The golden age of globalisation appears to be giving way to a new era defined by rising geopolitical tensions, technological disruptions and climate risks. These shifts are transforming the trade landscape, marked by trends of decoupling, friend-shoring and the growth of a green economy.

Mr Tan Chong Meng delves into how recent developments are influencing global trade dynamics, discusses strategies to future-proof supply chains and how stakeholders — big or small — can play a role in driving towards a better future.

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

His lecture on 7 May was the last of three lectures as part of the IPS-Nathan Lecture Series on “Exploring Global Trade and Singapore’s Place as a World Connector”.

Geopolitical Tensions

Mr Tan explained that geopolitical tensions are escalating globally, with notable conflicts like the Russia-Ukraine war and the Israel-Hamas conflict, along with economic strains such as the US-China trust issues and nationalist sentiments within countries. These tensions have significantly impacted global trade, as seen with the disruption of shipping routes due to the Israel-Hamas conflict, and complicated technological and cyber warfare concerns.

The Impact of Modern Life

According to the Mauna Loa Observatory in Hawaii, CO2 levels are currently at 425 parts per million by volume (ppm), with annual increases of 2.5 to 3 ppm. 

With this current trend, Mr Tan projected that we would reach the critical 450 ppm threshold within 10 to 15 years, which could lead to a 2 degrees Celsius rise in global temperature, a tipping point according to the Intergovernmental Panel on Climate Change (IPCC). He explained that the sharp rise in CO2 emissions has been driven by modern life’s demands, significantly impacting the climate and leading to extreme weather and health crises.

Production Systems and the Impact on Trade and Supply Chains

Mr Tan highlighted four areas that need change, namely, material usage and circularity, production systems, logistics, and consumer choices. These sectors must adapt to climate impacts, such as higher ports for rising sea levels and altered operational methods while influencing and being influenced by policies like carbon taxes.

Circularity

He introduced the concept of circularity, which is essential for sustainable production and consumption, challenging the prevalent take-make-waste model by promoting reuse and recycling, as illustrated by liquefied petroleum gas (LPG) cylinders and potential future applications like the recycling of mobile phones. For circularity to succeed, industries must be deliberately structured to support recovery and repurposing, potentially driven by commercial incentives and regulatory mandates to ensure products are sustainably managed and reintegrated into the production cycle.

Technological Disruption

The rapid acceleration of technological disruption, exemplified by Generative AI and its ability to create content from simple prompts, has become significantly advanced and accessible. This shift is driven by exponential improvements in supercomputing power, as seen with machines like Japan’s Fugaku and the US’s Frontier, leading to soaring valuations and continued innovation for tech companies. This acceleration shows no signs of slowing down, transforming various industries and applications.

Global Risk Report 2024

Mr Tan referred to the World Economic Forum’s global risk report on how industry players view the rapid changes in the world. It shows that CEOs view misinformation as the greatest risk over the next two years, while climate risk will take precedence over the next 10 years.

He noted that Singapore would need to focus on forming solutions to maintain our global economic and trade position, ensuring trade continues to support emerging economies and technological advancements with an emphasis on resilience, inclusivity, and sustainability.

Diversify, Not Deglobalise

Addressing manufacturers’ dilemma on whether to move out of the globalisation orbit, Mr Tan suggested instead of doing things differently, manufacturers need to diversify their approaches while remaining globally connected, adapting to net-zero goals, and re-engineering processes and supply chains to enhance resilience and sustainability. This entails balancing global and local strategies, leveraging globalisation’s benefits while fostering inclusive growth, upskilling workforces and promoting environmentally sustainable practices.

Decarbonise Supply Chains

Mr Tan moved on to explain that decarbonising supply chains and focusing on sea freight will be essential. As shipping is predominantly an international industry with global codes of practice, he said it is appropriate for us to understand what is being done on the global stage, and how Singapore complements it. 

At a global level, the International Maritime Organization (IMO) has adopted the increased targets for GHG emission reduction for international shipping, aiming for net-zero emissions by 2050, with interim goals by 2030 and 2040. This signals a global commitment to accelerate change in the industry, and the challenge lies in translating these goals into actionable initiatives.

Forging Global Partnerships — Green and Digital Shipping Corridors

To achieve the net-zero goals, a significant multilateral collaboration effort relates to green and digital shipping corridors (GDSCs). It aims to promote the uptake of green fuels and solutions, exemplified by Singapore’s initiative in establishing five GDSCs globally, with collaborative efforts involving government agencies, industry players and institutions such as the Silk Alliance, focusing on consolidating new fuel demand and infrastructure development, particularly in the Asia-Pacific region.

Greening Port Operations

Order books for new ships are increasingly turning green, with 50 per cent of new vessels ordered capable of running on alternative fuels, reflecting a dramatic transition in the shipping industry. Meanwhile, initiatives like trialling methanol and ammonia as marine fuels in Singapore demonstrate efforts towards fuel diversification, alongside greening port operations through just-in-time planning and coordination platforms, reducing CO2 emissions per voyage by about 7 per cent.

