RESILIENT SUPPLY CHAINS – FROM THE 9th CENTURY TO THE 21st

I am spending some extended time in Singapore.  This gives me the opportunity to see things from the vantage point of this amazing trade hub of the Asia Pacific.   From the sight from the plane of container ships – lots and lots of them – in the harbour, to the great cross-roads which is Changi Airport, to the expansive Port of Singapore which hugs the city’s foreshore (a part of which is being moved, don’t tell the Mayor of Auckland), this city is all about trade.

Trade isn’t a new thing here

A visit to the Asian Civilisations Museum offered insight into Singapore’s rich trading history.  The Tang Shipwreck was discovered only in 1998.  It contained a shipment of 60,000 ceramics manufactured all over China and destined for Iran and Iraq.   The goods were manufactured one thousand years ago, clearly indicating that even then South East Asia was at the heart of a global maritime trading network.  What is equally impressive are the logistics and financial system able to make this ancient supply chain work – in China itself and into the Middle East.   What ingenuity was required to get these highly prized goods from supplier to customer – right down to the packaging, with individual ceramic items carefully stacked in large urns and which remained unbroken even as this particular vessel sank.  (They fared better than the crew who lived on deck and probably drowned).

The Tang cargo is a testament to the capability of early Chinese entrepreneurs – maybe those around the world who dream of “decoupling” might reflect on this.  These people have been in business for 1000 years and more !  

The Tang cargo is a testament to the capability of early Chinese entrepreneurs – maybe those around the world who dream of “decoupling” might reflect on this.  These people have been in business for 1000 years and more !  

From connectivity to resilience

At the height of the pandemic, when the ships waiting in the Waitemata Harbour were a sign of disruption, we heard a lot about supply chain resilience. Suddenly we found we couldn’t simply order something online and expect it to arrive within days.  New Zealand, as the last bus stop on the planet, found itself at the end of a very long supply chain with inevitable consequences.  The same thing worked in reverse – getting our products to market became both tricky and expensive but as the trade statistics were to show, solutions were found and trade underpinned the health of the economy.

Policy makers also focused on what is needed to create resilient supply chains. Minimising red tape and speeding up customs clearances were all sensible strategies – sensible at any time but especially so during the pandemic.  Building on our already close trade partnership, New Zealand and Singapore reached new agreements on supply chain co-operation.

Digital is the new Tang

One particularly useful tool can be found within the digital economy. Replacing the large amount of paper documentation which accompanies goods as they travel through supply chains can result in significant cost savings and avoidance of time-consuming delays when documents gets lost.  Each trade transaction can be accompanied by up to thirty different documents, the most significant of which are commercial invoices, bills of lading, certificates of origin, sanitary and phystosanitary certificates and financial documents.   According to the International Chamber of Commerce (ICC), there are an estimated 4 billion paper-based documents that are being processed at any one point in time around the world.  That’s a boon for courier companies and a bother for exporters.

The solution is to move to trusted and secure “paperless trade” – or more correctly the exchange of data in the form of “electronic transferable records”.   There are various technologies available but plenty of barriers, including differing standards and the lack of enabling regulatory systems.  It’s probably no surprise that Singapore is a leader in this field.  New Zealand however is lagging behind other jurisdictions with no effort being made to update our own regulatory system to facilitate the adoption of these new and powerful solutions.  That needs to change if we are to retain our competitive position in global markets.

Trade is a continually evolving game. From the earliest times supply chains fostered international exchanges of goods, people and ideas and fuelled economic and social development. Today Singapore still has the advantage of its strategic location at the cross-roads of the world’s most dynamic region. In a model New Zealand could usefully follow, Singapore is also increasingly looking to digital technology to ensure that it remains a global leader in supply chain connectivity and resilience.

This post was prepared by Stephen Jacobi, Executive Director of the NZ International Business Forum. In March 2023 Stephen attended the ICC Future Trade Forum held in Singapore.