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Cambodia: Trade up, but logistics struggleThursday, January 22, 2015 > 09:59:06
(Phnom Penh Post)
Cambodia’s logistics performance and supply-chain efficiency has declined despite notable rises in trade volumes with European markets, a recent study shows.
Global supply chain firm Agility released its Emerging Markets Logistics Index 2015 (EMLI) yesterday. Cambodia fell three places on the index to 44th position out of 45 countries – better than only Uganda.
EMLI rankings take into account each country’s potential economic growth, accessibility and attractiveness for foreign investment as well as a nation’s domestic and international transport infrastructure.
Of the measures, Cambodia received the lowest score of all 45 nations in market size and growth attractiveness, or the country’s economic output combined with financial stability and population size.
“[Cambodia] has seen improvements in economic conditions,” the report says. “Still, social conditions require considerable improvements.”
Despite falling on the index, Cambodia air export volumes to Europe registered 41 per cent increase in 2014, the second biggest increase after Vietnam-US trade.
“Cambodia-EU is expected to continue on an explosive growth trajectory,” the EMLI report says. “However, it is worth emphasizing that this is the smallest trade lane by tonnage in the top 25, with eleven other lanes experiencing higher growth in absolute terms.”
Cambodia’s strong trade with the European Union, however, failed to impress industry professionals.
A survey of 972 logistics professionals, also included in Agility’s January 20 report, showed the Kingdom was the eleventh least attractive market for logistics investment, up two spots compared to 2014 survey results.
One such logistics firm, which services the Cambodia to European trade line, is CMA CGM Group.
Nhiev Kol, general manager for CMA Cambodia, was unsurprised at the latest EMLI results. He said port and overland transport costs remain major risks to the supply chain and burdens for importers of Cambodian goods.
“This logistics cost adds to the cost per unit, which means we cannot compete with neighbouring Thailand and Vietnam in the export of rice, rubber, resin, cassava, etcetera,” Kol said yesterday.
Thailand, Malaysia, Vietnam and the Philippines all ranked within the top 20 of the EMLI.
“CMA has no choice but impose higher tariffs to the final customer. At the end of the day, we both suffer due to the simple fact that we export less.”
CMA’s shipping volumes have grown about 5 to 10 per cent annually over the past three years, according to Kol.
John Manners-Bell, CEO of Transport Intelligence, a logistics analysis firm that compiled data for the EMLI, commended all 45 emerging markets for maintaining growth amid the slower-than-expected global recovery since the 2008 GFC.
“Despite the challenges, interest remains high in these volatile markets as indicated by increased infrastructure investment, expanding international trade and increased domestic demand,” Manners-Bell said. “Global manufacturers, retailers and their logistics service providers need to remain cognizant of the shifting dynamics if they are to exploit the significant opportunities which exist.”