Logistics in Cambodia is growing slowly, but it’s growing steadily. By the end of 2021, this sector is expected to grow by 5%, and there are a handful of factors that are driving this even further. This is why the government and global investors are expecting this sector to grow more over the coming years.
Four of the key sectors that are driving the logistics sector in Cambodia are tourism, agriculture, manufacturing, and construction. What’s promising is that the government of Cambodia is taking steps to significantly expand these sectors.
A common thing that each one of these sectors requires is reliable land transportation. As a result, the necessity of an improved and bigger logistics sector is increasing too.
In this article, we’ll discuss the drivers of logistics in Cambodia, the transport management system, and much more!
Key Drivers of Logistics in Cambodia
Here are the sectors that are driving the logistics in Cambodia:
Cambodia is a developing country, and there are still a lot of things that the government has to work on. For example, only 70 percent of the provincial roads and 96 percent of the rural roads are paved in Cambodia. A few years back, the World Bank-financed their government so that the roads can be improved.
Then again, the fees at the seaports of Cambodia were one of the greatest in Asia. However, the government reduced the fees by a great extent in 2019, which resulted in more traffic in the ports. The extra traffic is tough to handle, and the infrastructures are being developed so that the extra traffic can be tackled more efficiently.
Sihanoukville Autonomous Port (SAP) is the largest and only commercial port in Cambodia, and the number of containers received in this port has grown by 11% in the past few years. Due to this sudden spike, there are plans to improve this seaport.
Cambodia frequently trades with China, which is another reason why China is interested in investing in Cambodia and its infrastructures. Once a deal is made, the necessity of the logistics sector will only spike.
As you can see, already a lot of infrastructure development projects are going on in Cambodia, and this is only expected to increase. Without the help of logistics, it’s impossible to develop a certain plan. This is why the logistics sector will get more work, and a decent transport and warehouse management system is necessary to tackle this growing need.
There’s hardly any industry that manufactures every part, starting from the raw materials to the final product, in the same location. Manufacturing requires a lot of components, to begin with. The duty of transporting the raw materials falls right onto the logistics department.
Then again, once a factory ends up producing a batch of products, it must store it until the time it’s shipped off. This is where the warehouse management system comes in. Nowadays, most factories and stores don’t manage their warehouses.
Instead, they look for service providers from whom they can outsource. This is a growing trend, and it’s taking over the world rapidly. This is another service that’s being provided by logistics sectors. Through this method, the manufacturers need to pay for only the amount of space that they are using, and no more. So, it’s cost-efficient for them, and beneficial for the service providers too.
Tourism is one of the most important sectors of Cambodia, and it’s one of the few sectors that’s been on the rise for quite a lot of time. The tourism industry of Cambodia started growing back in 2004, where it jumped by a massive scale of 50%. Even now, this sector is growing by 10%!
If there’s one thing tourism requires, that’s logistics. Unless there’s a steady and reliable transportation system in the country, tourists won’t come. This is where the logistics sector of Cambodia can improve. Even though it’s quite good, there’s always room for improvement.
So, this sector is driving the logistics in Cambodia, and it’s a good sector to invest your money in.
Government Initiative for Improving Logistics In Cambodia System
What’s even more promising is that the government of Cambodia has taken up an initiative for developing its logistics and warehouse management systems. The GDP of this country is increasing at a rate of 7%, and due to their growing economy, the population is growing as well.
Due to this population boom, there has been increased pressure on the transportation system of Cambodia, which directly ties into its logistics system.
Back in 2018, Cambodia took upon a new project that’s known as the “Logistics System Improvement Master Plan”. The priority of this project is to improve the existing logistics system, create new scopes and opportunities, and implement whatever resource the country already has.
This plan is focused on improving the inland waterways, railways, ports, roads, air cargo hubs, etc. so that goods can be transported fast and efficiently. Another sector this plan is working on is the tourism sector. As we’ve said before, tourism plays a great role in the development of Cambodia as a whole, and for its logistics sector.
So, this plan is supposed to create a lot of demand for logistics. It is likely to improve it as well. This is certainly a good flag for investors.
There’s a ranking system that ranks each country according to its performance in the logistics sector. Back in 2010, Cambodia was ranked 129th in the whole world. However, they improved to 98th back in 2018, and this is expected to improve by a great deal.
This forecast is based on the current steps that are being taken by the Cambodian government. If they keep on bolstering their logistics system, then the revenue stream gained by the investors will likely increase. So, now is the right time to invest in the logistics of Cambodia.