Singapore boosts maritime, aviation hub role as cargo flows shift and supply chain risks rise

Singapore is investing further in its infrastructure, processes, and workforce to solidify its position as a trusted regional cargo centre.

With more shippers expected to choose the city as their preferred transshipment and intermodal hub in 2025 and beyond, these investments aim to meet growing demand and strengthen Singapore’s global logistics leadership.

Officials from the Ministry of Transport (MOT) and Economic Development Board (EDB) told The Straits Times (ST) that efforts are being made to speed up the time taken for air-sea intermodal transshipments via Singapore in 2025, and incentivise leading logistics providers to expand their regional business activities and services provided here.

For example, a prototype app is being developed to equip shippers and logistics providers with functions to simplify and increase the efficiency of intermodal logistics in Singapore, an MOT spokesman said on December 20, in response to queries from ST.

The functions include real-time fight or vessel data and status, bookings of fights or sailings, early alerts of delays, and cargo status visibility.

The move is being carried out under an Alliance for Action initiative to improve coordination between sea and air cargo, MOT’s spokesman said.
 

In March, Transport Minister Chee Hong Tat noted that the time taken for an air-sea intermodal transshipment via Singapore may exceed five days due to schedule uncertainties and manual processes carried out by smaller logistics providers.

He said his ministry’s aim is to halve that dwell time, and a “stretched target” to enable goods to depart Singapore on a connecting flight or vessel within 24 hours of arrival has been set.

Work is also under way to expand Singapore’s sea and air cargo handling capabilities through Tuas Port and the Changi Air Cargo Hub, as well as equip the workforce to adapt to advancements in the sector.

EDB vice president Dave Goh noted that the Logistics Job Transformation Map, which will guide companies in training and reskilling their workforce, will be launched in 2025. By then, the sector could add 2 per cent, or S$6.9 billion in annual value, to the economy and introduce 2,000 new jobs, he said.
 

Rising risk of shipping disruptions

These moves are being taken at a time when supply chains are increasingly gravitating towards Southeast Asia due to escalating trade tensions between the United States and China.

The trend is expected to accelerate, as US President-elect Donald Trump has announced plans to raise tariffs on Chinese imports by as much as 60 per cent upon taking office on January 20.

As trade flows shift, “Singapore has the capacity and experience in transshipments to be able to facilitate this trend”, said Mr Peter Tirschwell, vice president at S&P Global Market Intelligence.

Ports here are already handling record volumes of cargo. On December 24, port operator PSA said it handled an all-time record of over 40 million shipping containers, or twenty-foot equivalent units (TEUs), in 2024, up from 38.8 million TEUs in 2023.

But looming risks of disruptions to ocean shipping could add pressure on port capacity in the coming year.
 

Aside from Trump’s expected tariffs, thousands of workers at US East Coast and Gulf Coast ports could go on strike in January if negotiations between longshore workers and their employers on whether automation is used at the ports remain at an impasse.

That could cripple hundreds of billions of dollars’ worth of trade, and bring operations to a standstill at some of the biggest ports in the US.

Meanwhile, shipping lines are still avoiding the Red Sea due to geopolitical unrest in the Middle East, favouring longer voyages with more treacherous conditions around Africa.

“There is no question 2025 will be another year ridden with supply chain risk and disruption,” Mr Tirschwell said.

All this could disrupt shipping schedules and result in irregular, unplanned or cancelled port calls, leading to congestion at some ports and delays in the deliveries of goods from food to machinery.
 

Higher port throughput

Singapore’s ports could see more volumes in 2025 as new shipping alliances take effect, and liners rejig their networks to include port calls here.

Shipping alliances enable liners with similar strategies to pool their vessels and share port facilities along certain trade routes to reduce costs like taxes and bunker fuel, and increase service reliability on those routes.

Under the Gemini Cooperation alliance, which will become effective in February, shipping lines Maersk and Hapag-Lloyd will deploy around 340 vessels with a total capacity of 3.7 million TEUs into a new network that includes Singapore, Maersk Southeast Asia managing director Elaine Low told ST.

She said that the network has been designed with 29 loops offering direct coverage between key origin and destination ports, and added that Maersk has scheduled around 40 vessel calls a week in Singapore.

“Singapore will continue to be an important part of our overall global network, and is also our Asia-Pacific headquarters,” she said.
 

More demand for intermodal services

Ms Low told ST that there is also growing demand from Maersk’s customers for supply chain solutions that offer the ability to vary transportation modes across ocean, air and land. “That trend will continue in 2025.”

On that front, “Maersk is also investing in increasing our presence as an airfreight provider, utilising Changi Airport as our regional hub”, she said.

