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Transport costs remain high

120927_09
Korean company Pan Continental Freight is seeking to develop waterways to reduce Cambodia’s rice export costs. Photograph: Graphic Courtesy PCF

Cambodia's transport costs remain high compared with those in neighbouring countries, according to a 10-container shipment comparison conducted between Cambodia, Thailand and Vietnam by a Korean-owned company, Pan Continental Freight (PCF).

The comparison found Cambodia’s free on board (FOB) costs were US$35 a tonne, whereas Thailand and Vietnam costs per tonne were $17 and $16 respectively.

Pan Continental Freight general director Jae Hoo Lee said direct foreign investment was needed to develop logistics and infrastructure in terms of building ports, railways and waterways.

“There is great demand internationally for Cambodian agricultural products, but the lack of infrastructure and poor logistical systems have impeded the ability for demands to be met,” Lee said.

“Previously, our international buyers were sceptical about Cambodia’s ability to meet their demands. But trial shipments of 1,000 or 2,000 tonnes have helped them change their minds about Cambodia’s reputation,” he said.

PCF’s comparison shows that poor logistics and infrastructure make Cambodia not only more expensive but also less efficient than its neighbours.

On a per-day basis, Vietnam loads 2,000 to 3,000 tonnes, whereas Cambodia loads only 700 to 1,000.

“Cambodia’s logistics are not developed yet, but overseas companies are very interested in the development of transportation infrastructure,” Lee said. “We have been finding solutions for optimising agriculture exports from Cambodia for at least five years.”

Lee said his company would direct its efforts towards developing Cambodia’s waterways through its Agro-Mekong Logistics Belt project.

From next year, products from PCF’s partners’ main production sites will be transported to the Phnom Penh Autonomous Port via waterways in Kampong Chhnang and Kampong Cham provinces.

The plan is designed to decrease the bottlenecks of inland trucking by offering cost-effective waterway transport with increased cargo safety.

“In Vietnam, around 98 per cent of products are transported by the waterways, not by trucks,” Lee said. “That’s why their cost is very low, whereas in Cambodia we use only trailers and trucks.

“There’s no waterway system right now. Our target is to develop the waterways to the Phnom Penh port.”

PCF’s additional infrastructure developments will include new warehouses and equipment upgrades at the existing Phnom Penh port, which will operate concurrently with the new Phnom Penh River Port, located 22 kilometres south of the existing port in the city’s riverside district.

The improvements will allow Cambodia to load between 1,000 and 1,500 tonnes a day, which Lee said would help the Cambodian government achieve its goal of exporting a million tonnes of rice.

“We trust that the Cambodian government’s target of exporting one million tonnes of rice from 2015 will be achieved. Our work with the government and other related parties should make this happen,” he said.

To contact the reporter on this story: Erika Mudie at erika.mudie@phnompenhpost.com

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