Singapore Inc feels the squeeze

Singapore may be celebrated as one of the world’s most efficient and stable maritime hubs, but beneath the gloss, businesses are grappling with the rising cost of keeping their operations anchored in the Lion City.

The latest official figures show headline inflation easing to just 0.6% year-on-year in July 2025 — a deceptively calm number. Peel back the layers and the picture looks far less forgiving. Food and transport inflation remain stubborn (+1.1% and +2.1% respectively), while healthcare and services costs continue to gnaw at company bottom lines. For shipping firms and their suppliers, this translates into higher operational overheads and tighter margins.

The Singapore Business Federation’s National Business Survey underlines the anxiety: nearly half of firms flag the high cost of adopting new technology as a major barrier, while over a quarter report liquidity strains. Retail and hospitality have been hardest hit, but the maritime sector is far from immune.

Landlords report mixed rent trends. Prime retail spaces still command strong rates, while logistics properties show signs of softening after earlier spikes. Utilities, however, remain costly, and the step-up in GST from 7% to 9% over 2023–24 continues to reverberate across balance sheets. Energy costs, meanwhile, have stabilised compared to the wild swings of 2024, but energy-intensive industries remain weighed down by older contracts and investments in efficiency upgrades.

The stress is showing. The food-and-beverage sector, an important barometer of small-business health, has recorded an accelerating pace of closures in 2025, driven by rent and wage inflation. Manpower costs are also surging as companies compete for limited talent, while compliance costs for new climate and digital standards add further pressure.

Shipping companies are responding with a mix of technology adoption, workforce restructuring, and cost discipline. For many, Singapore remains indispensable — but they are approaching resourcing and investment decisions more deliberately.

“Singapore has long been a strategic hub for Anglo-Eastern, and we continue to invest in its maritime ecosystem through partnerships, innovation, and knowledge-sharing,” says Niraj Nanda, chief commercial officer of the world’s largest shipmanager. “The rising cost and more limited availability of a qualified workforce are growing challenges that we are tackling with the right strategies. A hybrid model, with part of the workforce based in other countries, has proven effective.”

Nanda highlights Anglo-Eastern’s push into technology to control costs, pointing to the Anglo-Eastern Fleet Performance Centre in India, which crunches operational data to deliver fuel and emission savings. The company has also embraced a shared service centre in India, consolidating finance, procurement and IT functions for efficiency. “The decision to utilise a shared service centre allows us to benefit from the cost advantages associated with operating in regions with lower labour costs without compromising on the quality of services rendered,” Nanda explains.

Still, Anglo-Eastern’s commitment to Singapore is clear. Earlier this year, the company consolidated its entities into a new office at Labrador Tower. “Stable and capable governance, high efficiency, a safe work environment and pro-business policies continue to position Singapore as a leading business destination,” Nanda stresses.

For Vinay Gupta, managing director of Union Marine Management Services, the answer lies in relentless attention to detail. “Cost has been — and will always remain — a sore point for every business. The only way to manage it is with discipline: to treat expenses like nails that must be trimmed every day,” he says.

Technology, Gupta argues, is the enabler. “Technology provides the bedrock that allows us to diversify our workforce across locations while still maintaining centralised control. This flexibility helps us balance efficiency with cost pressures.”

Gupta views Singapore’s higher costs as an opportunity to sharpen competitiveness. “By constantly monitoring, adjusting, and leveraging technology, Singaporean businesses can stay competitive even in a high-cost environment,” he adds.

That theme resonates with Wilhelmsen Ship Management CEO and president, Haakon Lenz. “Rising costs are a reality for doing business in Singapore,” he acknowledges. “One key challenge we face is the intense competition for competent professionals — this drives up manpower costs significantly and adds pressure on operational margins. Ultimately, Singapore offers a premium maritime ecosystem — and with that comes premium costs. The key is to ensure that the value we deliver to our customers continues to justify the investment in being here.”

Recruitment firms echo that perspective. Lorenzo Agatiello, director Asia Pacific at Faststream, argues that clients accept the higher costs because of Singapore’s quality. “Yes, Singapore is more expensive than some hubs, but at Faststream, we see our clients value what Singapore offers — stability, rule of law, connectivity, and access to top talent. Most view the higher costs as an investment in being part of a premium ecosystem that reduces long-term risks and opens opportunities.”

Yet not everyone is convinced that the current strategy is sustainable. Peter Schellenberger, founder of consultancy Novamaxxis, warns that the trend towards outsourcing has created its own inefficiencies. “Outsourcing of operations for shipping companies to lower cost locations is not proving ideal in terms of efficiency, and these jobs will never come back, also in the advent of AI,” he says.

His concern is that cost-driven relocations risk eroding the skills base and cohesion that have long underpinned Singapore’s strength as a maritime hub.

The government is alert to the issue. The 2025 budget includes targeted support measures, from training subsidies to innovation grants, designed to cushion the impact of higher business costs. The Monetary Authority of Singapore also continues to emphasise stable governance, predictability and long-term competitiveness as the city-state’s defining advantages.

But for firms on the ground, relief feels limited. Compliance burdens for new environmental and digital regulations, higher wages for scarce talent, and the structural impact of GST hikes all add layers of cost that no subsidy can erase.

So is Singapore becoming too expensive for shipping? The consensus among industry leaders is nuanced. Yes, costs are high and rising — but the city-state continues to offer unmatched connectivity, safety, and access to capital, talent and regulators.

As Lenz puts it, the calculus is about value as much as price. “The key is to ensure that the value we deliver to our customers continues to justify the investment in being here.”

Gupta’s metaphor of trimming nails daily, Nanda’s hybrid workforce model, Agatiello’s framing of costs as ecosystem investment, and Schellenberger’s warning about outsourcing inefficiencies all highlight a single truth: Singapore’s maritime hub status is resilient, but its firms must work harder than ever to defend margins.

For now, businesses are staying put — but they are leaner, more digital, and more deliberate. Whether that is enough to sustain Singapore’s role as the beating heart of global shipping in a high-cost era remains the billion-dollar question.