2015 - 16 KSP With Cambodia (English)

Logistics System Development Strategies for
Cambodia
2015 Knowledge Sharing Program
Construction and Infrastructure Policy Consultation Project
Project Participants
Execution of the Project (1) : Korea Research Institute for Human Resources
Kim Jonghak(National Infrastructure Research Division, PM)
Kim Jungi (National Infrastructure Research Division)
Oh Sungho (National Infrastructure Research Division)
Ko Yongseok (National Infrastructure Research Division)
Park Jongil (National Infrastructure Research Division)
Hong Kyoungsun (National Infrastructure Research Division)
Park Bora(National Infrastructure Research Division)
Execution of the Project (2) : External Expertise

Lee Hangsook (Incheon University)
Jeon Chanseok (PTOW consulting)
Local Research Team in Cambodia

Ministry of Public Work and Transportation
∣ Preface ∣
The Knowledge Sharing Program (KSP), launched to share the

experiences and knowledge that Korea has acquired in the process of
economic growth with developing countries around the world, has become a
major part of Korea’s ODA projects. KSP was launched in 2004, and has
opened the way for Korean companies looking for opportunities in overseas
businesses. It has also discovered new growth potential in foreign markets,
so there has been increasing demand for KSP projects. By providing policy
consultation in construction and infrastructure areas where Korean
companies show strength, KSP projects can be implemented more
strategically and the follow-up projects can be planned and integrated more
effectively.
This year’s KSP project was launched based on the expertise of the
Korea Research Institute for Human Settlements (KRIHS), and the policy
consultation agenda will be developed to support the recipient country’s
socioeconomic development; Relevant overseas projects will be planned to
open up new doors to overseas markets for Korean companies. Since April
2015, KRIHS has devoted all of its resources and efforts to this “Logistics
System Development Strategies for Cambodia KSP”, arranging discussions,
an interim report, a policy authorities training program and a final report
between the two countries. At the final report held in Cambodia, the final
project plan, which was prepared through a number of discussions with the
policy authorities in Cambodia, was announced.
This report includes KRIHS’ policy consultation for Cambodia. KRIHS has
examined the current state of logistics in Cambodia, shared Korea’s
experience in logistics development policies, studied implications for
Cambodia’s future logistics policies and provided policy suggestions for
Cambodia.
We would like to express our sincere gratitude to all the KRIHS
researchers and external advisors who worked very hard to study and share
Korea’s economic development model and all the affiliated organizations and
local experts in Cambodia for their support and cooperation. We also thank
the reviewers and advisors who gave valuable opinions and ideas as the
report was developed. We would like to send out a very special thank you
to the International Economic Affairs Bureau of the Ministry of Strategy
and Finance and its officials for their efforts and valuable administrative
support.
Thank you once again to everyone for their hard work and dedication,
and we promise all of you that we will do out best to advance our KSP
project and to contribute to the national development and prosperity of
Laos.
Lastly, we would like to point out that the opinions included in this
report are the opinions of the experts and advisors who have participated in
the project and that they do not reflect the official opinion of the Korea
Research Institute for Human Settlements (KRIHS).
August 2016
Kim Dong-joo
President of KRIHS
Contents
1
Implications and Expected Effects of Logistics System
Development Strategies for Cambodia 1
Chapter 1. Introduction 3
Section 1. Background and Necessity of Study 3

Section 2. Study Objective and Content 6
Section 3. Study Scope and Method 8
Chapter 2. Current Status of Social Economy & Logistics

Infrastructure in Cambodia 11
2
Section 1. Review of Upper Plan 12
Section 2. Social Economic Status 16
Section 3. Current Status and Problems Related to
Logistics Infrastructure 23
Section 4. Implications on Policies 75
Chapter 3. Institution and Operation of Logistics in Korea

77
Section 1. Legal Institutions 78

Section 2. Logistic Infrastructure 93
Section 3. Logistic System 104
3
Section 4. Implication of Policies 114
4  2015 Knowledge Sharing Program III

4
Chapter 4. Logistics Development Strategy for Cambodia
119
Section 1. Basic Direction 120

Section 2. Improvement Strategies for Logistics
Infrastructure 124
Section 3. Software Improvement Strategies 157
Section 4. Comprehensive Action Strategies 166
5
Chapter 5. Conclusion 169
Section 1. Comprehensive Suggestions on Policies 169

Section 2. Project Achievement 174
Section 3. Financing Plans 176
Reference 181
Appendix. Logistic Function and System 183

<Table 1-1> Map and Overall Conditions of Cambodia ······················································· 4
<Table 2-1> Economic Index of Cambodia ········································································ 16

