Speech by Mrs Josephine Teo, Minister of State, Ministry of Finance and Minstry of Transport, at the e-freight@Singapore Solutions Launch

25 June 2013 - Speech by Mrs Josephine Teo, Minister of State, Ministry of Finance and Minstry of Transport, at the e-freight@Singapore Solutions Launch, 25 June 2013, 9:30am at HDB HUB Convention Centre Auditorium

Speech by Mrs Josephine Teo, Minister of State, Ministry of Finance and Minstry of Transport, at the e-freight@Singapore Solutions Launch, 25 June 2013, 9:30am at HDB HUB Convention Centre Auditorium.

Mr Yap Ong Heng
Director-General, Civil Aviation Authority of Singapore (CAAS)

Mr Steve Leonard
Deputy Chairman, Infocomm Development Authority of Singapore (IDA)

Distinguished Guests

Ladies and Gentlemen

1. Good morning. Thank you for inviting me to join you this morning for the launch of e-freight@Singapore solutions.

2. The last few years have not been easy for the air cargo business. Demand for air cargo transport has been shrinking. In January this year, the International Air Transport Association (IATA) reported a 1.5% fall in demand in 2012 compared to 2011, the second consecutive year of decline1. In the same report, IATA noted that the slowdown in the air cargo industry has been largely attributed to the fall in the growth of world trade volumes, as well as a modal shift towards sea freight as shippers sought to reduce costs. Longer term trends in global manufacturing may mean continued lacklustre performance.

3. As volumes are down while capacity remains unchanged¹, freight margins have been squeezed. Higher fuel costs will also continue to exert pressure on air transport costs, demand and margins. In such an environment, it makes sense for businesses to seek out opportunities for greater efficiency.

4. One area that offers much scope for improvement is data entry and paperwork in the air cargo supply chain. On average, air cargo companies and related companies submit about 30 documents to complete one freight shipment. As much as 40% of the data is replicated across this catalogue of documents, from the invoice to the House Airway Bill (HAWB). These paper-based processes can therefore be made more efficient, productive and cost effective.

5. However, efforts by individual businesses to do so on their own would not be impactful at all. Instead, the entire airfreight industry needs to re-engineer and transform our processes, starting with the sharing of data at source and re-using this data as it is passed through stakeholders in the supply chain. This will avoid costly duplication of data entry efforts and minimise inaccuracy.

6. e-freight@Singapore was thus conceived as a sector-level initiative to bring about a new level of efficiency in the air cargo supply chain in Singapore. This journey began in January 2010 when a group of six forward-looking partners from both the public and private sectors came together. They are the CAAS, IDA, IATA, the Singapore Aircargo Agents Association (SAAA), the Singapore Logistics Association (SLA) and the Singapore National Shippers' Council (SNSC).

7. In a little over two years, Singapore has become one of the first countries in the world to develop a set of national data standards for e-freight that meets the needs of local businesses and regulatory agencies. These common data standards can be used across different solution platforms to promote data re-use and significantly reduce manual data entry. It would also improve accuracy in the electronic document transmission process.

8. At the same time, the Committee ensured that our national standards are based on the IATA standards on e-freight. Aligning Singapore's standard with that of IATA's will ensure that we have the highest chance of inter-operability with stakeholders, such as shippers, freight forwarders and airlines not just locally but EMBARGOED UNTIL AFTER DELIVERY PLEASE CHECK AGAINST DELIVERY overseas. This is of critical importance as Singapore's international trade volumes are three times that of our GDP.

9. I would therefore like to recognise the contributions of the members of the Technical Committee and the leadership of Mr Steven Lee, Chairman of the Singapore Aircargo Agents Association (SAAA). The achievement would not have been possible without your hard work and commitment.

10. Today, two and a half years after the journey began for e-freight@Singapore, we celebrate the success of live e-freight solutions deployment for the three consortia that took the lead. Let me congratulate all members of the efreight@ Singapore programme and the three consortia, respectively led by Kewill Private Limited, Innosys Private Limited and vCargo Cloud Private Limited, on reaching this significant milestone.

11. To date, 14 of the 37 committed companies have become early adopters of efreight@ Singapore. Besides freight forwarders, participating shippers include a range of industries that reflects the diversity of our economy. They vary from electronic and aerospace products to ornamental fish, and regional distribution of mining and construction equipment. The rest of the companies are expected to come on-board by early 2014.

12. I am pleased to note that a fourth consortium, led by Cargo Community Networks (CCN), was recently also selected as an e-freight@Singapore solution provider. CCN pioneered the development of air cargo community systems, which are used by freight forwarders to book space and transact with cargo carriers. CCN has a customer base of over 1,000 freight forwarders and 20 major cargo airlines both in Singapore and overseas. With this extensive network, our local community can look forward to an even wider integration and connectivity for their e-freight needs.

A New Model for Productivity Transformation

13. Finally, let me highlight the potential gains from the e-freight initiative. Quantitatively, it is estimated that the initiative can potentially achieve annual time and cost savings of 1.7 million man-hours and S$18.4 million respectively at the national level. These benefits will be enjoyed by all stakeholders across the supply chain, from shippers, freight forwarders to airlines.

14. For example, shipping company Marvell Technology Group has shared that the cargo clearance permit can now be prepared within the timeframe taken for the forwarder to collect the cargo from Marvell and send to the airport. Marvell's forwarder, Transpeed Logistics Private Limited, in turn gains in terms of a quicker turnaround time per transaction – from two to three days previously to just 10 minutes per transaction.

15. But perhaps the larger intangible benefit is that e-freight@Singapore demonstrates a model for bringing together all stakeholders along a value chain to help transform an industry to achieve a quantum leap in productivity. To reap the full benefits of e-freight, companies must be prepared to work closely with their business partners to jointly eliminate inefficiencies and to achieve productivity transformations across company boundaries. This is a model that can be emulated across industries for sectoral-level productivity transformation.

Extending beyond Singapore

16. Beyond our borders, e-freight@Singapore is also a trend-setter for adoption at an international level. Our efforts are in line with the vision of IATA as well as the Global Air Cargo Advisory Group (GACAG), which is striving for e-freight to reach 80% of all global route networks by 2015. Going forward, the e-freight@Singapore solutions, together with the common and inter-operable data standards, will enable Singapore to collaborate with overseas e-freight ready partners to fulfil the vision of cross-border end-to-end e-freight.

Conclusion

17. With e-freight@Singapore taking off, I believe it will sharpen the competitiveness of the Singapore's air cargo industry, and the wider aviation and cargo sectors. Companies that have come on board will reap the benefits, and I urge shippers and freight forwarders which have not done so, to take immediate advantage of being part of this e-freight community.

18. Once again, I congratulate all e-freight@Singapore stakeholders on reaching this very significant milestone. Thank you.

Note to Editor

¹ IATA press release – "Passenger Demand Grew as Air Cargo Declined in 2012" - 31 January 2013 http://www.iata.org/pressroom/pr/Pages/2013-01-31-01.aspx