The Importance Of Singapore And The Suez Canal

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Ever since the 19th century, Singapore has been a major trading hub in Asia for ships travelling from Europe to Asia, with the opening of the Suez canal in 1869 making Singapore the hub for trading activity due to its strategic location along one of the busiest trade routes in the world.

Figure 1: The Suez Route

To this day, Singapore remains important to world trade owing to its strategic location. Singapore’s port is the largest transshipment port in the world by cargo volume, accounting for close to one-seventh of world transshipment volume ("About Us", 2016), where cargo is transferred from one ship to another while docking in Singapore. Although Singapore has been diversifying its economy, building up other sectors such as the financial
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The idea of digging a canal through the Kra Isthmus to connect the Indian Ocean and South China Sea has long been existence. In fact, the idea was documented to have been first mooted back in 1677 by Thai King Narai (Chew, 2015). However, the idea was discarded due to a lack of available technology. However, with ever increasing capabilities of modern technology, as well as Chinese interest in taking on the project (the Kra Canal would complement China’s One Belt and One Road Initiative), the possibility of such a trade route opening has risen considerably.

If this project is successful, then the current Suez route for trading would be greatly altered. Instead of rounding Singapore, ships would cut through the Thai canal as shown in the figure below and possibly choose an alternative port in Thailand. Thus, the possible construction of this Thai canal presents another major challenge for the maritime industry in Singapore.

Figure 3: Possible route through the Kra isthmus

How we can overcome
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Other than the push towards automation using Automated Guided Vehicles, the work processes involved in transshipment can be further streamlined when the megaport in Tuas in constructed. Cost savings can be reaped from economies of scale when container capacity is increased, increasing our cost competitiveness.

In addition, the Port of Singapore should continually improve on its service standards such that it increases Singapore’s attractiveness as a port. Although Singapore’s port may be slightly behind its rivals, but it has a reputation for good service as compared to other ports (Tan, 2015). The Port of Singapore should capitalise on its advantage and seek to improve their service standards further, enhancing its strengths and as such increasing its attractiveness, allowing for the growth of the maritime industry in the long run.

Furthermore, we recommend aggressive expansion of PSA International, the company that manages the Port of Singapore, into northern Russia. PSA International can consider managing ports located along the Northern Sea Route, as shown

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