<Table 2-2> Comparison of Cambodia and Adjacent Countries ········································ 21
<Table 2-3> Cambodian Government Bodies and Names ·················································· 28
<Table 2-4> Road Density Compared to Adjacent Southeast Asian Countries ················· 29
<Table 2-5> International Road Network in Cambodia (based on 2011) ··························· 35
<Table 2-6> 1-Digit, 2-Digit Road Enhancement Project in Cambodia ····························· 37
<Table 2-7> China’s Road Network Plan Details ······························································· 40
<Table 2-8> Japan’s Cambodian Road Network Plan Details ············································ 41
<Table 2-9> Railroad Stations of Northen Route ······························································· 43
<Table 2-10> Railroad History of South Route ·································································· 45
<Table 2-11> Overview of Routes in the Railroad Development Plan ······························ 48
<Table 2-12> Maximum Ship Capacity of Mekong River ················································· 50
<Table 2-13> Size of Phnom Penh Port ·············································································· 52
<Table 2-14> Sihanoukville Port Facilities ········································································ 56
<Table 2-15> Overview of Storage Facilities ····································································· 56
<Table 2-16> Number of Ships at Sihanoukville Port ························································ 57
<Table 2-17> Amount of Cargo Imported and Exported at Sihanoukville Port ················· 57
<Table 2-18> Amount of Cargo Processed at Sihanoukville Port ······································ 58
<Table 2-19> Number of Passenger Traffic at Sihanoukville Port ····································· 58
<Table 2-20> Development Plans of Sihanoukville Port ···················································· 58
<Table 2-21> Special Economic Zone of Sihanoukville Port (SEZ) ·································· 59
<Table 2-22> Summary of Other Small Sea Ports ······························································ 60
<Table 2-23> Other Sea Ports in Cambodia ······································································· 60
<Table 2-24> Overview of Main International Dry Ports ··················································· 61
<Table 2-25> Facility Sizes of Cambodia Airports ···························································· 63
<Table 2-26>Overview of Operated Routes at Phnom Penh International Airport ············ 64
<Table 2-27> Annual Overview of Passengers at Phnom Penh International Airport ············· 64
<Table 2-28> Annual Overview of Handled Cargo at Phnom Penh International ············· 65
<Table 2-29> Overview of the Operated Routes at Siem Reap International Airport ················ 66
<Table 2-30> Annual Overview of Passengers at Siem Reap International Airport ··········· 66
<Table 2-31> Annual Overview of Handled Cargo at Siem Reap International Airport ············· 66
<Table2-32> Overview of the Operated Routes at Sihanoukville International Airport ············· 67
<Table2-33> Annual Overview of Passengers at Sihanoukville International Airport ········ 67
<Table2-34> Annual Overview of Handled Cargo at Sihanoukville International Airport ············· 67
<Table 3-1> Comparison among the National Basic Plans on Logistics ···························· 84
<Table 3-2> Logistics-related Laws in Korea ···································································· 87
<Table 3-3> Logistics Surveys in Korea ············································································· 89
<Table 3-4> Agency Responsibilities ················································································· 91
<Table 3-5> Current Condition of Logistics Facilities Per Region ·································· 102

<Table 3-6> Current Conditions of Logistics Facilities in Korea ····································· 103
<Table 3-7> Staged Plans to Establish Comprehensive Logistic Network ······················ 108
<Table 3-8> Major Services and Staged Establishment Plans ·········································· 110
<Table 3-9> Specification of Pallet ·················································································· 112
<Table 4-1> Existing Road Network Conditions in Cambodia ········································ 126
<Table 4-2> Population and Traffic Volume for Each Province ······································ 128
<Table 4-3> Trade Volume of Major Trade Passage in Cambodia ·································· 134
<Table 4-4> Traffic Zone for Each Hub ··········································································· 136
<Table 4-5> Traffic Passage and Traffic Axis between Each Hub ·································· 140
<Table 4-6> Scoring Standard for Domestic Axes ··························································· 145
<Table 4-7> Scoring Standard for International Axes ······················································ 146
<Table 4-8> Domestic Axes Assessment Result ······························································ 147
<Table 4-9> Domestic Axes Assessment Result ······························································ 147
<Table 4-10> International Axes Assessment Result ······················································· 151
<Table 4-11> Improvement Items of Cambodian Logistics Policies and Systems ·········· 157
<Table 4-12> Responsibilities of Government and Local Governments and Responsibilities
of Logistics Companies and Shippers ··············································································· 161
<Table 4-13> Sharing Roles between Logistics Related Governmental Bodies in Cambodia ·································
165
<Table 5-1> Supporting Project for Establishing a Basic Plan on Infrastructure ············· 176
<Table 5-2> Supporting Project for Global Infrastructure Funding ································· 177
<Table 5-3> Supporting Project for Establishing an International Construction Market · 178
<Table 5-4> Utilization of ODA and EDCF ····································································· 180
<Figure 1-1> Study Strategies ······························································································ 8

