DPM Tharman Shanmugaratnam at the Opening Ceremony of Singapore Post Regional eCommerce Logistics Hub

Mr Simon Israel, Chairman, Singapore Post,

Distinguished Guests,

Ladies and Gentlemen,

Introduction

It gives me great pleasure to join you today at the opening ceremony of Singapore Post’s Regional eCommerce Logistics Hub. 

The Hub marks a significant milestone in SingPost’s transformation into a leading eCommerce logistics company in Asia. 

SingPost’s Transformation into Leveraging eCommerce

It’s been an impressive journey. The rise of the digital economy had disrupted SingPost’s traditional business in postal services. The company responded by harnessing digitisation itself, to reinvent itself in eCommerce logistics. By last year, SingPost was managing S$5 billion worth of eCommerce merchandise.

This hub will play a critical role. Its intensive deployment of technology ensures fast and accurate processing and sorting of eCommerce parcels. It will enable SingPost to continue being a strong partner to merchants and platforms in the rapidly-growing eCommerce market.

Singapore’s Ambitions for a World-Class Urban Logistics System

SingPost’s transformation is a good example of the journey our wider domestic, or urban, logistics sector will have to undergo. 

1. We have an efficient and competitive external logistics sector, anchored in Changi and the port.
2. However, our domestic logistics sector has great room for productivity improvements. 
   1. I have spoken about this before.  Our last-mile delivery is characterised by multiple truck drivers going to the same mall or location in the city, often with small deliveries.
3. It also impacts the liveability of the city. 
   1. Good vehicles account for about 30% of peak hour road usage;
   2. They also cause a lot of congestion at and around the delivery bay at malls.

We know how things could be done differently – much more efficiently, at lower costs overall, and with less traffic congestion caused by goods vehicles. Cities like Tokyo, London and Zurich are exploring innovative solutions to achieve this.  

We must therefore transform domestic logistics - to raise productivity and job quality, and reduce traffic congestion. It will mean leveraging on technology and new business models in logistics. We will also aim to cap the growth of jobs such as drivers and warehouse workers, while redesigning them into higher skilled jobs. There is no choice. We have many local workers who will retire from the sector in the next 10-15 years, and a shortage of Singaporeans to fill up the same jobs.We also aim to reduce delivery vehicles during peak-hour by 20-30% within a decade.

We will be implementing several strategies to achieve these objectives.  

First, we will accelerate the in-mall consolidation of deliveries. 

In April this year, I announced two pilots for in-mall distribution at Tampines and Bedok Mall.  These pilots involve a single in-mall operator which receives and consolidates deliveries, and enables trucks to turn-around quickly.  The pilots are progressing well.

1. The average parking time for delivery vehicles has fallen from 24 minutes to 7 minutes in these pilot projects. By scheduling off-peak, queuing time has also been reduced significantly.
2. We will now work with several more malls.[1] Their operators have expressed interest in adopting the improvements showed at the pilot.  
   1. We aim to implement in-mall consolidation of distribution in another 12 malls by end 2017, and roll it out on an even wider scale over the next decade. 
   2. We are concurrently exploring regulatory initiatives, and  studying similar overseas experience, to support the move from the current inefficient system of deliveries to malls and other locations in the city.

Second, we will pilot off-site consolidation of deliveries, to amplify the savings from in-mall consolidation of distribution. These solutions seek to consolidate goods headed towards a common destination, optimising loading of trucks to further reduce freight traffic.  

CapitaLand will roll out this off-site solution to serve its malls in the west next year. We will encourage more such solutions in the next two years.

Third, in tandem with the rapid growth of eCommerce market we will roll out a nation-wide locker system by next year. 

1.  I had announced our plans to implement a system of Federated Lockers earlier this year. Since the announcement, many interested parties have made proposals.  In the last few months, IMDA has explored new and innovative ideas from industry, including proposals from local start-ups. We have also studied similar solutions overseas.
2. The success of this lockers project depends on a few key factors.
   1. One of which is the coverage of the locker network in Singapore. We will roll out the network in phases within our HDB estates. Our aim is to have an island-wide coverage.
   2. Next, because this is an evolving space, it is important to maintain healthy degree of competition for the operation of different segments of this network, so that we continue to see innovation and ensure competitive prices for consumers. The Government will therefore be inviting current and interested operators to participate in this island-wide locker network.   
   3. Finally, it is critical to ensure the interoperability of the lockers operated by different market players. This is important to ensure high service levels to consumers as speed and simplicity is key to the successful adoption of such solutions by consumers.

We invite interested parties to stay involved in our consultations. We will finalise our approach by 2H2017 and invite industry partners to collaborate in the island-wide deployment.

The federated locker system will benefit logistics and consumers. But we will also support our retailers, so they can ride the eCommerce wave not just locally but internationally.  SPRING Singapore and IMDA will provide this support under the Retail Industry Transformation Map. 

Over the medium-to-longer term, we will be looking at other new and broader solutions to stream-line and improve domestic logistics efficiency.  

Beyond malls, we will be exploring the feasibility of precinct-wide distribution facilities.  This involves precinct level consolidation of deliveries, to reduce multiple last-mile deliveries and benefit traffic and living spaces within the precinct. Our agencies will spend the next year studying this.

More ambitiously, another longer term solution being explored is to connect the island using an integrated goods-mover system, that enables autonomous vehicles to be deployed. A feasibility study is currently being conducted by JTC.   

High Quality Jobs in Logistics

The result of these various initiatives will also develop new high-quality jobs.The SingPost facility here is also a good example of the kind of job transformation. I would like to highlight just one example. Mr Muhammad Khairul Anwar Bin Joha is a Processing Officer who joined the company 5 years ago. He used to manually process and sort up to 2000 mail items and parcels in a workday. Today, he operates fully automated parcel sorting machines with automation control, fault identification and clearing, sorting up to 10,000 items per hour. To prepare for his new role, Khairul was given the opportunity to upskill himself through a combination of short formal training courses and On-The-Job-Training by internal trainers and technical vendors. Our companies have to do all we can to deploy the most productive technologies in logistics, and improve the quality of jobs and long-term career prospects of Singaporeans in the logistics industries.

I am heartened by SingPost’s efforts to drive transformation in a rapidly evolving industry.  Its focus on operational excellence and innovation will yield rewards as the eCommerce wave transforms business and consumer behaviour in the years to come.

On this note, let me once again offer my heartiest congratulations to SingPost on the opening of this Regional eCommerce Logistics Hub.