Textiles make Cambodia a stylish destination for freighters

On flights from Singapore to Moscow, AirBridgeCargo Airlines (ABC) has taken to carrying a significant volume of textiles, a commodity not usually associated with Singapore. The cargo comes from a place that, until recently, was never a major player in terms of air cargo: Cambodia.

Since early July, ABC has operated a weekly freighter from Moscow to Singapore that returns to base via Phnom Penh, the Cambodian capital. According to the Russian carrier, the new flight accommodates traffic from Cambodia to Europe and North America while it supplements its lift in and out of Singapore.

ABC is not alone in its recent attraction to the Southeast Asian nation, as a veritable procession of airlines have moved freighters into Phnom Penh. The influx of freighters into Cambodia started last year, when Cathay Pacific added Phnom Penh to its maindeck network, with weekly 747-400F service. In April of this year, Emirates started weekly all-cargo service between Dubai and Phnom Penh with an MD-11 freighter leased from Global Africa Aviation. That same month saw the launch of a Cambodian freighter operation by Malaysia-based Raya Airways. In May, Turkish Airlines inaugurated a weekly run between its Istanbul home base and Cambodia, fielding an A330-200F. Another regional link was established last month by DHL, which launched freighter flights between Phnom Penh and Bangkok, operating five times a week, with a 737-400F operated by K-Mile.

So what’s behind the sudden attraction to this land-locked Southeast Asian nation? The biggest driver has been the apparent migration of manufacturing – especially garments – from China to Cambodia. World Bank statistics show that the Cambodian economy expanded 7 percent in 2015. Tonnage moving through Phnom Penh climbed 14 percent last year and gathered further momentum in 2016, showing a 17 percent increase in the first five months of the year.

Some observers in the region also reckon that the security concerns over garment traffic from Bangladesh that prompted several countries (Australia, Germany and the U.K.) to ban direct cargo flights from there are adding to the growth of such exports from Cambodia.

“Against the backdrop of China’s slowing export growth, the Cambodian market looks appealing with double-digit growth in 2015, supported by ambitious airport development plans,” commented Robert van de Weg, ABC’s senior vice-president, marketing and sales. “By establishing our footprint in this country, not only do we open up new destinations for our customers, but we also strengthen our position in Southeast Asia – the main driver of world trade. We strongly believe that customers with export flows of fashion textiles and garments will benefit the most from this new service.”

Cathay Pacific’s tonnage out of Cambodia climbed 50 percent last year, according to Mark Sutch, the carrier’s general manager of cargo sales and marketing. While there are no plans to increase freighter capacity in Cambodia at present, “we may look at up-gauging our [passenger] equipment from A320 to A330,” he commented.

Sean Wall, executive vice-president, network operations and aviation, at DHL Express Asia Pacific, is bullish on intra-regional flows. “Cambodia is fast becoming an important trading player in Southeast Asia and the demand for movement of goods will grow in tandem,” he said. According to the integrator, trade between Cambodia and Thailand reached US$5.1 billion last year and Cambodian imports from Singapore were worth $1.05 billion.

Oliver Wu, country manager for DHL Global Forwarding, said DHL cannot avail itself of the lift brought in for the express arm of the organization, so it will continue to truck freight to Thailand. “Cross border trucking is lower in cost compared to airfreight to Bangkok, and we have our own specialized trucking service from Cambodia to Bangkok,” Wu explained. “So far, we have seen success for our road-air solution via Bangkok.”

Garments have historically dominated Cambodia’s exports. For example, sweaters worth US$1.8 billion were shipped out of the country in 2014. However, outbound food shipments are on the rise, as evidenced by the opening of a new temperature-controlled facility in Phnom Penh last month by Yusen Logistics. The 33,000-square-foot building is reportedly the largest temperature-controlled warehouse in the Cambodian capital.

Yusen’s move shows that not only airlines are homing in Cambodia; international logistics players also have the country in their sights. Rotha Sang, president of local forwarder Asian Freight (Cambodia), reported that his company’s airfreight tonnage has declined since last year due to rising competition.

The increase in volume, meanwhile, has overwhelmed Phnom Penh. “We don’t have enough air space to uplift cargo from Cambodia, and many shippers and forwarders still arrange logistics across the borders to Thailand and Vietnam for airfreight shipments,” Rotha Sang said. In one recent case, the importer refused to sanction trucking to Bangkok, so Asian Freight ended up splitting the large shipment over several passenger flights.

So, in light of these struggles to find enough lift, the new freighters buzzing around Phnom Penh are a welcome sight indeed to the Cambodian logistics business.

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