<Figure 1-2> Procedures for Understanding Cambodian Logistics Related Conditions and
Establishing Improvement Strategies ···················································································· 9
<Figure 2-1> Flow of National Development Plans and the Rectangular Strategy ············ 12
<Figure 2-2> GMS Range and Site Inspection for GMS Railroad ····································· 13
<Figure 2-3> Target Rice Export Volume of Cambodia ···················································· 14
<Figure 2-4> Logistics Plans of Adjacent Countries (Left –
Thailand, Right – Indonesia) ··································
15
<Figure 2-5> Economic Growth Rate and Ratio of Each Industry to GDP ························ 17
<Figure 2-6> Community Analysis, Population Size, and Distant Distribution ················· 18
<Figure 2-7> Population Analysis in Cambodia ································································· 19
<Figure 2-8> Geographical Condition of Cambodia ·························································· 20
<Figure 2-9> Cambodian Land and Terrain Overview ······················································· 20
<Figure 2-10> Comparison of Cambodia and Adjacent Countries ····································· 21
<Figure 2-11> Water System Status in Cambodia ······························································ 22
<Figure 2-12> International Trade Volume of Cambodia ·················································· 23
<Figure 2-13> Cambodia’s major import/export cargo volume ········································· 24
<Figure 2-14> Comparison of Logistics Costs (Left) / Competitiveness of Rice Production
and Logistics (Right) ·········································································································· 25
<Figure 2-15> Supply Chain of Rice ·················································································· 26
<Figure 2-16> Rank in Infrastructure Domain (Left) / LPI Rank Comparison to Adjacent
Countries and Korea (Right) ······························································································· 27
<Figure 2-17> Major Interested Parties for Logistics ························································· 27
<Figure 2-18> Road Network in Cambodia ········································································ 30
<Figure 2-19> NR1, 2 Status (near Phnom Penh) ······························································ 31
<Figure 2-20> NR3 Road Status ························································································· 32
<Figure 2-21> NR5, 6 Road Status ····················································································· 33
<Figure 2-22> Newly Constructed Beltway ······································································· 34
<Figure 2-23> International Road Network in Cambodia ·················································· 36
<Figure 2-24> Development Plan for Cambodian Road Network ····································· 36
<Figure 2-25> Road Network Plan (China) ········································································ 40
<Figure 2-26> Road Network Plan (Japan) ········································································ 41
<Figure 2-27> Existing Railroad Network in Cambodia ···················································· 42
<Figure 2-28> Northern Route Railroad in Cambodia ······················································· 44
<Figure 2-29> Overview of South Route Railroad in Cambodia ······································· 45
<Figure 2-30> Annual Overview of Train Operation ························································· 46
<Figure 2-31> Transportation Progress of Freight Cars (ton) ··········································· 46
<Figure 2-32> Railroad Network Plan ··············································································· 48
<Figure 2-33> Overview of Inland Waterways in Cambodia ············································· 49
<Figure 2-34> Maximum Ship Capacity of Each Section of the Inland Waterway in
Cambodia ···························································································································· 51
<Figure 2-35> View of Phnom Penh Port ··········································································· 52
<Figure 2-36> Phnom Penh Port Pier and Cargo Handling Facilities ································ 52
<Figure 2-37> Quantity of imported and exported goods through Phnom Penh Port ········ 52
<Figure 2-38> Quantity of Imported and Exported Goods through Phnom Penh ·············· 53
<Figure 2-39> Landscape of Phnom Penh New Port ·························································· 54
<Figure 2-40> Sihanoukville Port ······················································································· 55
<Figure 2-41> Cargo Warehouse at Sihanoukville Port ····················································· 57
<Figure 2-42> View of Container Handling Facilities at Sihanoukville Port ····················· 57
<Figure 2-43> Sihanoukville Port SEZ Development Plans ············································· 59
<Figure 2-44> Location of Main Dry Ports ······································································· 61
<Figure 2-45> Camodia Airport Location ·········································································· 62
<Figure 2-46> View of Phnom Penh International Airport ················································ 63
<Figure 3-45> Overview of SEZs in Cambodia ································································ 68
<Figure 2-48> Picture of Distribution Facility in Phnom Penh ········································· 72
<Figure 2-49> Picture of Poipet Customs ··········································································· 72
<Figure 2-50> SWOT Analysis of Logistics Conditions in Cambodia ····························· 76

<Figure 3-1> Expansion of Area Logistics Complexes ······················································ 81
<Figure 3-2> 6th National Logistics Plan (Draft) ······························································· 86
<Figure 3-3> Current Conditions of Logistic Infrastructure in Korea ································ 93
<Figure 3-4> Concept of Logistic Complex and Axis Development in Koreas ················· 94
<Figure 3-5> Procedures of Private Investment Projects Managed by Government ·········· 96
<Figure 3-6> Estimation of the Demand of Area for Inland Container Processing Facilities ···································
99
<Figure 3-7> Estimation of the Demand of Area for General Cargo Processing Facilities ······································
100
<Figure 3-8> Overall Layout of the Logistics Facilities in Korea ···································· 101
<Figure 3-9> Current Status of the Logistics Industry in Korea ······································· 105
<Figure 3-10> Cross-docking System ··············································································· 106
<Figure 3-11> Overview of Comprehensive Logistics Information Network ·················· 107
<Figure 4-1> Direction for Development Strategies ························································· 120

<Figure 4-2> Conceptual Diagram for Cambodian Logistics Complexes ························ 122
<Figure 4-3> Software Elements that Need to Be Improved ············································ 123
<Figure 4-4> Flowchart for Selecting Logistics Complexes and Axes ···························· 124
<Figure 4-5> National Growth Axes in Cambodia ··························································· 126
<Figure 4-6> Population Size and Traffic Volume for Each Province ····························· 127
<Figure 4-7> Demographic Distribution for Each Province ············································· 128
<Figure 4-8> Traffic Pattern in 2012 (Left), Expected Traffic Pattern in 2020 (Phnom Penh
– Other Regions; Right) ·································································································· 129
<Figure 4-9> Expected Traffic Volume Between Each Province ····································· 130
<Figure 4-10> Analysis for Traffic Volume Patterns in 24 Provinces ····························· 131
<Figure 4-11> Major Border Region Facilities in Cambodia ··········································· 132
<Figure 4-12> Current Logistics Passage in Cambodia ···················································· 133
<Figure 4-13> Major Importing Countries (upper graph) and Exporting Country (lower
graph) in Sihanoukville Port ····························································································· 134
<Figure 4-14> Regions in Cambodia ················································································ 135
<Figure 4-15> Major Logistics Complexes for Each Region of Cambodia ····················· 136
<Figure 4-16> Traffic Volume for Each Region (2020) ··················································· 137
<Figure 4-17> O/D Traffic Volume for Each Region ······················································ 137
<Figure 4-18> Current Domestic Traffic Volume in Cambodia (2020) ··························· 138
<Figure 4-19> Traffic Volume between Domestic Hubs (2012) (Unit: %) ······················ 139
<Figure 4-20> Traffic Volume between Domestic Hubs (2020) (Unit: %) ······················ 139
<Figure 4-21> Traffic Volume of Private Cars (2020) ···················································· 141
<Figure 4-22> Traffic Volume of Trucks (2020) ······························································ 142
<Figure 4-23> Domestic Logistics Axes in Cambodia ····················································· 143
<Figure 4-24> International Logistics Axes in Cambodia ················································ 143
<Figure 4-25> Conceptual Diagram of IPA ······································································ 148
<Figure 4-26> IPA Result ································································································· 149
<Figure 4-27> Major Logistics Complexes in Cambodia ················································· 152
<Figure 4-28> Major Logistics Facilities in Cambodia ··················································· 153
<Figure 4-29> Urban Logistics Center ············································································· 154
<Figure 4-30> Example of Urban Logistics Center ·························································· 155
<Figure 4-31> Major Logistics Axes in Cambodia ·························································· 156
<Figure 4-32>Comprehensive Conceptual Diagram ························································ 156
<Figure 4-33> Visions and Objectives of a National Basic Plan on Logistics ················ 158
<Figure 4-34> Detailed Action Plans for the Objectives of a National Basic Plan on
Logistics ··························································································································· 159
<Figure 4-35> Specific Action Plans for Each Stage ······················································· 159
<Figure 4-36> Conceptual Diagram for Integrated Logistics Information System in
Cambodia ·························································································································· 162
<Figure 4-37> Targets of Logistics Standardization in Cambodia ··································· 164
<Figure 4-38> Comprehensive Action Plans for Logistics Development in Cambodia ··· 167
<Figure 5-1> Proposal of Cambodia Logistics Improvement Measures ·························· 175

