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The Impact of E-Commerce on the Maritime Industry

A key strategy charted out in the International Maritime Centre (IMC) 2030 Strategic Review, which outlines the vision and strategy for Singapore to be the global maritime hub for connectivity, innovation and talent – is the strengthening of inter-linkages and network effects. This strategy aims to create greater convergence of businesses, people and ideas in Maritime Singapore in order to set us apart from other maritime centres. An approach highlighted in the review encouraged maritime players in Singapore to build connections with adjacent trade-related sectors such as commodity trading, logistics and e-commerce. In this article, we focus on the significant impact e-commerce has had on the maritime industry.

E-commerce – creating a ripple effect in the maritime industry

E-commerce has transformed the way shipping companies think about their business. Greater consumer spending on e-commerce platforms have led to an increase in the demand for B2C and C2C shipments and provided a boost to the shipping business.

However, the inclusion of the individual consumer and their rising expectations have also placed pressure on both shipping and e-commerce companies to streamline their processes. Customers expect goods to be delivered quickly, to know when their goods are going to arrive, and to track the delivery of their package in real-time. In addition, customers want cheap delivery options. A study by McKinsey & Company found that 86% of online shoppers said that expensive shipping costs was the main reason they stopped short of checking out their purchases on e-commerce websites.

In the competition for customers, some e-commerce businesses have also begun to think of innovative ways to improve operations and increase efficiency. For example, web-giant Amazon has an expanding network of warehouses, which places inventories nearer to customers and have also started testing out their own delivery service, on air, sea and the ground. These efforts help to speed up deliveries and get the products to customers faster, improving customer satisfaction with Amazon’s services. With companies like Amazon reducing their reliance on external parties like shipping companies, the maritime industry needs to keep a look out for opportunities to remain relevant in this age of disruption.

Meeting the challenges of an ever-changing economy

The IMC 2030 Strategic Review encouraged players in the maritime industry to have greater collaborations with related industries like e-commerce, co-innovating in common interests. For example, shipping companies are signing up on Alibaba’s OneTouch platform – which give merchants or suppliers the opportunity to book spots directly on a container ship online. This bypasses the need to go through freight forwarders, benefiting both SMEs who are able to ship their goods with ease, as well as shipping companies who gain access to a new pool of clientele.

How e-commerce works hand in hand with the maritime industry

Back home, with a robust sea transport network in place, local e-commerce companies such as RedMart, Singapore’s leading home-grown online supermarket, still rely heavily on sea-freight to transport goods from other countries to Singapore. RedMart ships its products to Singapore at least twice a week, with about 90% of import traffic coming by sea-freight. Goods like alcohol and produce are shipped from ten different countries such as the United States of America, United Kingdom, New Zealand, Japan, France and Australia in order to offer customers competitive prices and a selection of over 130,000 products that range from fresh fruits and vegetables, frozen and chilled meats and premium speciality products.

Gildas Chambrelan, Import & Private Label Director at RedMart, shares that “RedMart uses sea-freight as a strategic tool to gain access to goods from international markets in an efficient way, especially for non-perishables with low unit value. This allows RedMart to provide our customers with a wider choice of everyday products at competitive prices.”

To meet increasing demand for shipments, the new Tuas Mega Port, scheduled to be completed by 2040, aims to increase the port’s capacity to 65 million TEUs (twenty equivalent units) of cargo, which is more than double the current port handling capacity. The new port will also provide additional capacity to meet the needs of major alliances including 2M, Ocean Alliance and THE Alliance, and to also anchor key shipping players in Singapore. For instance, there will be enough space to serve big vessels at the new port that can hold 24,000 standard containers or more. In addition, port operations will be even more efficient with the Maritime and Port Authority of Singapore (MPA) extending funding support to technology start-ups, such as XjeraLabs. The start-up has been working closely with Jurong Port to develop a proof-of-concept for the use of video analytics to track container vehicles moving in and out of the port. Such initiatives will speed up port operations, which will have a positive impact on e-commerce businesses by further enhancing the transportation network and facilitating in the flow of goods.

Looking Ahead

The rise of e-commerce has presented the maritime industry with opportunities in a new sector to meet the growing demands of the supply chain. While it is true that big e-commerce players like Amazon may be bypassing shipping companies and disrupting supply chain processes, many small e-commerce businesses like RedMart still rely on the shipping industry as a trustworthy partner in their business operations. Ultimately, the maritime industry must remain on its toes in this age of rapid disruption and find new innovative ways to remain relevant to e-commerce businesses.

For those who are keen to take up new challenges, explore new horizons and be part of a vibrant, dynamic and growing sector, explore the Maritime Singapore Connect website and find out more.

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The Maritime Singapore Connect (MSC) Office is a national initiative, supported by the Maritime and Port Authority of Singapore, to profile the maritime industry and connect students and jobseekers with the multiple pathways into the industry.

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