Development of Electric — Harbour Craft

To transition to a lower emissions future for harbour crafts in Singapore, the focus is on designing and developing best-in-class electric harbour craft. This is alongside building necessary infrastructure and facilitating financing, and new harbour craft operating in the port required to be electric or compatible with net-zero fuels by 2030. All this will be supported by growing momentum in green financing initiatives such as MPA’s trial for the first charging point and collaboration with financial institutions to explore debt financing and alternative financing options.

A Re-Trained Workforce

Mr Tan said we would also need a re-trained workforce, ensuring that the current workforce is equipped to handle the changes within the industry.

He described the Tripartite Advisory Panel formed in 2023 to address workforce needs in the transition to cleaner marine fuels. The panel recommended the establishment of a decentralised Maritime Energy Training Facility to retrain 10,000 maritime personnel by the 2030s, emphasising collaboration with 22 partners across various sectors to integrate academic possibilities into workforce training. This also reflects Singapore’s unique tripartite foundation ensuring joint commitment between employers, the workforce and the government.

Where is Singapore Today?

As a country, Singapore finds itself amidst numerous ongoing initiatives in the realm of transitioning to cleaner marine fuels and greening its maritime industry, with many of these initiatives interconnected and codependent for successful transformation. Despite uncertainties, Mr Tan noted that a report published by The Straits Times in April 2024 indicated that Singapore was well-placed and on the right track in this journey.

Where the PSA Group is

Looking towards the private sector, Mr Tan said PSA Group is actively driving sustainability efforts across its global portfolio, with emissions decreasing despite increased business activity. Through electrification and renewable energy procurement, it aims to reduce emissions within its premises and throughout its supply chain, collaborating with suppliers and customers to mitigate carbon footprints. 

He added that PSA recognises the varying CO2 emissions of different transport modes and invests in intermodal facilities and network optimisation to offer optimal outcomes for beneficial cargo owners. Examples include multimodal transport corridors like the Stuttgart Express and the International Land Sea Transport Corridor, highlighting PSA’s commitment to decarbonisation across its operations and supply chain.

Food — What We Eat Matters

Consumer influence, particularly in food choices, significantly impacts carbon footprints. 

Several companies have stepped up and are now offering information regarding the carbon footprint of food, allowing consumers to make better choices.

Transport mode also affects carbon emissions, as seen in the difference between air-flown chilled meat and frozen meat. Food waste contributes to about 30 per cent of carbon emissions in the food industry, highlighting the importance of minimising waste to reduce the overall carbon footprint.

Convergence of Stakeholders in Sustainability

Mr Tan said everyone can play a role in ensuring sustainability in our supply chains, from governments playing a central role in coordinating efforts, manufacturers rethinking their practices, and consumers having a voice in their preferences. 

Ultimately, knowledge serves as the common tool for informed decision-making, emphasising the importance of science-based approaches.

Design Digital Commons to Unlock Data

The challenge of digitalising supply chains that involve with complex data requirements necessitates the establishment of a digital commons. Mr Tan gave the example of SGTraDex, which facilitates data exchange and collaboration across the industry.

Overcoming data ownership and interoperability challenges requires collective action and market-based incentives. SGTraDex, a public-private initiative, aims to optimise industry resources, enhance operational efficiency, and address real-world use cases in the maritime and logistics sectors.

Conclusion

Mr Tan concludes by explaining that while Singapore is at the forefront of ambitious plans to address emissions and drive innovation, it’s crucial to connect beyond its borders to navigate global trade dynamics. The lecture series has highlighted the evolving response to various drivers of change, from industrialisation to modern technologies, yet emissions remain a pressing challenge. Collaborative efforts across government, private sectors, and digital solutions are essential to tackle this future and turn daunting threats into opportunities for innovation.

Question-and-Answer

The Question-and-Answer segment was moderated by Mr Kerry Mok, President and Chief Executive Officer of SATS, who asked Mr Tan about the rewiring of supply chains, explaining that as the supply chain evolves, nearshoring will become prevalent. Mr Mok asked how Singapore can ensure that it remains at the centre of world trade, and how it can influence some of these flows. 

Mr Tan emphasised the need for continual innovation as well as the need to create a vibrant ecosystem. Key themes would include the imperative for sustainability initiatives across industries, with a shift towards sustainable fuel sources and the acknowledgement of potential additional costs for consumers. Also key are Singapore’s strategic location and efforts to maintain its position in global supply chains through collaboration, and its infrastructure development and digital innovation. 

Mr Tan recognised the need for proactive collaboration to address challenges like climate change and technology disruptions, with a focus on harnessing technology while mitigating risks. Additionally, concerns about potential supply chain disruptions beyond COVID-19 —such as those relating to climate events — underscore the importance of proactive measures to ensure resilience. 

Overall, the discourse underscored the necessity for collaborative, innovative approaches to sustainability and supply chain management to uphold Singapore’s prominence as a global trade hub.

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

Click here to watch the video of lecture III.