<Figure 5-2> Diagram of Project Structure ······································································ 179
2015 Knowledge Sharing Program Ⅲ
Implications and Expected Effects of Logistics

System Development Strategies for Cambodia
Kim Jonghak (KRIHS)

Cambodia depends on foreign countries pertaining to imported good such as
industrial product, construction material, and petroleum, due to weak manufacturing
foundation. For this reason, Cambodia has the market structure that the logistics
cost raises consumer price directly. Cambodia’s logistics cost is three times more
expensive than Vietnam’s which is one of neighboring country of Cambodia. High
logistics cost is caused in accordance with various factors such as lack of
transportation infrastructure, absence of logistics policy and etc. Therefore, the
strategies to reduce logistics cost should be followed with logistics infrastructure
and logistics system. This research suggested Cambodia’s logistics strategy with
two aspect; logistics infrastructure and logistics system.
<Cambodia’s major logistics complexes>
6 Major Domestic Logistics Complexes 5 Major International Logistics Complexes
According to Korea’s logistics experience, logistics infrastructure development

is building national logistics complexes and establishing axes that connect each
Implication and Expected Effect of Logistics System Development Strategies for
Cambodia  1
logistics complexes. This research divided Cambodia into six area, and designated
major cities as logistics complexes that have high traffic volume. The order of
major cities that have the high traffic volume is Phnom Penh, Sihanoukville, and
Kampong Cham. By this order, it shows that Phnom Penh which is the capital of
Cambodia has the most urgency to build logistics facilities. For the effective
linkage between logistics complexes, 8 logistics axes suggested based on analysis
of freight volume between areas. The result shows Sihanoukville-Phnom Penh
axis and Phnom Penh-Kampong Cham axis have the highest priority which reveals
it is necessary to build transportation infrastructure firstly.
<Improvement of logistics infrastructure of Cambodia>
This research suggested the modification of law and institution, the fostering
logistics industry, and the reform of logistics related organizations as the strategy
of logistics system development of Cambodia. At the moment, the comprehensive
reformation of logistics is urgent because there is no logistics related organization
or law system. This research suggested the logistics control tower organization
that can control logistics related organization due to the characteristic of logistics
that there are a lot of stockholders among government department. It is possible
to promote effective law system and fostering logistics industry after establishing
the control tower organization. It would cause more problems if each division
establishes similar laws and systems separatedly
2  2015 Knowledge Sharing Program Ⅲ

Chapter 1. Introduction
Kim Jonghak, Oh Sungho (KRIHS)
Summary
Chapter 1 describes the background and objective of the task and makes
study method recommendations to draw up strategies relating to the
development of transportation and logistics in Cambodia. The strategy for
the development of transportation and logistics in Cambodia is classified in
two groups, improving hardware in terms of infrastructure and improving
systems in terms of software. The method to draw up a strategy for the
development of logistics is proposed through an analysis of transportation
and geographical information along with a review of the related data.
Section 1. Background and Necessity of Study
Cambodia is a country with a population of 15.4 million (2015) and an

area of 1.81 million ㎢, located in South East Asia. It shares a border with
Thailand, Vietnam, and Laos and thus, it has a geographical advantage for
commerce. However, Cambodia only has one international airport in
Sihanoukville, and the Phnom Penh port is only operated as a feeder port.
Chapter 1. Introduction  3
Therefore, Cambodia is faced with a problem of having to depend heavily
on foreign trade. The capital, Phnom Penh, has a highly concentrated
population and is currently experiencing critical issues encompassing local
housing and transportation. Due to a great portion of the population being
comprised of a younger generation, Cambodia has high labor productivity.
Therefore, labor-intensive industries such as apparel and sewing have
grown substantially.
<Table 1-1> Map and Overall Conditions of Cambodia
Kingdom of Cambodia
Area 181.035㎢
Capital Phnom Penh
Total population:
15,708,756 (2015)
Population
- Urban population
ratio : 20.7%(2015)
Population
82/sq.km
Density
Khmer 90%, minorities
Ethnic (Vietnamese, Chinese
Group Chams Tribe and
Gaoshan)
Khmer language,
French (above 50’s),
Language Chinese, English
(Youth middle age
group)
Tropical Monsoon
Climate
Climate
Source: https://www.cia.gov/library/publications/the-world-factbook/geos/cb.html
Cambodia has relatively flat topography with mainly low slopes and wide
plains with a tropical monsoon climate. Therefore, it possesses a
advantageous natural environment for farming and some of the preserved
resources are various mineral resources such as iron ore and limestone.
Although Cambodia has been promoting economic development through the
development of sewing and apparel industries since the 2000s, inadequate

