Referred to by many as the nation’s chief architect, Mr Lee was “a giant of history” according to US President Barack Obama. His death will add a new poignancy and tragedy to the country’s 50th anniversary, since it became an independent nation in 1965. From such humble beginnings, few could have anticipated the meteoric rise of the city-state into the international economic trading centre it is today.
Not only has the little island grown economically but also literally, adding 200 additional square kilometres of land reclaimed from the sea, as well as a further 100 square kilometres of reclamation planned by 2030.
Even those in the enclaves of London's Baltic Exchange tacitly acknowledge Singapore's dominance; for the younger generation, this isn't even a question. A number of surveys of shipping professionals by UK-based consultancy firm Moore Stephens, in mid-2014 yielded an overwhelming consensus that London was losing out to Singapore as a maritime business hub.
Now, the country is the world’s single most important cargo transhipment centre, with 80% of last year’s nearly-34 million TEU of container cargo exchanged with other ports throughout Asia and beyond. Growth shows no sign of slowing down, with a 5.7% year-to-date increase to 5.34 million from 5.05 million last year.
Sited close to some of the world’s busiest seaways on the key nautical route between the Far East and Europe, it is no surprise that bunkering is also big business for Singapore, with 42.4 million tonnes of fuel supplied last year. This pitches the island state well ahead of Fujairah, Houston and Rotterdam in the bunker ratings.
Recently, the Port of Singapore Authority has been spearheading key initiatives to develop liquid natural gas (LNG) bunkering facilities there. Although bunker prices have fallen sharply in line with recent oil price drops, many believe this is a temporary blip and, in any case, many ship operators are increasingly focused on their emission profiles. Burning more environmentally-friendly fuels makes a big difference.
Major liner firms including Dubai-based UASC and Japan’s MOL are now building so-called “gas-ready” ships – vessels that can easily be converted to burn LNG when the necessary bunkering infrastructure comes available. The PSA intends to be a pioneer in this key bunkering development.
Singapore’s incredible successes in the maritime field have been no accident; the Government is keen to advance the needs of its shipping industry with various initiatives and incentives. This February, Singapore's Government pledged to extend further its Maritime Sector Incentive (MSI), a special component of the state’s budget designed to promote “the growth of Singapore as an international maritime centre” in the words of Deputy PM and Finance Minister Tharman Shanmugaratnam.
MSI measures include an extension of tax exemptions to cover finance leases, hire-purchases and loans used for the construction of vessels, containers and equipment. But these are just the beginning.
The International Marine Purchasing Association is holding a new exhibition in Singapore on May 26th and 27th 2015 for marine purchasing and supply professionals. Register to come along as a visitor by visiting the sign up page at www.impasingapore.com/register
A pressing need for local labour
So quickly have expatriates flocked to the island to take up its many employment opportunities that the cost of living has soared, and increasingly strains Singapore’s ability to compete for the broad-stroke, high-volume work which keeps neighbouring Chinese yards busy.
Therefore, the Government has taken up a number of initiatives in order to provide more living space and more jobs for the country’s 5.5 million people. From the beginning of this year, Government legislation has capped the ratio of foreign to local labour at 4.5:1, and this cap is expected to fall to 4:1 in 2016. Therefore the Government has set up a series of initiatives pouring money into research and development (R&D), education and training in order to maintain its competitive edge.
In 2002, Singapore’s Maritime and Port Authority (MPA) established the Maritime Cluster Fund-Manpower Development Program (MCF-MD) programme to grow Singapore’s maritime cluster by developing a core of maritime expertise. The MCF-MD is comprised of two branches: the Tripartite Maritime Manpower Taskforce for Seafaring, and the Maritime Manpower Taskforce for Shore-based Sectors.
As well as involving training for new generations of maritime workers, the MCF-MD also involves re-tooling Singaporeans who already have sea-going maritime expertise for jobs on land, with a focus on port operations, ship operations, shipbroking, repair and conversion. These co-funded training programmes have benefited 20,000 people as of the end of 2014.
In March, the MPA announced it will inject a further US$46.8m into the MCF-MD. Under the new deal, $6m will be provided over the next five years, with the aim of awarding up to 20 scholarships annually, double the number awarded in previous years.
The move would be vital in forming “a strong core of local talent in the maritime industry, which offers diverse career opportunities for Singaporeans in both seafaring and shore-based jobs,” according to Andrew Tan, chief executive of MPA, speaking at the time of the announcement.
“The enhancement to the MCF-MD programme… allows us to support more skills-based learning, upgrading, and re-skilling for those who want to switch careers,” Tan added. “We will be announcing more initiatives on manpower development by the two taskforces in the coming months.”
Shipyards and ports reclaimed from the sea
First announced in 2013, Singapore’s master plan for the relocation of the city’s entire port infrastructure to a purpose-built facility on reclaimed land to the West of the island in Tuas continues apace.
Developed with inputs from Singapore’s MINT fund, the new consolidated port facility will have twice as much capacity as its predecessor, and will massively improve the emissions footprint of Singapore’s port operations – not least by eliminating the inefficiency and road congestion currently caused by the five terminals of Brani, Keppel, Tanjong Pagar, Pasir Panjang Terminal 1 and Pasir Panjang Terminal 2 exchanging transshipment cargo via trucks.
