Panalpina opens new venture in Cambodia

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PanalpinaRising opportunities in the emerging economy of Cambodia continue to attract more international investors, including forwarding and logistics company Panalpina.

The firm opened its latest operational base in the capital city of Phnom Penh in August, providing global and local air freight and ocean freight services, customer brokerage, in-land transportation, cross-border trucking with Vietnam and Thailand, container freight station consolidation, and warehousing and storage services.

“Our new office in Cambodia demonstrates Panalpina’s interest in the emerging economies we believe will provide strong opportunities for business growth,” said Benny Ong, country manager for Panalpina Cambodia.

Currently benefiting from two decades of relative economic stability, the country has become an interesting market for investors with its stable annual GDP growth of about 7% and growing opportunities in the textile, agriculture, and construction industries, noted Ong.

The garment industry represents the largest portion of the domestic manufacturing sector, accounting for 80% of exports and directly impacting the volume of air freight shipments to and from the country. In 2015, air freight traffic increased 14% year-on-year at Phnom Penh International Airport, attributed to a strong demand for local garments in overseas markets, such as the U.S. and Europe.

Cambodia’s total garment and footwear exports earned US$6.3 billion in 2015, with a growth rate of 6.7% compared to 2014. Exports have been growing continuously for the last 20 years, and are expected to continue growing in 2016, said the supply chain operator.

Revenue growth has also been recorded at two of Cambodia’s international shipping ports, Phnom Penh river port and Sihanoukville.

Phnom Penh has seen strong growth in recent years, thanks to continually growing container traffic. The port handled 144,813 TEUs in 2015, up 8.3% year-on-year as a result of surging exports, particularly rice and construction materials.

The ASEAN nation’s sole deep-sea port Sihanoukville handled 392,000 TEUs of container throughput in 2015, with average growth of 10% to 15% per annum during the last five years.

The agriculture sector, the main source of income for many Cambodians living in rural areas, has benefited in recent years from government quota on rice exports to China, Europe, and the U.S. and from tax-free imports of agriculture equipment.

“As manufacturers increasingly look towards Cambodia as a key market for goods, the need for transport logistics increases,” said Ong. “Cross-border trucking between Cambodia, Vietnam and Thailand is fueling demand for more value added services.”

As yet, Cambodia has no proven reserves of oil or natural gas. However, in the last few years, the Cambodian government has granted a number of licenses for petroleum exploration. “Considering the current downturn in the global oil and gas business, the possibility of a burgeoning oil and gas market in Cambodia is an exciting opportunity for Panalpina, and one that we will be paying close attention to in the future,” he added.