Progress is an ever evident force in Southeast Asia, as many of the countries in this region have at one time or another been at the top of the charts for emerging economies. Both internal and external market forces have created a competition amongst neighboring countries in the region, and it seems it may be Cambodia’s turn to shine. This burgeoning economy is full of potential and promise, and many are taking notice. The country boasts a number of advantages with their strategic location for cross-border transportation, as well as river ports, sea ports, and airports; Cambodia has a number of means to connect themselves to worldwide markets.
In a response to the increasing need for import and export providers, DSV decided to expand their network coverage to Cambodia with the opening of DSV Air and Sea Cambodia. The opening came in 2016 after DSV’s acquisition of UTi Worldwide, which had operated in the country since 2005. DSV kept much of the experienced team already in country to help them establish a strong foothold, as they aim to fully support and provide a wide range of services for both importers and exporters, including integrated services for domestic markets. Currently, DSV Air and Sea Cambodia offers air and ocean freight forwarding services, warehousing, customs clearance, buyer’s consolidation, including land-air transportations for customers.
To learn more about their operation, we sat down with Ms. Kanyarad Julhiran, Managing Director at DSV Air and Sea Thailand, and DSV Air and Sea Cambodia. She spoke with us further about the opportunities and potentials that DSV sees in the Cambodian market.
Supporting Burgeoning Markets
Over past few years, Cambodia has become well-known as one of the fastest growing clothing and garment manufacturing bases in the world. Many logistics companies and forwarders are pouring in to set up bases of operation in the country to provide mainly export services in this blooming market. Both shipping lines and airlines are continuing to expand their services to and from Cambodia with wider range of service and more frequency. At the same time, the Cambodian government is improving their customs regulations and infrastructure to uplift the country’s capability and to support the growth of manufacturing and export sectors at the same time.
Ms. Julhiran said, “Most of the manufactures in Cambodia are producing garments and footwear. There are a number of investors who are seeking to expand their manufacturing bases to produce global brand garments, especially Chinese investors since manpower in Cambodia is still lower compared to other neighbor countries like Thailand or Vietnam. Moreover, with the ideal location and readiness of its international airports, Phnom Penh Autonomous Port (Phnom Penh River Port), deep sea port likes Sihanoukville Autonomous Port and road connections make Cambodia enticing for Thai, Japanese, Korean, Chinese, Vietnamese and many international investors interested in producing products that are then exported to Europe, North America, and other major markets in the world.”
Connecting to a Worldwide Network
“DSV has strong expertise and experience in providing freight forwarding and logistics in emerging markets backed with the full support from our networks in every region across the world. Our customers can trust in our wide range of services. Even though our major customers in Cambodia are textile and garment industries, we are beginning to see a wider variety of inbound and outbound cargo like cosmetics and electronic devices. The quantity of these items might be small today, but it lets us clearly see the tendencies and potential of this market.”
Ms. Julhiran further extrapolated on the potential DSV Air and Sea Cambodia see in the import market in Cambodia. Most people understand that Cambodia is a manufacturing and exporting country, but even so they still need to import almost all the raw materials used to make all types of various products. On top of that, they also import most of their consumer products, construction equipment and materials into the country. More importantly, most payment terms for import are cost, insurance and freight (CIF), which the sellers of the goods pay for freight forwarding and cargo insurance at the origin. This is why the connection and network coverage is so important. For DSV, they have inherent strength in this, so that they can use their worldwide network to sell their services at the origin too.
“We aim to grow more in the import sector. From our experiences in the industry and in Cambodia, we understand that most of the freight forwarders rely solely on export services. If the customers at the destinations don’t use our services, we may lose that piece of the pie. So, when looking other areas with potential, the import market stuck out to us. In Cambodia, they import almost everything from consumer products and electric appliances, to the raw materials used for the backbone industries of Cambodia like fabrics and accessories for clothing and the garments industry,” said Ms. Julhiran.
As warehouse providers in Cambodia continue to invest more heavily into the country, international management systems, like C-TPAT and ISO, are beginning to be applied to more and more operations. There are also more technological advancements being implemented to warehouse operations in order to lift the level of their services and security. Since most of the manufactures in Cambodia are producing global brand name products, customers rightly put a big focus on the safety of the products.
DSV understands these needs are important, so the company only chooses to partner with reliable warehouse and truck service providers, who are eager to work and invest into their facilities and fleets in order to meet DSV requirements. In Cambodia, DSV chose to work with partners who can provide both warehouse and trucking services, resulting in increased cargo safety and reducing the risk of shipment loss.
“Most of the global brand customers normally have their own handling procedures. Each of the products quality needs to be double checked as well as corresponding labels and tags. So DSV as a service provider needs to ensure our customers that we have expertise and strong experience in handling high quality products. We ensure that each of our operational processes align exactly with customers’ SOP. Again, this is why we need to work with the suppliers who are willing to invest into their facility in order to meet our requirements and are ready to support our growth,” said Ms. Julhiran.
Investing in Local Expertise
While logistics services in Cambodia currently are not as robust as they are in neighboring countries, more global logistics providers are eyeing to invest into Cambodia. Most of them are looking at the potential of export market. While DSV recognizes the value in that market, they see things differently and are also aiming to expand their services to further focus more on import services, warehouse management and logistics solutions. DSV also plans to bring more technology, innovation and know-how to serve the customers in Cambodia.
Today, DSV is continuing to develop the skills of the people in the company and try to make their Cambodian team stronger. They also have programs to exchange staff from different countries to further strengthen their company. Cambodian staff visit DSV operation sites and offices in Thailand, and conversely specialists from Thailand are sent to Cambodia to share their know-how and expertise with DSV Air and Sea Cambodia. This helps all of the Cambodian staff to be better able to provide better service and helps to encourage future strong growth just waiting to be unearthed in Cambodia.