How Does Globalisation Affect Freight Transport in Singapore

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1. INTRODUCTION

There is little doubt that an effective transportation system is the backbone of a sound economic society (Bloomberg, Hanna and Murray, 1998). Comtois (2007) also recognizes that transportation plays a considerable role in the economy with its omnipresence throughout the production chain, at all geographic scales. Singapore Review (2007) stated that Singapore is heavily dependent on exports; therefore freight transportation holds an important role in stimulating the economy of Singapore and making it what it is today. Singapore is located at a favorable geographical position, making it the number one hub for the transshipment of freight to and from all over the world. Singapore also boosts world-class seaport and airport facilities and an extensive network of expressways, allowing efficient and effective transfer of cargo between multiple modes of transport. This paper will discuss the economic role of freight transportation in Singapore’s economy and how Singapore’s advancement into the global economy affects the demand for freight transportation locally.

2. THE ECONOMIC ROLE OF FREIGHT TRANSPORT IN SINGAPORE

World Trade Magazine (December 2007, p. 14) states that countries with good shipping logistics tend to attract export oriented foreign direct investment- seen, along with trade, as a way to access knowledge and technology. In a Web-based survey conducted by a World Bank study in year 2007 with some 900 freight forwarders and express carriers in international logistics businesses in 100 countries, Singapore came out tops out of 150 countries in terms of speed in the clearance export shipments, the competency of custom brokers and corruption-free logistics environment, etc. From here one could see that the efficiency of freight transportation in Singapore also plays an important part in attracting foreign organizations to establish bases of operations here for the distribution of goods and services regionally as well as internationally. One such organization is Broadcom, a company that specializes in producing electronic products. Broadcom’s managing director, Rick Hodgman, made the following comment in World Trade Magazine in 2005, "We use Singapore as our shipping hub. The airport, customs, and logistics aspect is very important to us because the material we manufacture throughout Asia comes through Singapore. Broadcom needs a very good logistics base and Singapore has the best of any countries in Asia." Another major corporation that chose Singapore to set up one of its regional offices was Toyota Motor Asia Pacific Pte. Ltd. Its Vice President of Corporate Affairs Division, Mr Kenichi Yamaguchi, who also had praises for Singapore’s good business and transportation infrastructure, made the follow statement in Singapore Investments News (2002), “What we find most attractive is the ease of setting up a regional telecommunication network with our affiliates. For instance, setting up our internal ISDN network is easy and effective. The presence of many other regional offices here helps. For instance, we could negotiate some regional contracts with shipping lines or third-party logistics warehousing without having to search extensively in the region. Singapore as a major sea and air transportation and transshipment hub has been a positive factor in our trading operations.”

The growth of the transport and storage industry in Singapore is quite apparent as it experienced an increase of 11.3% in terms of GDP in the year 2007 from the year 2006. The Singapore Government’s recognition in the importance of transport is also reflected in the 23.9% of total government development expenditure spent on transport development in year 2007. This point is further emphasized by Singapore’s Prime Minister, Mr Lee Hsien Loong, who made the following statement in his speech at the opening ceremony of the 13th Asean Transport Ministers’ Meeting, held in Singapore on November 2007, “Transportation is vital to any...
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