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Freight

Logistics industry insiders hopeful but they see little change for now

Logistics industry insiders in the Kingdom have not seen evidence of imports and exports growing noticeably in early 2021 but are hoping to see that change as the availability of COVID-19 vaccine inoculations widens in the country and region.

Sin Chanthy, president of the Cambodia Logistics Association (CLA), concurs, saying that activity in the sector has yet to improve as demand remains stagnant.  However, he did note that some Cambodian exports, including agricultural commodities, electronics and bikes have increased significantly.

Chanthy said there are hopes for a reset towards slight improvement taking hold by the middle of the year as vaccinations spread throughout the region. He added this should trigger an uptick in demand and that activity in the logistics sector will increase in parallel. However, he did point out that issues in air transport may continue for the immediately foreseeable future.

He added that during the pandemic, 20 to 30 percent of CLA’s membership reported their operations as severely affected. Chanthy noted that some members came close to closing, others suspended their business operations and some are still only just surviving.

Chanthy reports that at present, some cross-border transportation between Cambodia and Vietnam and Cambodia and Thailand has been affected by strict control measures designed to contain the spread of Coronavirus. It has taken longer with the measures in place for goods to pass borders – up to two to three days in some cases.

Im Phal, managing director of freight forwarder OBS Logistics Co Ltd, said last year his business dropped significantly, between 30 percent and 50 percent. However, he added that it has recovered slightly so far this year.

“What has driven the slight recovery of my business is that 20 percent of my customers account for 80 percent of our revenue,” said Phal. He added that his company focuses only on the transport of products such as food and beverages, electronics and travel bags, sectors that have not been affected as much by the pandemic as others.

Phal added that 2021 is moving forward step-by-step and it will take years to assess 2020’s full impact and just as long to return to normal. Business remains essentially stagnant according to Phal.

The National Bank of Cambodia (NBC) said in a report released earlier this year that the Kingdom’s total exports increased by 15.9 percent in 2020 because of rises in gold, electronics, bicycles, milled rice and rubber exports. It reported that exports of garment products dropped 7.8 percent.

Total imports to Cambodia fell 10.1 percent in 2020 after having risen 18.3 percent in 2019 compared with 2018 figures. The decrease in imports was because of the slowdown of raw materials sourced from foreign suppliers for use in the garment, footwear, construction, automotive and fuel sectors.

Chandara Chea, president of the Logistics Business Association, agreed that early 2021 has seen little change in logistics activity. He noted that the traditional peak season for logistics is July to November.

Chandara added that after the Chinese New Year, import and export activity was silent because most investors in Cambodia start their businesses or operations after that holiday. As such, from January to February business remains slow but resumes from March to November.

He added that COVID-19 has affected the entire economy, particularly local businesses, but as far as cross-border trade goes, if sales and purchase agreements are signed, exports and imports run normally. He noted that once there are more buyers, then production capacity will increase and imports of materials will as well.

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