In 2024, Maersk expanded its warehouse facilities in Changi, and is now building a new regional distribution centre in Jurong West to support its customers in the region.

The 1.1 million square feet facility, which will go live in 2025, is Maersk’s second in Singapore.

These investments are coming on stream amid a rise in demand for airfreight that started in 2024, when more shippers diverted important cargo from ships to aircraft to avoid disruptions caused by the Red Sea unrest.

Changi Airport’s latest data shows that it handled 1.82 million tonnes of airfreight as at November, a 14.5 per cent increase from the same period in 2023, and surpassing the 1.74 million tonnes handled in all of 2023.

About 61.2 million passengers have passed through Changi Airport as at November, up 15.2 per cent year on year. In 2023, the airport handled 58.9 million passenger movements for the full year.
 

According to a December 10 report by the International Air Transport Association, airlines are projected to achieve an all-time high in cargo tonne-kilometres (CTKs), with demand expected to increase by 11.8 per cent year on year in 2024.

CTKs measure the volume of freight transported over a given distance.

Mr Tirschwell said air cargo will grow again in 2025 “if severe disruption is faced on the ocean front”.

While it is typically a last resort to divert from ocean to air given the costs, “companies will make hard choices if forced to in order to maintain revenue and market position”, he said.

A Singapore Airlines (SIA) spokesman told ST that the rise in its cargo volumes in 2024 was due to higher utilisation of freighter aircraft and higher bellyhold capacity from the increase in its passenger fight services.

“SIA remains cautiously optimistic on the outlook for our cargo business for the rest of the financial year ending 31 March 2025,” the spokesman said, adding that it expects demand for airfreight services to remain strong going into 2025.

“We will continue to focus on our key verticals and e-commerce to drive cargo performance, and will continue to monitor key trade lanes and adjust capacity to meet demand.”
 

Changi to focus on e-commerce in 2025

SIA’s focus on e-commerce is no coincidence.

Among the other reasons for the surge in 2024 airfreight is a boom in e-commerce fuelled by mega platforms like China internet company PDD Holdings’ Temu and privately owned Shein.

Mr Lim Ching Kiat, executive vice president of air hub and cargo development at Changi Airport Group (CAG), told ST in an interview that cargo capacity at the airport’s existing facilities will be tight moving forward.

To optimise space at the existing Changi Airfreight Centre (CAC) and Airport Logistics Park Singapore (ALPS), which are running near full capacity, CAG must prioritise the tenant mix and type of cargo it plans to handle until fresh capacity comes on stream from 2030.

Mr Lim said it has already developed an ecosystem to handle pharmaceutical products within the airport, and is now talking to partners like SIA Cargo and SATS to build up a similar supply chain for e-commerce.

“The e-commerce trend keeps evolving. Previously, e-commerce players would ship their goods to Singapore and utilise the warehouse of a third-party logistics manager before the parcels are sent to customers,” he said.

Now, players like Shein and Temu are doing direct shipping, in which parcels are delivered to customers directly.

“We are watching to see how the business model changes and if these players will require specialised warehouse facilities and equipment to track those parcels, and how we can work with them,” said Mr Lim.
 

Singapore well positioned as global supply chain hub

When fully developed from the mid-2030s, Changi Air Cargo Hub will boost the airport’s overall cargo-handling capacity from three million tonnes to 5.4 million tonnes annually.

Changi Air Cargo Hub will comprise the second ALPS announced in October, the upcoming Changi East Industrial Zone, which is part of the Changi East development comprising Terminal 5, as well as the existing ALPS and CAC.

“This will give us significant new capacity to support further expansion of the air express integrators, regional distribution centres and air-forwarding activities within the airport free-trade zones,” said EDB’s Mr Goh.

He noted that manufacturers and cargo owners from various industries, such as Henkel, 3M, Schneider Electric and Asahi, are already orchestrating their regional and global supply chains from Singapore.

Air express integrators, such as DHL Express, FedEx and UPS, are also using Singapore as their secondary air cargo processing hub in Asia, while emerging player SF Express from China recently opened its airside logistics centre at CAC.

Air express integrators are companies that provide end-to-end logistics services for time-sensitive shipments, combining air transportation with integrated ground delivery networks.

On the seaport front, Tuas Port will become the world’s largest fully automated port when fully completed by 2040, with an annual handling capacity of 65 million TEUs.

As at October, 10 of the 66 container berths at Tuas Port are already operating, with one more berth expected to begin operations by the year end.

An upcoming warehousing facility, PSA Supply Chain Hub @ Tuas, will be ready by 2027.
 

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.