Governance of a City-State
14th IPS-Nathan Lecture Series: Lecture II “Mega Maritime Movements: Adjustments in Orbit” by Mr Tan Chong Meng

Singapore has emerged consistently as a top International Maritime Centre, according to the Xinhua-Baltic International Shipping Centre Development (ISCD) Index, despite huge industry shifts since the advent of the Global Financial Crisis (GFC).

As the shipping industry continues to evolve, Mr Tan Chong Meng used the metaphor of a spacecraft landing in a particular orbit and needing to adjust, to describe how countries need to adapt and change to maintain their state of economic growth.

Mr Tan, who is former Group Chief Executive Officer of PSA International (PSA), is the Institute of Policy Studies’ (IPS) 14th S R Nathan Fellow.

His lecture on 12th April was the second of three lectures as part of the IPS-Nathan Lecture Series on “Exploring Global Trade and Singapore’s Place as a World Connector”.

Is the Golden Age of Globalisation Over?

Mr Tan examined the trajectory of global trade as a percentage of GDP from 1970 to 2021, noting a significant increase followed by a kink downwards during the GFC and a slowdown after the GFC. He questioned whether the “golden era” of globalisation was truly over, attributing paradigm shifts in global trade dynamics to various economic and geopolitical factors.

Mr Tan noted there were perhaps other signals that suggested something deeper was afoot. He presented contrasting images from St. Peter’s Square in 2005 and 2013, with the latter showing a crowd full of smartphones. A chart comparing top 10 publicly listed companies in 2008 and 2018, also indicated a move from resource-based companies to technology-focused ones, reflecting broader changes in global economic drivers.

The Drivers of the World Have Changed

Mr Tan discussed the paradigm shift following the GFC, highlighting the emergence of Industrial Revolution 4.0 (IR 4.0) around 2016. Despite initial scepticism, the transformative power of technology became evident, leading to increased automation, smart manufacturing and data-driven efficiency across various sectors.

This resulted in a shift in GDP compositions from manufacturing to services in many countries post-GFC, causing an impact on maritime trade intensity and supply chain strategies, said Mr Tan. He explained that before the GFC, trade growth outpaced GDP growth significantly. Post-GFC, both absolute trade growth and its relationship to GDP growth normalised.

An Inside Look into the Shipping Industry

During the GFC, Mr Tan shared that the shipping industry faced plunging freight rates, job cuts and idle ships. Known for its resilience, the industry rebounded after the GFC by investing in larger ships, with capacity of larger ships growing from 11,000 TEU in 2006 to 16,000 TEU in 2012. However, this triggered an “arms race” among companies to order larger vessels, resulting in overcapacity.

Following profit declines, the shipping industry underwent unprecedented restructuring with major consolidations and acquisitions, dubbed “six weddings and a funeral”. Hanjin Shipping declared bankrupt, while shipping lines formed alliances to consolidate market power and improve asset utilisation. This led to three alliances controlling 81 per cent of global container shipping capacity.

This was the shipping industry’s “St. Peter’s Square moment”, said Mr Tan. Due to the alliances between companies, the larger ships were taking on containers of other companies, resulting in a huge increase in the complexity of port operations and challenging the efficiency of a shipping network. Container retrieval became even more challenging, akin to finding a needle in a larger, multi-coloured haystack.

Singapore had to Respond Quickly

To accommodate larger ships, PSA and the Maritime and Port Authority of Singapore (MPA) expanded the Pasir Panjang terminal, increasing crane numbers, depth and overall efficiency. Comparing the Tanjong Pagar terminal in 2004 to Pasir Panjang terminal in 2018 shows significant upgrades, including the ability to manage mega ships. This expansion more than doubled Singapore’s berths that are capable of handling large vessels within four to five years, despite the substantial costs.

To adapt to the changing landscape, Singapore’s port shifted its business model from transactional to partnership-based, forming joint ventures with major shipping lines. This strategic shift allowed closer collaboration with global alliances, optimising the port’s role in its logistics networks. Internally, PSA transitioned from “node to network”, recognising the need for broader connectivity.