transportation and logistics infrastructure has been an obstacles for
development. Therefore, there is a necessity to promote national
development and invigorate the regional economy by effectively establishing
logistics infrastructure including a transportation network.
The Cambodian government established the 3rd phase (2013-18) of the
NSDP and recognized the expansion of transportation and logistics facilities
as the first priority of infrastructure development to carry out the national
development strategies. There are plans established for cargo transportation
infrastructure including railroad networks (2014, KOICA), ports (2011), and
road networks (2014, China).
Furthermore, the necessity for short-term investment measures along
with long-term development plans for development of a transportation and
logistics network that connects the Greater Mekong Subregion1) is being
pushed ahead.
1) Since 1992, Asia Development Bank (ADB) has been implementing a large project for infrastructure
development including roads, railroads, communication network, tourism, and human resource
development by establishing the “Greater Mekong Subregion” which is a joint development
project that includes regions such as Thailand near Mekong river valley, Myanmar, Laos,
Cambodia, Vietnam, and Yunnan region of China.
Section 2. Study Objective and Content
1. Objective of Task
The objective of this task is to develop a policy proposal suitable for

Cambodia’s conditions based on Korea’s knowledge and experience on
logistics development.
The details for proposing strategies for Cambodia’s logistics development
are as follows: first, Cambodia’s current status related to logistics should be
analyzed, however, at present, Cambodia’s legal system related to logistics is
non-existing, making it difficult to render judgement on this particular issue.
However, plans for roads, railroads, ports, and airports have been
established. Therefore, these plans will be analyzed in this study. Secondly,
Korea’s experience and knowledge on logistics should be transferred to
Cambodia and therefore, this study finds elements that can contribute to
Cambodia’s logistics development by looking back at the initial stage of
logistics development in Korea. Furthermore, this study suggests a direction
of development of Cambodia’s legal systems by reviewing the current
conditions of development in Korea including laws, organizations, and
logistics industries. Third, development plans for logistics in Cambodia will
be proposed by being categorized into “hardware” including transportation
facilities and “software” which includes laws and regulations in order to
show the two items above, along with the analysis results of the current
conditions of logistics in Cambodia.

2. Main Content
The main content of this task are as follows. First, the current conditions
of social economy and logistics in Cambodia have been observed. The
economic standards and population size were observed for assessing the
social economy and current conditions of infrastructure facilities in Cambodia.
These includes the national master plan, roads, railroads, airports, and ports,
all of which are analyzed to further look into Cambodia’s logistics conditions.
Second, Korea’s experience and knowledge of logistics development has been
suggested. By taking Cambodia’s current logistics conditions into
consideration, aspects from Korea’s experience and knowledge of logistics
development which can be applied to Cambodia have been drawn. The third
content involves strategies for Cambodia’s logistics development with
logistics development strategy being categorized into hardware and software.
In terms of the hardware aspect, a development strategy suitable for
Cambodia’s current conditions has been suggested through analysis of GIS
and transportation demands.
<Figure 1-1> Study Strategies
Section 3. Study Scope and Method
1. Study Scope
Pertaining to the spatial range, all 24 provinces of Cambodia have been

included. Although the time range was not present in the perspective of
policy suggestions, a priority for each axis has been proposed under the
perspective of plans for improving logistics infrastructure.

2. Study Method
As for plans for implementation of this program, the Cambodian MPWT

data and existing literature have been reviewed and overall conditions of
logistics were objectively examined through GIS data and traffic demand
data. When the data proved to be insufficient, it was supplemented through
field surveys and interviews with professionals.
<Figure 1-2> Procedures for Understanding Cambodian Logistics Related Conditions

and Establishing Improvement Strategies
In order to share the experience and knowledge of the Korean logistics

industry, Korean logistics plans established during the initial phase of
developing its own logistics industry have been reviewed. This was done
in order to draw up applicable implications for Cambodia. In addition, an
overview of the logistics related system in Korea including relevant laws
and organizations have been examined through reviewing existing literature.
Furthermore, knowledge on the logistics industry which can be applied to
Cambodia including informatization and standardization of logistics was
scrutinized through cooperative research with professional organizations.
Chapter 2. Current Status of Social Economy &

Logistics Infrastructure in Cambodia
Kim Jonghak, Hong Kyoungsun, Kim Jungi(KRIHS)

Summary
To investigate the current transportation and logistics situation in
Cambodia, the rectangular strategy, the GMS plan, and the logistics plan of
neighboring states were reviewed. In addition, recent social and economic
trends were examined through Cambodian socio-economic indicator analysis.
Situational analysis of transportation infrastructure for passenger and cargo
freight including roads, railways, airports, and ports were reviewed to tackle
problematic issues. Regarding logistics, international trade flow volume, free
economic zones, and rice-related logistics channel flow were reviewed.
With the analyzed data, a SWOT analysis was performed to find the
strengths, weaknesses, competitiveness, and threats pertaining to Cambodia
to improve transport and logistics.
Chapter 2. Current Status of Social Economy & Logistics Infrastructure in Cambodia 11

