Agnes Lau is a seasoned professional with a remarkable 34-year career at DB Schenker, where she has an extensive track record of generating business revenue and devising commercial strategies. In 2018, she was promoted to lead the business development department as chief commercial officer, and this year, she assumed even greater responsibility as the CCO for the Singapore and Malaysia Cluster. Payload Asia talks to Agnes in this C-suite section to find out more about Schenker Singapore’s operations.
Can you give a brief background about Schenker Singapore?
Schenker Singapore is a leading global logistics service provider with 53 years of presence in Singapore. Our integrated solutions in air, ocean, land transport, and contract logistics support almost every industry, enabling connectivity to global and emerging markets. On top of our global network, we deliver innovative and sustainable solutions, ensuring our customers’ supply chain remains resilient and competitive.
Which sectors are driving the demand for freight (by sea and air) in and out of SG? Which main routes does the team serve?
The key sector driving demand is definitely the manufacturing sector. Singapore is known as a global hub for manufacturing high-tech goods. Many of the export and import shipments are related to electronics, pharmaceuticals, and precision engineering. The business-friendly ecosystem coupled with access to high-skilled talent has attracted many MNCs to set up their R&D hubs, headquarters, and regional distribution centers in Singapore. This has contributed greatly to high-tech manufacturing output, and likewise the demand for freight.
Similarly, Singapore is an attractive logistics and distribution center for moving goods in Asia and also to different parts of the world, attributed to the top-class transportation infrastructure and key connectivity to markets. Though some consumer spending may have shifted to services, we still see a very strong demand for consumer goods, boosted by e-commerce growth. Not forgetting, several sectors have consistent demand such as perishables and oil/petrochemicals which remain evergreen.
We serve almost every route to key markets and ports around the world. Just to list the top few trade lanes would be our intra-Asia trade, Asia-Europe trade routes, and trans-Pacific trade routes for ocean freight. For air routes, we have connections to all major global cargo airports, and the top lanes we serve include China, USA, Germany, India, and South Korea.
How are macroeconomic fundamentals affecting the current demand?
The current macroeconomic development thus far has shown us mixed signals with the global economic outlook forecasting slower growth in both 2023 and 2024. Singapore as well has recently announced the narrowing of the GDP growth to 0.5 to 1.5 percent from 0.5 to 2.5 percent. There is generally a lower demand globally. But this slower growth is not equal everywhere with emerging markets facing higher growth since China reopening. Even developed economies such as Japan’s GDP have surpassed expectations and sustained better-than-expected growth despite increasing prices and outlook.
In Singapore, the PMI has inched slightly upward in recent months but is still below 50, which indicates a contraction. The slight improvement in PMI signifies stabilization and an optimistic outlook by manufacturers, not forgetting, that the growing demand from generative artificial intelligence remains on the horizon. Similarly, the rising inflation and higher prices are not enough of a catalyst yet to slow down consumer spending in Singapore and other parts of the world. Overall, considering all economic factors, the demand has been relatively stable or in other words, flat growth. There might be a conservative increase in volume as we approach the peak shipping season, but it is unlikely we will see anything that of 2020/2021 levels. PMI for emerging markets continues its improved trajectory which leads to higher export volume from them and demand from e-Commerce remains a strong contributor to the large volume of freight demand.
How important is Singapore as a trans-shipment hub in the region? Where is Schenker Singapore focusing its resources?
As mentioned earlier, Singapore’s strategic location is a vital gateway to the rest of the world and our world-class transport infrastructure easily termed us as the top trans-shipment hub of the world. Located in Southeast Asia, along major shipping routes, we facilitate the movement of goods in the region and beyond. This is supported by state-of-the-art seaport and airport facilities whilst known for its high service level and operational efficiency.
The way forward is to go beyond simply providing transport and storage services. We are focusing on expanding our value-added, tailored services. This is not something new as we are already doing it with many of our customers and will continue to enhance their supply chain capabilities through digitalization and industry-specific solutions. We are investing heavily in automation as seen with the recent groundbreaking for RedLion2, and in addition to RedLion1, these logistics hubs will utilize cutting-edge solutions to speed up operational lead times to better serve our customers. We are growing our capabilities stronger than ever to be future-ready.
Do you expect an uptick in demand come holiday season? And what’s the company’s outlook?
Unfortunately, the demand has not been impressive as we approach the traditional peak shipping season. Typically, the period running up to China’s golden week holiday will result in a surge of demand for freight as shippers stock up their inventories for the holiday season. However, we do foresee conservative growth in the coming months.
Drawing from our recent interim report on our half-year results in 2023, DB Schenker has shown robust growth momentum, despite the global uncertainty and economic challenges. This is contributed by the thriving and growing performance in Asia Pacific. Our outlook for Singapore remains positive as we are committed to driving digitalization initiatives and providing top-class logistics services, as exemplified by our latest flagship project – RedLion2. We are also expanding our eco-fleet in Singapore with new EV trucks to support our customers with sustainable logistics solutions, atop biofuel options for shipping via air and sea.
What will be the recommended approach for forwarders and shippers in the current business environment?
With a great deal of economic uncertainty ahead of us and the seemingly tense geopolitical situations, we must be ready to respond to any new developments. What the past few years have shown us is that there were many situations that affected our business adversely but each time we adapted and emerged stronger. I would say the approach forward would be to further hone our capabilities but in a sustainable manner, expanding while being cost-effective is going to be a common factor among businesses alike. This period is also an opportune moment to explore and implement new ideas to improve overall business strategy and operational efficiency, be it through data analytics, digitalization, automation, and most importantly, developing our human capital. Even in the current business environment, there are many opportunities around us waiting to be capitalized upon. We want to be well-prepared to seize the chance and with the right timing, we are sure to ride on the wave of eventual growth.
Where does sustainability fit in the company’s overall agenda?
It doesn’t just fit in, it is the agenda itself. DB Schenker globally aims to be carbon neutral by 2040. To that end, we have invested greatly and partnered with carriers and airlines to purchase biofuel and sustainable aviation fuel instead of the fossil-fuel variant which will significantly reduce CO2 emissions by 80%. Customers can opt to use greener solutions when moving a shipment with us.
While in Europe, DB Schenker plans to transition to an all-electric delivery fleet by 2030, we are equally committed to Singapore’s national goal of having all commercial vehicles running on cleaner energy by 2040. We currently operate a fleet of EV vans for last-mile deliveries, and this year, we are going to introduce a total of 3 EV trucks. The initial launch of our electric truck in April represents the first fully electric heavy goods vehicle for logistics in Singapore. Furthermore, our logistics hubs are also harnessing renewable energy to be greener than ever. Both RedLion1 and SLC 3 are accredited with Green Mark Platinum for their green features, while RedLion1 holds the distinction of being Singapore’s first LEED Gold-certified warehouse. Furthermore, as we approach the first half of 2025, the completion of RedLion2 will mark a new milestone as it is designed to be a carbon-negative, zero-energy building, setting a new standard for green achievements.
In all aspects of our business – land, air, ocean, and contract logistics, we are making sustainability more accessible, transparent, and accountable. This is not a task that can be undertaken by one alone, it is a joint effort across the industry and beyond to ensure a better future for our planet and generations to come.