Overhauling and modernising the country's shipyards has been given top priority by the Singaporean authorities as well, typified by widespread and far-reaching modernisation. These initiatives includes significant investments in infrastructure and automation, and even an entirely new “mega” shipyard – the Sembmarine Integrated Yard at Tuas (SIY), which now covers 73 hectares comprising four working VLCC docks with a total capacity of 1.55m dwt, as well as finger piers and basins for maintenance and repair.
Now, SIY has entered its $560m second phase of development following the opening of Phase I. This new phase, involving the building of three further drydocks, is likely to take up to four years and cover 35 more hectares of reclaimed land. Further, the yard's owners are toying with the idea of adding a Phase III, which would increase the facility’s total area to more than 200 hectares – the largest shiprepair complex in the world.
“When Phase II is completed, we will have seven dry docks in operation including four VLCC docks in Phase 1”, explained Chief Executive Wong Weng Sun, last September. “This will give the yard greater flexibility and enable us to keep work flowing continuously. We remain optimistic about the long-term outlook of the offshore and marine industry.”
R&D gets cash injection
Home to an incredibly diverse land and marine ecosystem, Singapore has recently been increasing its focus on sustainability, and last year, MPA set up a S$150 million Maritime Innovation and Technology (MINT) fund to incentivise research on newer, greener ways of doing business in Singapore’s maritime industry.
The move provides funding for proof-of-concept projects, test-bedding and establishment of commercial viability for new maritime ideas, and has been a key contributor to the modernised design and innovative technologies incorporated in the design of the new consolidated terminal at Tuas.
Recently, MPA signed a Memorandum of Understanding (MOU) with American classification society ABS, to collaborate on research on LNG over the next five years, paving the way for Singapore to become an LNG-bunkering powerhouse in Asia. As well as research on clean fuel, the MOU will cover the development of new, future-proof port systems, which will be vital in the safe navigation, traffic management and the next stage of the island’s maritime development.
At the time of the agreement MPA chief executive Andrew Tan said: “This MOU with ABS will strengthen Maritime Singapore’s R & D capabilities in the areas of green shipping, future port and maritime technologies. It also aims to promote Singapore’s position as a global maritime knowledge hub.”
In February, MPA built on this development with a further MOU, signed by Mr Tan and ClassNK Executive VP Yasushi Nakamura, to collaborate on various R & D projects pertaining to safe, environmentally friendly and sustainable ship operation.
The signing ceremony marked the opening of ClassNK's first research centre outside of Japan, the Global Research and Innovation Centre (GRIC), in Singapore. Projects for GRIC include development of an Exhaust Gas Cleaning System (EGCS), feasibility studies of marine renewable energy testing in Singapore, and a pilot scale demonstration for Zero-Emission Desulphurization process for Maritime applications (ZEDSMart).
Singapore dominates energy conversion projects
Singapore shipyards’ focus on high-end repairs and conversions and their specialist knowledge, particularly in the LNG and offshore spheres, ensures continuing dominance in these niche but rapidly growing sectors.
The island’s repair yards are prized for their expertise in highly-complex repair work including the life extension of LNG tankers and the lengthy conversions of oil tankers and LNG carriers to floating storage, production and regasification units. Singapore’s shipyards have won strong and loyal clients, with some repair yards claiming up to 85% of work as repeat business.
Singapore’s yards are world leaders in the floating energy conversion market, a sector which is growing rapidly. Tomorrow’s energy lies in increasingly hard-to-reach offshore regions where floating systems are the only viable option for harnessing oil and gas. The collapse in oil prices may have taken the urgency out of some oil-oriented projects, but floating gas promises huge potential, particularly in Asia. All of Singapore’s principal yards compete for this business and yards in the Sembcorp Marine grouping and Keppel head the global league.
Last year, Sembcorp Marine subsidiary Jurong chose Singapore’s new SIY yard for a $696m FPSO conversion, commissioned by an Odebrecht Oil & Gas and Teekay Offshore joint venture, OOGTK Libra. Due for completion in Q3 2016, the work includes converting the 130,596 dwt Navian Norvegia, a shuttle tanker, to a 50,000 BOPD, 4m-m3-per-day FPSO.
Meanwhile Keppel has had involvement with over 119 conversion projects since 1981. Although having recently expressed some nervousness in the short-term about the effect of low oil prices and rig oversupply in its end-of-year report, describing it as “a challenging environment,” the company’s orderbook remains firm through to 2019, amounting to S$12.5 billion, with its yards full for this year on 15 rig deliveries, and 80% occupancy predicted for 2016 and 60% for 2017.
In January, head of Keppel Corp Loh Chin Hua reported that the yards hadn’t experienced any cancellations for rig newbuildings or requests for renegotiations of payment, although there were “some requests to push the delivery of two projects to the right” according to Keppel O&M ceo YY Chow, who added “We are looking at that but there has been no agreement as yet.”
Moreover, Keppel is more positive long term, maintaining that “The consumption of energy is projected to grow and is expected to sustain the oil and gas business.”
Much more in store for Singapore
What Singapore has in store for its shipyards and bunkering operations will unavoidably depend on the future of fuel prices. But its powerhouse port is not going away, handling bigger cargoes than ever and positioning to play a key role in LNG adoption. By establishing itself as a hub of global maritime expertise, against the odds, and providing a model of efficiency and cost-effectiveness through innovative operations on land and sea, the little island has secured its maritime future for many years – and even generations - to come.