The e-commerce and logistics sector accounted for 44% of occupied warehouse space in Singapore last year. This figure is mentioned in a report presented last week by real estate service provider and investment manager Colliers International.

The third-party logistics (3PL) and logistics sector comprise e-commerce firms, freight forwarders, transport agents, supply chain and logistics support companies, delivery services and storage
services, while other warehouse occupiers are the manufacturing sector (30%); distributors (10%); food, chemicals and pharmaceuticals (6%); oil, marine and energy (5%); and IT and technology
(5%).
Excellent marks
According to the head of research for Singapore at Colliers International, Tricia Song, the figures show that “Singapore is a top class logistics hub with the world’s busiest transshipment port,
second busiest port in terms of total cargo tonnage handled, and the 12th busiest airport by cargo traffic as at 2018."
The emergence of e-commerce in recent years has had a positive spillover to the 3PL and logistics sector in Singapore, she added.
A Business Times (BT) report quoted Colliers as stating that regional trade and growth in e-commerce should channel to stronger warehouse demand in the long term and benefit the city-state given
its logistics hub status.
However, the small market size as well as greater efficiencies in inventory forecasting and stock management could potentially moderate the need for drastic warehouse expansion, Colliers
noted.
The BT report said a newly released e-Conomy 2019 report by Singapore government-owned Temasek, Google and Bain & Company estimates South-east Asia’s Internet economy to be worth US$100
billion by end-2019, with e-commerce taking the lion’s share at US$38 billion. That represents an increase of almost six times from US$5.5 billion in 2015.
Four criteria under the magnifying glass
As there is about 117 million sq ft of total warehouse space in Singapore, and more than 80% are located in the east and west regions, the Colliers’ research team evaluated the logistics
micro-markets against four criteria: presence of an existing logistics cluster and supporting infrastructure; availability of quality warehouse stock with consideration of both existing and
future supply, as well as vacancy rate; accessibility to airport or sea ports; and rent premium compared to island wide average.

Changi region gets best marks
On the basis of these four criteria, the region around Changi tops the list due to its proximity to Changi Airport, although it has limited warehouse space with unit sizes generally smaller than
the locations at Tuas and Boon Lay/Jurong West, the three regions on the west coast of Singapore. Due to strong demand, the Changi micro-market has the highest occupancy rate among major
logistics locations in Singapore, said Colliers.
Colliers noted in its report that It does not expect a sustained oversupply of warehouse stock as Singapore’s logistics hub status should benefit from both domestic and regional growth in
e-commerce. It expects overall warehouse supply to ease, with annual expansion averaging 1.5% of warehouse total stock over 2019-2023 versus 7.6% for the previous four years over 2014-2018.
Startups are backed
With new supply tapering off, it forecasts the overall vacancy rate to stabilise at 10.8% in 2020.
In another logistics development, Reefknot Investments, a joint venture between Singapore's Temasek Holdings and Kuehne + Nagel, has launched its inaugural US$50 million global fund to invest in
startups "at the forefront" of the logistics and supply chain industry, the company said in a statement.
Based in Singapore, Reefknot Investments backs startups at the Series A and Series B stages of growth that disrupt supply chain and logistics. Its first fund will back six to eight startups in
verticals such as AI, digital logistics and trade finance.
Nol van Fenema
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