 2021. The new arrangement will reduce the need for trucks to traverse downtown traffic, while transporting cargo from one terminal to another. 

Shortening the lines of trucks waiting at terminals is crucial for all ports. That’s a major reason for bottlenecks, holding up the movement of goods during Covid lockdowns in Shanghai and causing significant delays in clearing boxes at California ports. The risks tied to trucking were also highlighted earlier this month when striking drivers in South Korea wreaked havoc on supply chains. 

Investment in ports isn’t just about building more roads and trucks. It’s also about improving the port’s ability to track and coordinate what’s happening at sea with all the moving parts needed to transport containers on land.

Singapore will operate automated guided vehicles to move more containers between the yards and berths where ships wait. A human driving a truck will use sensors and wireless communications to lead a convoy of driver-less vehicles in and out of the port. Drones will be used for shore-to-ship deliveries, and aid security guards with checks.

The upgraded technology will save on manpower in the global labour crunch. But the Singapore port wants to take a further step by integrating information systems, enabling it to track cargo and communicate surges in demand to all supply-chain players. 

Singapore is among a growing trend of seaports cutting down on paperwork processes. It is one of seven jurisdictions globally that accepts electronic bills of lading, a key supply-chain document that must be submitted or collected from ship captains before cargoes can offload from vessels.

The shift is a major leap from the decades-old practice of submitting physical papers to verify cargoes. The process became a major headache during Shanghai’s lockdown, as there were fewer people at the ports for delivering documents, bringing a halt to activity.

The only possible downside to all this is the Chinese and Thais move forward with an Isthmus of Kra canal. This may take some time or may never happen. Either way, Singapore is well aware of how to adjust accordingly.

Meanwhile, Malaysia will remain a secondary player with the main west coast ports Tanjung Pelepas (11.2m TEUs in 2021) and Port Klang (14m TEUs in 2021) together handling less than 63% of Singapore. Both are unlikely to challenge Singapore’s pre-eminent status for now and the foreseeable future.

Reference:

Singapore’s US$14 bil mega-port takes aim at shipping chaos, Ann Koh & Kyunghee Park, Bloomberg, TheEdgeMarkets, 29 June 2022