Cambodian exports and imports are growing, and the government seeks to export 1 million tonnes of rice in 2015. The Country Manager of market leader Maersk Line, Benjamin Paul Wilson, sat down with the Post’s Anne Renzenbrink to talk about developments and challenges in the country’s shipping industry.
Can you briefly explain your activities in Cambodia?
We are purely involved in container transportation, ocean transportation. So we have two companies or two brands. We have Maersk Line and MCC transport. We are both under the same company (AP Moller group). And locally we are also under the same company Maearsk Cambodia Limited. What we do is we run two ships a week into Sihanoukville port. We also have operations through Phnom Penh port. We offer connection to Cambodia to the rest of the world. So we have port calls in 125 countries around the world. So essentially you can bring anything from any one of those countries to Cambodia or take anything from Cambodia too.
What products do you ship?
Garments and footwear is the main commodity that’s being exported today. And that accounts for around 70 per cent of our total volume I would say. The next biggest one is agricultural commodities and mainly rice. Rice has been a great success story for Cambodia. It’s really growing.
In what other Southeast Asian countries do you have a presence and how do you compare it to Cambodia?
We are present in every country in Southeast Asia. I think the size of Cambodia’s economy is obviously less than neighbouring countries Vietnam, Thailand. But obviously Cambodia is starting from a different position than they are. They’ve had a much longer history of manufacturing, political and economic stability in neighbouring countries. So they have obviously had a head start. Cambodia, however, is growing much, much faster than its neighbours. We are seeing this year containerised export volumes growth of over 20 per cent. I think Vietnam is saying maybe 3 or 4 per cent. So it is a big gap.
What are the challenges you face, also in comparison to other markets in the region?
Obviously the size of the market. That brings disadvantages as well because shipping is also a lot to do with economy of scale. If you can put a bigger ship in you can load more containers, so unit cost decreases. So you have a natural economy of scale disadvantage in a market which is the size of Cambodia. What we also see is that generally speaking transportation costs here are higher than in other countries and there is a number of reasons for that. I think it’s been well documented in the press here. When there has been benchmark studies done, there are things like higher customs clearance costs, there are higher import export documentation fees, and what we also see is generally speaking, the port costs here are higher than in neighbouring countries as well. So it’s a challenge for us but it’s also a challenge for Cambodia. It does have some competitive advantages, but looking forward long term these are some of the things that need to be addressed to maintain that competitiveness.
Is the shipping business very competitive in Cambodia?
Yes. I mean shipping is globally an extremely competitive market. And its very volatile as a result because in shipping you’re buying your ships, your assets, which are your largest investment three, four, five years before you actually get them. So you are taking a gamble on where you expect the global economy to be going in advance. And what tends to happen is shipping lines don’t always get it right. So you end up with a either an under-capacity or an over-capacity. And that has a massive impact on rates. And how you make money in shipping is by filling your ships. So everybody is looking to fill the ships and that means that the rates are constantly adjusting, constantly changing. So the competition here is no different than from any other country where we operate, everybody is after the same business and that leads to quite severe rate pressure.
Did recent political developments have an impact on the shipping industry here?
Honestly, we saw a very little impact and we expected it particularly after the election, with the uncertainty that was in the weeks and months afterwards, we expected to see more impact than we did. Actually the garment production seemed to continue as per schedule, the rice exports continued, so really we didn’t see a great deal of impact. We saw a little bit on the import side, maybe fewer of the consumer products that we normally see coming in, that slowed down a bit. I mean used cars for example. I think it’s normal, people don’t go and buy cars when they are not quite sure what’s happening.
This interview has been edited for length and clarity.