Singapore Faces Fierce Competition from Emerging Ports in SE Asia

In the past few decades, the booming development of the marine industry has generated demand for ports to meet growing economic needs. More countries are committed to improving port infrastructure. Due to its speedy export procedures and a competitive edge over its neighboring countries with ports which have limited capacities to accommodate large vessels, Singapore has long been a key terminal for global imports and exports.

Singapores free port policy has greatly facilitated the circulation of goods, while reducing trade costs and promoting the development of international container shipping business. These have significantly helped Singapore enhance its international competitiveness.

Statistics showed that Singapores trade volume in 2012 totaled S$94.8 billion (US$820 billion), up by 1.1% from 2011. For the first time, container throughput in Singapore's ports exceeded 30 million TEUs and reached 31.6 million TEUs, a 5.7% increase from 2011 and a record high.

But now, the power landscape of Southeast Asian cargo ports is eventually changing. Singapore which once dominated the throne of central port has seen sluggish growth in its container throughput, while Indonesia and Malaysia are catching up through boosting investment in port construction.

This situation can be largely attributed to a scattering trend of production bases in the manufacturing industry, and Southeast Asia is now witnessing a fierce competition similar to that between Hong Kong and mainland Chinas ports after 2000.

For instance, the port of Tanjung Pelepas in Johor, southern Malaysia began operations in 2000. By 2016, its container throughput ranked 19th in the world. Within less than an hours drive from the business-dense Singapore, the port has a much cheaper shipping costs comparing with its neighbor.

Clearly enough, Singapore is losing its dominating position among its peers. Although its container throughput in 2016 ranked no.2 in the world, second only to Shanghai, a five-years growth rate of 8.6% compared with in 2010 is far lower than the global increase of 27.6%.

In addition, trade in Southeast Asia increased over 10% during this period. Indonesia's container throughput increased by 53.7%, while both Vietnam the Philippines saw over 40%‘s increase in their container throughput. On the other hand, Singapore’s market share in Southeast Asia had fallen from 40% in 2010 to 34%.

There are two reasons for this trend. First of all, manufacturing sectors now have more choices in establishing their bases, and secondly, other countries are stepping up their efforts in port construction, aspiring to build ports that can import and export without relying on Singapore and attract manufacturers with low logistics costs.

Indonesian President Zoko had pledged to build 24 ports to revive its status as a maritime nation, and at the core of the scheme is a new port in the Ba Dinban, 100 kilometers away from the Indonesian capital Jakarta, with industrial parks hosting companies such as Toyota in the vicinity. The port will cost 3 billion US dollars of investment, and part of it will start operation as early as in 2020.

Vietnam who has introduced large factories such as Samsung Electronics into the country also plans to build new ports. Under the government's leadership, Vietnam spent 120 billion yen to build a port on its northern coastline. The port, deeper than all other existing ports nearby, provides conditions for large ships to lay anchor inside.

Thailand is planning to expand the port of Chonburi in the east as well and sets to increase the port‘s throughput by 2.3 times by 2022. In the coming decade, it’s estimated that the total throughput of new ports in other countries outside Singapore will be roughly equivalence to Singapores current level.

Will Southeast Asia, currently in a rapid pace of industrialization, follow a development process similar to Chinas？ One thing for sure, Singapore will not sit back and do nothing, as it has begun to build a new port near the Western Industrial Park. If the new port is put into use before 2025, Singapore's throughput will increase to 1.5 times, so the competition among cargo ports in Southeast Asia will become more intense in the future.