LOGISTICS
Logistics in Cambodia
The rapid economic growth driven by the exports of the garment sector combined with a growing population, has increased the pressure on the logistics infrastructure. While the sector still suffers from high-cost operations, several major projects are underway to tackle these issues. The governmental strategy is focusing on the strengthening of two major economic corridors (Sihanoukville-Phnom Penh and Poipet-Bavet). It includes a broad range of infrastructures: expressway, railway, ports, and air cargo hubs. As a result, a constant improvement of the logistic sector can be observed during the last few years.
The favourable geographical situation of Cambodia in Southeast Asia makes the country a natural hub in the region. Therefore, the government is working on improving and simplifying transnational cooperation to make the trans-border crossing an easy process. World Bank estimates that by 2030, through Cambodia’s highways, ports, airports, and warehouses, Cambodian firms are projected to move 4.1 times more goods compared to 2018. This projection is largely explained by the current economic development of Cambodia which will continue at a rapid pace and the ongoing diversification of industrial exports that has followed the implementation of electronic devices factories. These manufacturers (mostly Japanese) have chosen Cambodia to upgrade their regional supply chain.
Logistic infrastructures in Cambodia
Cambodia has currently 3 International airports: Phnom Penh, Siem Reap and Sihanoukville. They are all managed in the form of a concession by the French company Vinci under the brand “Cambodia Airport”. The company had to invest significantly to upgrade the welcoming capacities of the airports following the development of the tourism sector. In addition, new airports are being under construction near Phnom Penh, Siem Reap, in Koh Kong and Mondulkiri provinces. At the moment, only Phnom Penh airport has freight activities. The rapid expansion of the sector in Cambodia has created a demand for more airlines to link Cambodia to the rest of the world. Between 2013 and 2017, 8 cargo airlines started to operate in Cambodia, highlighting the dynamism of the sector.
Road transport remains the major logistics modality in Cambodia, accounting for more than 70% of freight traffic. The percentage of the country’s total road length which is paved is not optimal nevertheless there is a significant improvement since 1991, in particular on the main roads. Several large projects are ongoing to implement expressways with a long-term plan to establish a national expressway network. The government is also launching projects to enhance the connectivity with Bangkok and Ho Chi Minh City.
Many businesses in Cambodia are relying on international shipping and are being carried out by maritime transportation. There are two major ports: a deep-water seaport in Sihanoukville and a riverport in Phnom Penh. Sihanoukville port is now the subject of an ambitious development plan designed to improve its capacity for handling international shipments. The construction of a new container terminal is expected to be completed by 2022 to welcome deep-sea cargoes up to 14.5 meters while Phnom Penh’s capacity will be expanded to 500,000 TEU by 2025. In addition, a new seaport is currently under construction near Kampot but will focus mostly on the development of tourism.
In terms of rail transport, the railway system in Cambodia consists of two lines: the Southern Line from Phnom Penh to Sihanoukville, and the Northern Line from Phnom Penh to Poipet, near the Thai border. A railway rehabilitation programme was launched to re-introduce the freight and passenger services. The railway system is currently run by a Cambodian group. In 2019, a rail link with Thailand was re-established after a 45 years hiatus. A regular service is expected to be introduced but no specific details have been communicated yet regarding the schedule.
For additional information, download here a sector brief conducted by GIZ through the GBN program in cooperation with EuroCham and ADW.