Section 1. Review of Upper Plan
1. Rectangular Strategy
The rectangular strategy was adopted in 2004 as the primary plan to

achieve growth, employment, equity, and efficiency. As an implementation
plan for the strategy, the National Strategic Development Plan (NSDP) was
adopted in 2006 and currently, Cambodia is in the midst of promoting the
“NSDP 2014-2018 (STEP 3).” The rectangular strategy sets agricultural
development, infrastructure development, private sector growth, employment
expansion, and human resource development as its four goals for national
development. Infrastructure development has been specially recognized as
the key stimulator for economic growth. With the recent launch of the
ASEAN Economic Community (AEC) to integrate into the ASEAN economic
sphere, the importance of logistics in Cambodia is being emphasized
evermore.
<Figure 2-1> Flow of National Development Plans and the Rectangular Strategy
Source: KOICA, Master Plan for Railway Network Development in Cambodia, 2013

2. Greater Mekong Sub-Region (GMS) Plan
GMS is a plan that was established in 1992 by the Asian Development Bank
(ADB) to expand social infrastructure and to develop natural resources in the
Mekong Sub-region to support economic development and economic transition
of the neighboring states. It is a large-scale infrastructure development project
covering Mekong river transportation network maintenance, energy
development, communications network maintenance, and tourism development
targeted towards the neighboring states including Cambodia, China, Laos,
Myanmar, Thailand, and Vietnam. After completing development, more active
interaction between human resources and material trade are expected among
neighboring states.
<Figure 2-2> GMS Range and Site Inspection for GMS Railroad

3. The Rice Exportation Plan
In 2010, Prime Minister Hun Sen set a target of one million tons of rice export
and selected the rice industry along with the garment industry as the main
drivers for economic growth in Cambodia. However, in 2016 rice exports have
merely reached half of the targeted amount. Cambodia's rice production capacity
is about five million tons. The export numbers are poor compared to its
production capacity. This is due to the lack of rice processing and handling,
infrastructure and high logistics costs. Because of this, neighboring countries with
cheaper logistics costs such as Thailand and Vietnam have been importing
Cambodian rice to sell them to the international market after processing. This
inhibits the growth of the Cambodian rice industry.
<Figure 2-3> Target Rice Export Volume of Cambodia
Source: Cambodia Rice Federation, http://www.crf.org.kh/
4. Logistics Development Plan of Neighboring States
The neighboring states of Cambodia have already recognized the

importance of logistics. They have established and have been
promoting a national level logistics development plan. For its logistics

policy, Thailand has set the GMS trade service hub and Asia gateway
development as its goals and is focused on connecting trade networks
and transportation channels with other countries. Indonesia is focused
on logistics node development by developing national level logistics
nodes and an international port hub through urban-rural linkages.
Malaysia is aiming to develop a low-cost, value-added global supply
chain logistics service and is working on logistics service
improvements. Cambodia currently lacks a national logistics
development plan such as these.
<Figure 2-4> Logistics Plans of Adjacent Countries (Left – Thailand, Right –

Indonesia)
Source: Ruth Banomyong, 「Developing National Logistics Policy: Lesson Learned from ASEAN」, World
Bank National Trade Logistic Blueprint Workshop, 2014.9

Section 2. Social Economic Status
1. Economic and Industry Status
In 2013, the GDP per capita in Cambodia exceeded 1000 USD and the GDP
growth remained at a high level of 7% since 2010. However, the fiscal balance
scale is at -5% to the GDP and has been generating a yearly deficit of around
7~8 billion USD.
<Table 2-1> Economic Index of Cambodia

Economic Index Unit 2010 2011 2012 2013 2014
1 Billion
GDP 11.2 12.8 14.0 15.2 16.8
USD
Per Capita GDP USD 805 902 968 1,037 1,125
Economic Growth Rate % 6.0 7.1 7.3 7.2 7.0
Agriculture % 4.0 3.1 4.3 1.8 4.7
Secondary Industries % 13.6 14.5 9.2 10.5 8.7
Service Industries % 3.3 5.0 8.1 8.4 7.1
Gross Domestic
% 17.3 22.0 23.5 23.5 21.5
Investment/GDP
Gross Domestic
% 13.4 13.9 14.8 14.9 13.4
Savings/GDP
Inflation Rate % 4.0 5.5 2.9 3.0 4.4
Liquidity Increase
% 20.0 21.4 20.9 14.6 -
Rate
Financial Balance/GDP % -8.1 -7.5 -5.2 -5.0 -4.8
Goods Balance/GDP % -14.1 -11.6 -14.6 -15.7 -15.9
Current Balance/GDP % -10.4 -8.8 -11.6 -10.8 -11.3
External Debt/Import
% 1.6 1.6 1.5 1.6
& Export
External Debt/GDP % 29.3 28.4 30.6 31.6 31.2
Note: Figures in 2013 and 2014 are estimated value.
Source: Asian Development Bank, Country Partnership Strategy p.7, 2014

In 2010, the primary industry accounted for 36%, the secondary industry
accounted for 23.3%, and the tertiary industry accounted for 40.7% of the
GDP. The main business of the secondary industry is apparel, and the
tertiary industry is tourism. A high portion of the primary industry is
agriculture and it is a major source of revenue for rural areas. Cambodia's
main source of income is agriculture and is significantly affected by
logistics. Therefore, Cambodia is trying to lower logistics costs through
logistics development and increase agricultural competitiveness.
<Figure 2-5> Economic Growth Rate and Ratio of Each Industry to GDP
2. Population Distribution
In 2015, the population of Cambodia was 154 million and the capital,
Phnom Penh, comprised 10% of the total, at around 18.3 million. As the
population of the 194 districts' population distribution was analyzed by
population size and its distance from Phnom Penh, the population living
within 50km from Phnom Penh accounted for around 40% of the total
population.

