Cambodia's logistics sector has staged a modest recovery since the government relaxed Covid-19 restrictions in November, to allow for the full restoration of socio-economic activity, as one of a raft of industries ravaged by pandemic fallout.
The government has set out several key plans to improve infrastructure and logistics services, and keep costs low to help the Kingdom compete with regional and international markets.
The Post sat down for an interview with Cambodia Logistics Association (CLA) president Sin Chanthy, who outlined the progress made by the industry, as well as the roadblocks ahead.
Could you briefly describe the overall status of the logistics sector?
The Covid-19 crisis led to exorbitant shipping rates and a shortage of containers, which spelled severe trouble for the sector. In February, the Russia-Ukraine conflict broke out and the prices for fuel and oil have remained high since.
Nevertheless, Cambodia’s logistics sector has essentially returned to normal operations, especially when it comes to the import and export of goods to the US, EU, China and elsewhere.
Overall, shipping costs are now approximately 10 per cent lower than they were at the height of the pandemic, despite the heightened oil prices. But with the US actively seeking to remedy the matter, petroleum and fuel prices have been on a steady downtrend, and the overall situation in Cambodia has improved.
Similarly, the shipping container shortage and related issues have diminished as the EU and US in particular reopen their economies.
Logistics companies within the association have reported slight reductions in costs, although some of them had to hike their rates by 10-15 per cent in the wake of the steepest climbs in oil prices. We have coordinated with consumers and our partners to bring shipping rates back down.
Have most logistics companies resumed normal operations?
All of the more than 100 companies within the association, whether they do business domestically or internationally, have resumed operations – yet the import and export of goods have witnessed a decline due to a number of business-related issues.
The government has been working to solve many challenges related to logistics, how do you rate their accomplishments to date?
As a matter of fact, there are short-, medium- and long-term plans of the Ministry of Public Works and Transport and broader government that focus on challenges confronting logistics and infrastructure. For example, after a long period of background work, the ministry put in place the EDI (Electronic Data Interchange) Port system, with support from Japan.
Although we have just begun employing this system, our neighbours have been using it for a long time. It allows users to access information related to the movement of both goods and ships, and makes their management much more convenient.
Ship operators can share information with their users through the system – it is a speedy solution that reduces the paper trail that used to accompany each step, and has resulted in moderate but significant improvements in operations at the Sihanoukville Autonomous Port.
Are there any other logistics-related issues that we should be aware of?
The country’s infrastructure is being upgraded to bolster the growing logistics sector, especially the Phnom Penh-Sihanoukville Expressway, which will be ready for traffic in the near future. However, despite these advances, some lingering obstacles keep stakeholders unhappy.
What is needed to improve logistics in Cambodia are ways to keep our costs low, so that we can compete with our neighbours. Without resolving the matter, we will fall behind and our products simply will not sell very well abroad due to cheaper alternatives from just about everywhere else.
One such initiative that Cambodia needs to deliver on is the construction of more deep water ports, to allow larger ships to dock domestically, in line with demand, rather than relying on nearby countries with such facilities.
Where in the world do Cambodian products get shipped to?
At present, Cambodian goods are sent to every major region in the world by air and sea, and even land. In fact, we are capable of transporting merchandise to China entirely overland. Basically, if we trade with any country on the planet, we can make sure our goods are delivered there.
How does the logistics sector benefit the economy?
Of course, it is not just because I work in the field that I say it is a crucial contributor, but the logistics sector accounts for eight per cent of Cambodia’s gross domestic product (GDP).
Logistics are essential for all trade segments, both domestic and international. If the sector did not exist, trade would be impossible. During the pandemic, there would have been widespread shortages had it not been for the men and women of the logistics field.
Any producers, farmers, or investors who set up factories or enterprises need the logistics sector to deliver their goods to consumers, so I think it is clear that the sector makes a huge contribution to society – and not just the economy.
Logistics also underpins global humanitarian action. For instance, the World Food Programme is now in dire need of logistics services to ensure that food can be delivered to famine-stricken areas.
This interview has been edited for length and clarity.