Cambodia Logistics Market Size & Share Analysis (2024-2029)
The Cambodia Freight and Logistics Market is projected to reach USD 1.91 billion in 2024 and grow to USD 2.32 billion by 2029, reflecting a compound annual growth rate (CAGR) of 3.95% over the forecast period. Despite the global supply chain disruptions caused by the COVID-19 pandemic, Cambodia’s logistics sector showed resilience, rebounding to near pre-pandemic activity levels after initial setbacks. Understanding these insights derived from the experts at Cambodia Logistics Consulting is crucial for stakeholders and investors looking to capitalize on the market.
Economic Growth and Infrastructure Development
Cambodia, located in Southeast Asia, has been one of the region’s fastest-growing economies, with an average GDP growth rate of approximately 7% over the past decade. This economic expansion, along with a burgeoning population, has significantly increased the demand for improved transport infrastructure. To address these needs, the Cambodian government, in collaboration with development partners, introduced the “Logistics System Improvement Master Plan” in 2018. This plan aims to enhance the logistics network and prioritize key projects to support sustainable economic development.
The Cambodian economy relies heavily on four main sectors: agriculture, tourism, manufacturing (particularly garments for export), and construction. Efficient transportation is essential for these sectors’ growth. Agriculture depends on road and maritime transport for exports, tourism relies on international air carriers and road transport, manufacturing needs road and water transport for both raw materials and finished goods, and the construction sector requires efficient delivery of materials via road and water transport. Thus, the development and maintenance of the transportation infrastructure are critical to sustaining economic growth.
Shipping Cost Challenges
A significant challenge in Cambodia’s logistics sector is the high cost of shipping, especially to distant markets like Europe and the United States. Shipping expenses constitute between 10% and 20% of product prices, and container costs have risen considerably during the COVID-19 pandemic. For example, shipping container prices to the US and Europe surged from approximately USD 2,000 pre-pandemic to between USD 8,000 and USD 10,000 during the crisis, with special shipping rates sometimes reaching as high as USD 15,000 per container.
Growth in Rail Freight and E-commerce
Rail freight and passenger transport are seen as potential catalysts for economic growth and employment, attracting foreign investment. Export-oriented companies have been pivotal to Cambodia’s economic success. The logistics sector is a core component of Cambodia’s development strategy, with the World Bank predicting that by 2030, Cambodian businesses will be transporting four times as many goods via highways, ports, airports, and warehouses.
The rapid development of e-commerce is also transforming Cambodia’s logistics market. Online shopping has become increasingly popular, offering numerous opportunities for small and medium-sized enterprises (SMEs). The convenience of online shopping, along with various payment options and cost-effective delivery services, has driven its appeal. Government initiatives, such as the Go4eCAM project, aim to bolster the local e-commerce ecosystem and support SMEs in leveraging digital trade.
Competitive Landscape
Competition in Cambodia’s logistics industry is extensive, with a diverse array of both local and global companies vying for market share. Major players include Sihanoukville Autonomous Port, Phnom Penh Autonomous Port, Damco Ltd, CBG Logistics, Nippon Express, and others. The ongoing economic growth and infrastructure development are creating new opportunities for logistics providers.
Conclusion
In summary, the Cambodia Freight and Logistics Market is set to experience steady growth, driven by economic expansion, infrastructure improvements, and the rise of e-commerce. Despite challenges like high shipping costs, the sector’s resilience and government initiatives are fostering a strong logistics environment. For businesses looking to navigate this dynamic market, consider partnering with our Cambodia Logistics Consulting team at Eurogroup. We provide valuable insights and strategic guidance to capitalize on emerging opportunities.