The Cambodia freight and logistics market is expected to grow at a CAGR of around 5% during the forecasted period. Cambodia currently has four drivers of growth: agriculture, tourism, manufacturing (mainly garments for export), and commercial and residential construction. Expansion and diversification of Cambodia’s drivers of growth, especially agriculture, are important development objectives for the government. Efficient transport is critical for the growth of those sectors. The agriculture sector relies on road and maritime transport for exports, the tourism sector relies on international air carriers and road transport, manufacturing relies on road and water transport to deliver the materials needed and to export finished products, and the construction sector relies on water and road transport to deliver materials. So, to maintain the economic growth the transportation sector needs to be developed and maintained.

Key Market Trends

Logistics System Improvement Master Plan – Government Initiative

Located in South-East Asia, Cambodia is one of the fastest developing countries in Asia, with an average GDP growth rate around 7% over the past decade. The economic boom, combined with a growing population, has resulted in an increased pressure on the country’s transport infrastructure. In order to facilitate the development of transport infrastructure the Government of Cambodia and development partners prepared a “Logistics System Improvement Master Plan” in 2018 to improve the logistics system and implement priority projects identified for realizing sustainable economic growth. The plan focuses on infrastructure development of roads, railways, inland waterways, ports, multimodal transport facilities, and air cargo hubs. Tourism is another important cross-subsector focus for transport infrastructure development. The transport sector plays important roles in Cambodia’s national strategic goals of promoting growth, employment, equity, and efficiency. The government aims to enhance transport connectivity and build vibrant logistics systems to enhance the competitiveness and diversification of the economy. The Industrial Development Policy, 2015–2025 requires the improvement of the transport network, especially along the industrial corridor. The government has also assigned a total of US$ 910.40 million for transport infrastructure in their annual National Budget from 2014 till 2018 to further the initiatives.

Improved Logistic Performance Index Ranking

Logistics is the management of the flow of raw materials and finished goods through a transport network. The process involves a chain of defined events, activities, and infrastructure, which together determine a country’s logistics performance in terms of cost, quality, and ultimately its competitiveness. The ranking of Cambodia’s logistics sector in the World Bank’s Logistics Performance Index improved from 129th place in 2010 to 73rd in 2016, but dropped to 98th in 2018. Cambodia’s performance rating lags behind that of neighboring countries because of lack in customs, infrastructure, logistics competence, and tracking and tracing. Considering that transport volumes have increased over the last 2 decades and are expected to increase further, the existing physical infrastructure is of insufficient capacity and quality. Inefficient customs procedures and inadequate infrastructure constrain the logistics performance of international corridors as well. The Logistic sector performance in Cambodia and the country’s Ranking in World Bank’s Logistic Performance Index is bound to improve with initiatives taken by the Cambodian Government.

Competitive Landscape

The competition in the logistics industry in Cambodia is highly fragmented with the presence of both domestic as well as international logistics companies in the country. Cambodia’s local logistics providers offer domestic services, with a limited service range and low-to-average quality of service, barring a few providers who are market leaders. With the economic boom and transport infrastructure development the business opportunities for Logistics providers are also improving. Some of the existing major players in the market include – DB Schenker, UPS, DHL, CEVA Logistics, Yusen Logistics, XPO Logistics, Naniwa Transport, Sinotrans, Bright Star Logistics Service Providers, Kuehne + Nagel Ltd., FedEx and VTS (Cambodia) Co., Ltd.

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