The population of the rest of the country excluding Phnom Penh is low.
Phnom Penh, Sihanoukville, Siem Reap excluded, the population distribution
in Vietnam and Thailand border towns (Thailand: Poipet, Battambang;
Vietnam: Svay Rieng and more) were high.
<Figure 2-6> Community Analysis, Population Size, and Distant Distribution
The average population of each of Cambodia's provinces is about 640,000

For the population rank analyzed after grouping 24 provinces into four by
the average population, the most populated areas were Phnom Penh
(1,835,100), Kampong Cham (1,741,400), Kandal (1,443,100), Battambang
(1,215,600), and Siem Reap (1,096,500). The most populated tier was
centered mainly to the northwest of Phnom Penh; Phnom Penh surrounding
areas (Kandal, Kampong Cham), Thailand border area (Battambang), and a
tourist attraction site (Siem Reap).
The second tier is comprised of Prey Veng (983,200), Takeo (886,100),
Banteay Meanchey (806,800), Kampong speu (797,800), Kampong Cham
(684,800), and Kampot (625,500). These areas are located northwest and
southwest from Phnom Penh.

<Figure 2-7> Population Analysis in Cambodia
Third tier shows below average population and is mainly located between
Battambang and Svay Rieng. From the analysis, it shown that overall, the
population is concentrated to the northwest of Phnom Penh. This is thought
to be, due to the fact that the population is highly concentrated in the
metropolitan area around Phnom Penh along with the fact that the
population is increasing in areas like Battambang and Siem Reap with the
invigorated agriculture and tourism in the areas.
3. Geographical Status
1) National Spatial Features
Cambodia is located in the center of Southeast Asia and borders Thailand,

Vietnam, and Laos. Cambodia is geographically well-suited to be a logistics
hub not just for Southeast Asia but also Indochina.

<Figure 2-8> Geographical Condition of Cambodia
Compared to Vietnam and Thailand, Cambodia is geographically closer to a

circle and the capital is located at the center; where there are favorable
conditions for transportation and logistics infrastructure. An advantage is that
the main development axis terrain is situated mostly plain regions without
obstacles for the establishment of logistic complex facilities.
<Figure 2-9> Cambodian Land and Terrain Overview
Mountainous Terrain
Plain Terrain
Plain Terrain
Mountainous Terrain Phnom Penh
When comparing Cambodia to Vietnam, the population is 16.5%, area is

54.7%, and exports are 7% of Vietnam. Compared to Thailand, the population is
21.2%, area is 35.2%, and exports are merely 2.6% of Thailand. Cambodia is
falling behind in terms of population size and exports compared to its
neighboring states. Also, Cambodia's population is significantly low for its land
area compared to its neighboring states.
<Figure 2-10> Comparison of Cambodia and Adjacent Countries
Export Volume
Population Size
<Table 2-2> Comparison of Cambodia and Adjacent Countries
Population (in millions of Exports (in millions of

Country Area (in 1000 km2)
USD) USD)
Cambodia 14.3 181 5,068
Laos 6.2 237 1,746
Thailand 67.3 513 193,176
Vietnam 86.5 331 72,192
2) Water System Status

Cambodia has abundant water resources, the 150km long Tonle Sap Lake sits
in the center of the country, the 4,180km Mekong River runs from Tibet to
Cambodia through Myanmar, Thailand and Laos, and goes through to Vietnam.
The developed transportation system links Vietnam and Thailand with high trade

activity provides great conditions for inland waterway development. However,
the great difference in water level between the dry and rainy seasons makes
transportation through the waterways difficult.
<Figure 2-11> Water System Status in Cambodia

Section 3. Current Status and Problems Related to
Logistics Infrastructure
1. Imports, Exports and Related Organizations
1) Current Status of Import and Export Volumes
In 2012, Cambodia's export volume increased 16.9%($7.8 billion) from

the previous year and import volume also increased 15% ($7.1 billion) for
the same period. <Picture 2-12> shows that Cambodia's economy
improved consistently while its export and import volume increased
proportionally. Cambodia's major export and import countries are very
different. The major import countries usually consist of Southeast Asia and
other Asian countries including Thailand, Singapore, China, Indonesia, South
Korea, Japan, etc. Cambodia rarely imports from Europe or the U.S.
<Figure 2-12> International Trade Volume of Cambodia

Cambodia imports most of its industrial products since it has a weak
industrial base, and many of the imports come from neighboring countries
due to the fact that Southeast Asia's industrial products are priced more
competitively compared to European or American products. On the other
hand, Cambodia's major export countries are China, Europe and the U.S.
This is due to the fact that rice - which is Cambodia's major export
product - generally exports to Europe and the U.S. rather than to other
Asian countries that also produce rice themselves.
<Figure 2-13> Cambodia’s major import/export cargo volume

2) Competitiveness of the Logistics Industry
The overall cost of Cambodia's logistics is relatively higher than the

surrounding countries. Compared to neighboring countries, for the marine
transportation it costs $6(ton.100km), 3 times higher than Vietnam's
$2(ton.100km), while for land transportation it costs Cambodia
$13(ton.100km), 2.6 times higher than Vietnam's $5(ton.100km). Although
Cambodia has a favorable environment for rice production, it is not very
competitive compared to its neighboring countries, due to its higher logistics
costs. When considering the cost of logistics for neighboring countries,
Cambodia has the lowest price competitiveness since Thailand costs $151
and Vietnam costs $145 while Cambodia costs $250.
<Figure 2-14> Comparison of Logistics Costs (Left) / Competitiveness of Rice

