What is the future of Singapore's Shipping and Offshore sectors?

With the annual Singapore Maritime Week now a distant memory, it is worth reflecting on the health of the local Maritime sector. Agreed, 2016 hasn’t got off to a great start with Keppel announcing 2800 redundancies, a fire at a local oil storage facility, estimates of 40% of the bulk sector going under and, significantly for the local industry, Sete Brazil going bankrupt. All this on top of the 2015 sale of national shipping icon NOL/APL.

On the surface there wasn't much to celebrate, and certainly there was very little 'good' news. Many people are, indeed, asking themselves what is the future of Singapore's Maritime sector? While the future might not be quite what we thought, in many ways the Singapore maritime sector is in a far better position to advance and adapt than it is, generally, being given credit for.

A bit of context, please.
It is very easy to predict the end of the world. Given a stage and a microphone, there are and will continue to be plenty of headlines predicting the demise of Singapore shipping and offshore (SO). It should be noted, however, that very few experts proclaiming doom also publicly predicted the market crash when the times were good (or better). The future is, needless to say, quite hard to see.

The global SO sector is in crisis and things are very bad – perhaps as bad as anything we have seen in the last 25 years. Hundreds of thousands of jobs have been lost; losses are mounting even for the biggest players; projects are being postponed or cancelled; and consolidations, defaults, and company closures are now commonplace.

But it should be remembered that this is a global phenomenon. Singapore, as an important part of the global SO family, is feeling its share of the pain...but compared to Norway, Brazil, the North Sea, the US shale gas and CBM producers, the Chinese shipyards and steel industry? Things could be far worse for our tiny nation. We do not have to look far to see how badly oil-focused economies can be impacted by the fall in prices.

Things are bad, but relatively, I think Singapore is actually holding up pretty well. This, perhaps, provides us with some indication as to the future of our SO sector.

Is the future the same as the past?
Anyone who expects the future to look the same as the past is perhaps living in a fool's paradise. Singapore does not have oil reserves to drill for, nor does it have a population to be anything other than a through port. It may very well be the case that Singapore cannot sustain some aspects of its current shipping sector, not because of our quality or work ethic – but because the global markets can do it cheaper, to a sufficient standard, elsewhere.

Singapore SO needs to, and will, evolve to maintain our place in the market. Other local sectors have learnt this lesson as Singapore has moved its economic model away from low-value manufacturing to high-value services and operations. For our future in SO it is very fortunate that this process of evolution is already underway.

You only have to look at the how the local SO sector has developed banking, tech (electronic charting and navigation), R&D, vessel flagging, insurance, legal, and dispute resolution capabilities to understand where the future of the local SO industry lies. As the government looks to map out the future of key Singapore-based industries, there is a great opportunity to look at what is going to work best for Singapore SO in 20 years' time.

Will we be able to build mass-produced bulkers as cheaply as the Chinese? Unlikely. Is this what we want to do? In my opinion – no, and we don't have to. Can we be the commercial and corporate centre of SO finance, chartering, R&D, and insurance? Yes. Can we be the ones to finance and develop the high-end systems that go into unmanned commercial vessels? Yes.

What will determine Singapore's ability to maintain its position as a maritime hub will come down to attracting the most innovative SO companies in the world to centre their businesses here; to provide a highly educated and motivated workforce; and to be known as a business-friendly and well-regulated SO centre.

And we can do this, because we already have, and we will continue to build on this.

For me, the most important Maritime Week quote came not from the conference or a keynote speech, but from a private conversation. It, perhaps, sums up the bright future of Singapore's offshore and shipping sectors: "You don't have to own a shipping company to be a shipping country."