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Smart Nation, AEC to give logistics industry a boost: Analysts

Industry watchers say a lot of opportunities are emerging for the logistics industry with the setting up of the ASEAN Economic Community and the Trans-Pacific Partnership.  

SINGAPORE: The logistics industry is set to expand at a faster pace, with the setting up of the ASEAN Economic Community (AEC) and Singapore's push towards a Smart Nation, according to industry watchers. They added that the country's geographical position makes it a key gateway into Southeast Asia.  

For example, Singapore’s leading homegrown e-commerce logistics company SingPost is using technology and analytics to revolutionise parcel delivery in the domestic market. With the “Pick Own Parcel Stations" (POPStations), customers can collect their parcels at their own time.

SingPost said its POPStations fit in well with the push towards a Smart Nation.

Said Dr Sascha Hower, group chief operating officer at SingPost and CEO of Quantium Solutions: "In a Smart Nation, consumers expect convenience and flexibility to catch up for their busy lifestyles. So to give one example, you don't want to sit at home and wait for your e-commerce package to arrive. POPStations or 'smart lockers' fit well into the Smart Nation. You can basically choose any of the 140 locations we have by now ... to pick up the item you ordered.”

The e-commerce segment in the Asia Pacific is burgeoning, with business-to-consumer e-commerce sales in 2014 estimated to be worth more than US$500 billion (S$690 billion).

EMERGENCE OF THE ASEAN ECONOMIC COMMUNITY

Other than gearing up to serve consumers in a new landscape, logistics firms are also seeing new opportunities among businesses. The emergence of a single AEC is set to increase the free flow of goods and services between member nations and also ties among organisations and people.

Mr Kevin O’Hearn, vice president of FedEx South Pacific, said: "Logistics plays a big part in the overall trade story, so Singapore and ASEAN benefit tremendously from cross-border trade. And in fact, we expect the economy to grow by 5.5 per cent over the next 10 years.

"And with the ASEAN Economic Community coming up online this year, as well as the Trans-Pacific Partnership surely after, we see great opportunities to grow and for companies participating in smart logistics to grow with fewer custom clearance challenges."

SMES TO BENEFIT FROM TPP

Meanwhile, trade agreements such as the Trans-Pacific Partnership (TPP) would also mean more opportunities for small and medium enterprises (SMEs) to grow and expand their base.

As the backbone of the Singapore economy, SMEs depend on cost-effective methods to export bulk orders internationally at lower costs. Logistics companies are also stepping in for a piece of the growing trade.

“It's certainly challenging for SMEs to get their business off the ground,” said Mr O’Hearn. “And FedEx, with its global network, provides SMEs with the reach to new markets. I think we have the expertise in dealing with customer clearance and we can be a helpful partner in cutting through some of the red tape for some of these new businesses."

“Additionally, last year, we launched the small business grant, targeted at companies of up to 200 employees that have been in business a few months, to provide additional seed capital to get them up and running,” he added.

Singaporean start-up RedWhite Apparel - which was founded two years ago - designs and manufactures bib shorts for long-distance cycling. It said it has benefited from a FedEx grant of S$25,000, which helps the company access a global network of dealers and distributors.

Mr Yuva Viswanathan, co-founder and director of RedWhite Apparel, noted: "When the grant came in, it helped us do one thing really well, that is expand our stock base three-fold. So we went from being able to fulfil half of the orders and losing that business, to being able to take two distributors on board right off the bat, fulfil their orders, make them happy and process future orders that will really help us grow.

“Because if we can get our product out there very quickly, we're exposed to more customers and that increases brand awareness in a very short period of time. So it really helps us grow from 2016 to 2017 and beyond.”

Despite sluggishness in the key manufacturing sector, SingPost and FedEx said they are unfazed about a potential lack of exports. They said the rising middle class in the region means more online sales, and the AEC will bring about more regional connectivity, which supply chain and logistics providers will tap into.