Demand for cheaper and more reliable cargo transport in Cambodia is putting new pressure on the country to modernize and expand its long-ignored rail system, experts say.
Speaking at an infrastructure conference in Phnom Penh last week, Prime Minister Hun Sen called for greater investment in railway infrastructure in order to tap into regional trade and keep Cambodia competitive as a business destination.
“We are looking…to build an efficient rail system between urban areas and to neighboring countries,” he said.
Cambodia has just two railway lines. The 266-km Southern Line connects Phnom Penh to the seaport in Sihanoukville and has been open to freight traffic since 2013. The planned 386-km Northern Line would connect Phnom Penh to Poipet City on the Thai border, but is not complete, with a long section of old tracks between the capital and Battambang City still in disrepair.
“The country’s economic boom is raising the demand for the railway, which is cheaper, carries more volume and is safer for container transport than traditional highway travel,” Pheng Sovicheano, spokesman for the Ministry of Public Works and Transport, said this week.
“The Northern Line should be fully completed in one to two years and will allow our rice to be transported from the growing regions, including Battambang through to Sihanoukville, cheaply for the first time,” Mr. Sovicheano added. “Both the Southern and Northern lines offer key opportunities for international trade.”
But according to Sin Chanthy, president of the Cambodia Freight Forwarders Association, businesses will continue to rely on more expensive—albeit faster—road transport until the the country’s rail system expands and improves.
“Based on broad estimates, trucks carry about 40 percent of freight, air around 20 percent, and just 5 percent by train. The rest is via sea,” Mr. Chanthy said.
“We need more trains and better networks; they can cut costs and are more convenient,” he said.
John Guiry, CEO of Royal Railway, which holds a 30-year concession to operate the two railway lines, said increasing numbers of garment factories, rice millers and small-parts manufacturers were expressing interest in shipping goods using the Southern Line in order to keep their costs down and compete with foreign firms. He said his company had contracts with between 30 and 35 businesses.
“Companies see the need to compete, and trucking costs for standardized units of the same good can be at least 20 percent cheaper by train,” Mr. Guiry said. “So we’ve been working with the government and private sector on initiatives to enhance cargo capacity to accommodate growing demand.”
The projects include: improving the accessibility of the Phnom Penh dry port on the city’s outskirts, double-stacking containers on trains, increasing the frequency of trains, and modernizing train crossings.
Safer and more modern crossings, he said, “will reduce time lost due to traffic ignoring road crossings, and should save about two hours [per journey].”
“A new siding into the dry port will be completed by the summer, and the other projects will be implemented soon after,” he added.
Royal Railway currently runs up to four cargo trains between Phnom Penh and Sihanoukville each day, mainly transporting coal, cement, rice and garments. Each train has up to 60 cars, with each car carrying a maximum of 60 tons, according to the company. By comparison, a container truck can carry up to 42 tons, it says.
The Southern Line competes directly with container trucks moving goods along National Road 4, which links Phnom Penh to Sihanoukville. While it takes nearly 12 hours for a train to travel between the cities, compared to five or six hours by road, cargo trucks often spend up to four hours waiting behind other vehicles to enter the Sihanoukville Autonomous Port, according to Mr. Guiry.
There are other factors to consider, too, said Somoeun Tith, commercial manager for Royal Railway.
“Customers are noticing poor road maintenance, congestion and restrictions on overloaded trucks,” Mr. Tith said. “Goods have also been stolen on the road, and firms are now looking for better security and insurance.”
“So, we’ve also noticed demand for transporting higher value products, including from Western garment manufacturers, high-quality rice and $300,000-value cars.”
Nuon Ratana, sales and marketing manager for RDL Logistics, a freight-forwarding firm, said his clients, particularly in the rice industry, had begun trading National Road 4 for the Southern Line.
“Train freight is underutilized. It is very much a new concept for some trading companies,” he said. “But it is suitable for long distance and less expensive, so it helps save on these transportation costs.”