This is No Ordinary Disruption

Mr Tan emphasised the rapid and transformative changes occurring in the shipping industry and global economy. He highlighted the need for immediate defensive strategies to maintain business while also emphasising the importance of long-term planning to adapt to the evolving landscape. Referencing the No Ordinary Disruption book by McKinsey Global Institute, Mr Tan underscored the significant global forces driving change and the necessity to reassess traditional business assumptions and models.

IR 4.0

Mr Tan highlighted several examples of the impact of IR 4.0 on the economy, namely, the Adidas Speed Factory, which displayed innovative 3D printing technology for shoe manufacturing. He also touched on the rise of e-commerce and the increasing levels of industry cross-integration, where players from different industries collaborate to create new alliances and offerings.

This huge disruption led to PSA questioning their business models, and the need to evolve beyond traditional stevedoring activities and engage more deeply with the rest of the supply chain to remain relevant.

Mr Tan stressed the need for ports to evolve beyond traditional activities to remain relevant, calling for both whole-of-system and market operator approaches to technological disruptions.

Singapore as a Leading International Maritime Centre

At the national level, Mr Tan discussed Singapore’s position as a leading International Maritime Centre (IMC), highlighting its top rankings in global reports like the Xinhua-Baltic and Menon DNV. Besides being a hub port facilitating goods, Singapore had to be a hub for offering an ecosystem of complementary services with banks and law firms with shipping portfolios. This is in contrast with other key ports like Rotterdam and Shanghai, which served as big ports for their hinterlands in Europe and China respectively. Singapore’s strategic approach involves three foundational strategies: Tuas Port, IMC 2030 strategy, and Sea Transport Industry Transformation Map.

Mr Tan explained that “to keep the IMC story going, innovation must continue”. Singapore’s commitment to innovation is evidenced by the dedicated support of marinetech startups by MPA.

With an ageing workforce, there is a focus on upskilling to ensure a competent future workforce. The green transition is another priority, with MPA driving the adoption of eco-friendly fuels to green global supply chains.

From Ports to Supply Chain Orchestrator

With the advent of the 2020 disruptions due to the pandemic, Mr Tan highlighted the vulnerabilities exposed in global supply chains. He stressed that while strategy is essential, effective execution and a progressive organisational culture are crucial for success.

He highlighted PSA’s journey of transformation from being just a port operator to a supply chain orchestrator in response to disruptive forces. They shifted focus from containers to understanding the cargo within, adapting to the evolving landscape of IR 4.0 and embracing technologies across the supply chain.

By recognising trade as three-dimensional — physical, financial and regulatory — they acquired capabilities in extended supply chains, digital solutions, and logistics services. Their portfolio now offers comprehensive supply chain solutions, backed by digital engines, enhancing their capability to manage complex cargo logistics.

Panama vis-à-vis Singapore

Mr Tan ended his lecture with a story of Panama and Singapore. He highlighted the similarities between the two countries as being small, equatorial countries with strategic maritime significance, connecting two major oceans. While Panama boasts engineering marvels like the Panama Canal, Singapore focuses on innovation and adaptability to maintain its edge in the maritime sector. Their different strengths shape their unique approaches to maritime business. Both nations recognise the need for continuous innovation to stay competitive, embracing their respective strengths to navigate the evolving landscape of global trade.


In the question-and-answer segment moderated by Mr Marcus Lam, Executive Chairman at PwC Singapore, Mr Lam asked Mr Tan about how PSA’s workforce was able to handle the transformation and adapt to economic shifts. The latter highlighted PSA’s focus on integrating new ideas, diversity and expanding its business scope while maintaining a strong corporate culture. Mr Tan also discussed the importance of future-proofing Tuas port, emphasising operational efficiency and data utilisation.

Various questions were raised on topics like sustainability, the impact of geopolitical shifts on shipping, forecasting accuracy, and the role of technology in transforming PSA’s business model. Mr Tan elaborated on PSA’s approach to these challenges, emphasising the role of technology and collaboration. He highlighted examples including data utilisation for resilience planning and adapting to the changing landscape of global commerce.

Lastly, questions on competition with neighbouring ports and price competitiveness were addressed. Mr Tan discussed PSA’s strategy for leveraging digital trade opportunities and the challenges of maintaining competitiveness amidst changing market dynamics.


This event summary was partially generated with the use of AI.

Click here to watch the video of lecture II.

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