We are Asias largest integrated logistics
provider, providing end-to-end supply chain management via physical
and information technology networks. We specialise in the handling
of fast moving consumer goods, electronic goods, parts and components,
hazardous goods, chemicals, medical supplies and pharmaceuticals.
Through a strategic alliance with Kuehne & Nagel, who is the
worlds number one seafreight company and number five airfreight
forwarder, we serve the Asia-Pacific, Europe and the United States.
To be a global player in supply chain management, we will:
Strengthen our existing Asia-Pacific network
and accelerate growth in key
We expect to enter markets in Japan and Korea by end-2003 and are
also looking to accelerate growth for our businesses in China and
India, both organically and through selective mergers or acquisitions.
Harvest the synergies of our joint partnership
with Kuehne & Nagel (KN)
Through our strategic alliance with KN in 2001, we have extended
our global reach to markets in Europe and the United States. Our
joint marketing efforts have secured
us contracts in contract logistics and freight forwarding.
Leverage strengths and partnerships to develop
specialised industry knowledge
Through our partnership with KN, we will focus on five key industry
clusters globally consumer/retail, chemical, healthcare and
Harness technology to create innovative supply
chain management solutions
Investing in advanced technology remains one of our competitive
strengths. Through a new partnership with United States-based Savi
Technology, we can now add secure supply chain management systems
to our portfolio of innovative logistics services.
Revenue from our logistics operations remained healthy at S$446.3
million. Net earnings contribution from SembCorp Logistics (SembLog)
however declined from S$54.4 million to S$25.2 million mainly due
to a one-time goodwill write-off by its 20 per cent associate, Kuenhe
& Nagel (KN). Consequently, KN did not make any earnings contribution
to SembLog compared to its contribution of S$30.9 million in 2001.
At the operating level, however, SembLog turned in strong growth
in supply chain management in all our three key markets where EBIT
earnings growth of 16 per cent for Singapore and 63 per cent each
from China and India were recorded.
Our joint marketing efforts with KN secured us 16 joint accounts.
In addition, SembLogs joint venture with KN in the area of
freight management in Singapore, ST-KN, secured another 50 accounts.
We have integrated our systems with KNs new Customer Relationship
Management system that links both companies, in all business areas
of seafreight, airfreight and contract logistics. Together with
KN, we have adopted a common focus on five key industry clusters
globally consumer/retail, chemical, healthcare and electronics.
During the year, we established SembLogs marketing arms in
the Europe and the United States, and worked with KN to promote
our logistics network to multi-nationals at their global headquarters.
KN has also established senior representation in our office in Singapore,
greatly enhancing communication between both companies.
In keeping with our plans to expand our Asian network, we entered
the Taiwanese market in June 2002, forming a 51/49 joint venture
SembCorp Logistics (Taiwan) with Pacific Resources Technology Corporation
(PRTC). The joint venture operates four distribution centres in
Taipei, Kaohsiung and Taichung. With strong operations already in
China, we are now ideally placed to leverage the huge volume of
China-Taiwan trade (estimated at more than US$26 billion1).
June also saw us enter into another strategic alliance, this time
to advance our technological edge. We became the only preferred
logistics partner of Savi Technology, when we invested US$10 million
in its parent company Infolink Systems. Savi supplies the technology
used by the United States Department of Defence to track its military
assets. Together with Savi, SembLog has developed secure supply
chain management solutions that utilise proprietary technology to
screen, seal, track and trace containers. We believe our secure
supply chain solutions are well-positioned to meet increased security
requirements for sea-bound cargo entering the United States under
the Container Security Initiative.
In 2002, we also completed the Singapore Army Logistics Base (ALB)
for the Singapore Armed Forces based on the Design-Build-Operate
concept. The ALB features state-of-the-art technology that controls
all warehousing and distribution functions, manages and tracks inventory
and consumption patterns.
For 2003, our Singapore operations will be underpinned by a baseload
of outsourcing contracts from the public sector and existing commercial
customers. We also expect a higher contribution from the healthcare
and chemical sectors from 2003.
We remain committed to accelerating growth in China and India, which
we expect to account for up to 50 per cent of our supply chain management
revenue by 2005.
Growth in China should come from greater operational efficiency
with new IT systems and bundling of services to increase value-add
to our clients. In India, we plan
to improve our business mix to yield greater returns.
For our offshore logistics operations, we will grow contributions
from new supply bases in Batam, Indonesia and Baku, Azerbaijan.
We will also continue to explore business opportunities in Sakhalin
and offer regionally integrated supply chain management for the
oil and gas industry.
1 Source: The Republic of China Yearbook
– Taiwan 2001