Production and Logistics (Right)
Land
Sea
Cambodia Vietnam
Source: Enrique Aldaz-Carroll, 「Improving rice trade logistics to help reach 1 million tons export target」
World Bank National Trade Logistic Blueprint Workshop, 2014.9
In order to improve the competitiveness for Cambodia's logistics industry,

the production chain - which connects producer to consumer - needs to
organically connect the highways, railroads, island waterways, etc. Currently
Cambodia lacks a organic production chain like this. If Cambodia's logistics
industry improves through strategic planning in logistics policies and the
construction of logistics infrastructure, it could potentially improve

Cambodia's export competitiveness.
<Figure 2-15> Supply Chain of Rice
Railroad
Waterway
Road
3) Infrastructure Standard Comparison and Competitiveness of the

Logistics Industry
Cambodia's infrastructure facility standard ranked lower than 120th place

in 2012, but it is currently making a lot of improvements, being placed
80th recently. Under the LPI (Logistics Performance Index: LPI), which
indicates the competitiveness of the logistics industry, Cambodia ranked
129th place in 2010 to 83th place in 2014, improving 46 ranks within 4
years. This illustrates the consistent investment in Cambodia's infrastructure
as the nation's economy improves.

<Figure 2-16> Rank in Infrastructure Domain (Left) / LPI Rank Comparison to
Adjacent Countries and Korea (Right)
Source: http://knoema.com/WBLOGPI2014Nov/logistics-performance-index-world-bank-2014?location=1000230-cambodia
4) Related Organizations
Logistics industry requires cooperation not only from transportation related

entities but also from various entities such as industrial and urban
developmental organizatons, customs and tax, etc.
<Figure 2-17> Major Interested Parties for Logistics
Currently in Cambodia, there are a total of 22 governmental departments that

are related to the logistics industry, they include: Ministry of Trade and
Commerce, Ministry of Finance, Ministry of Industry and Energy, Ministry of
Urban and Land Construction, Ministry of Posts and Telecommunications,

Ministry of Public Works and Transport, Ministry of Rural Development,
Ministry of Water Resources and Meteorology, Cambodia Development
Resource Institute, General Department of Customs and Excise of Cambodia,
etc. In the private sector there are the Truck Transportation Committee,
Freight Transportation Committee, Port and Harbor Company, etc.)
<Table 2-3> Cambodian Government Bodies and Names

Category Cambodian Government Bodies and Names
Minister of Commerce
Minister of Economy and Finance
Minister of Industry, Mining and Energy
Minister of Land Management, Urban Planning and Construction
Government
Minister of Posts and Telecommunications
Domain
Minister of Public Works and Transport
Minister of Rural Development
Cambodia Council of Development
General department of customs and excise
Truck Association
Private
Freight Forwarder Association
Domain
Drt Port Companies

3. Current Status of Roads and Railroads
1) Roads
(1) Current Status
Since the early 2000s when the country became politically stabilized, there
have been various road reconstructions and facility improvement projects that
have fixed, improved and built new roads. Some of the projects are also
currently underway throughout the nation via international contracts and ODAs.
As of September 2014, Cambodia has a total of over 55,000km road networks,
of which 1-Digit and 2-Digit consists of over 11,000km. They consist of
20.1% of the total road networks, and 1-Digit and 2-Digit also consist of
43.7% of total bridge expansion length.
<Table 2-4> Road Density Compared to Adjacent Southeast Asian Countries

Bridge Proportion
Road Proportio Proportion
Number Number of Extensio of Bridge
Type of Road Extension n of Bridges Authority
of Roads Bridges n Extension
(km) (%) (%)
(km) (%)
NR(1-Digit)
2)
2,243 4.06 9 589 14.5 17,643 23.1 MPWT
NR(2-Digit)
3)
8,864 16.05 146 698 17.2 15,710 20.6 MPWT
To Be
3,4-Digit 4,407 7.98 236 904 22.3 16,309 21.4
Selected
Local Road 39,728 71.92 13,355 1,869 46.0 26,559 34.8 MRD
Total 55,242 100 13,746 4,060 100 76,221 100
Source: IRITWG, Overview on Transport Infrastructure Sectors in the Kingdom of Cambodia, 2015
2) NR is the acronym of National Road. NR (1-Digit) corresponds to national roads in Korea.

3) NR (2-Digit) corresponds to local roads in Korea.

<Figure 2-18> Road Network in Cambodia
Source: Ministry of Public Works and Transport
According to a field investigation of Cambodia's major road 1-Digit,

overall conditions of 1-Digit are very favorable. NR1 is currently under
construction to expand the road, which is most likely due to the economic
growth, resulting in the inflow of population and resources to Phnom Penh.
NR1 is an important road in terms of logistics since it is connected to
Vietnam. NR2 road conditions are also favorable and public transportation
of bus stops can be found everywhere. This is because NR2 is a primary
road for people who live in Kandal and Takeo, which are the major
provinces near Phnom Penh.

<Figure 2-19> NR1, 2 Status (near Phnom Penh)
▲ NR1 Road in Phnom Penh
Cambodia's NR3 road has very favorable conditions overall and vehicles
such as trucks were easily found, as there are many cars driving to nearby
private transport terminals. A lot of people also use this road for passing
the Takeo and Kandal provinces near the Phnom Penh area and there are
many road expansion constructions currently underway for the roads passing
through Phnom Penh.

<Figure 2-20> NR3 Road Status
▲ Adjacent Area from NR3 Road in Phnom

▲ NR3 Road Sign in Phnom Penh
Penh
Cambodia's NR5 road connects Phnom Penh to Thailand's boundary region

of Battambang and Banteay Meanchey province, and handles most of the
logistics between Thailand and Cambodia. Consequently, the road condition
is favorable and there are many trucks and freights using this road. NR6
road also has favorable conditions. It was built with private investment, it
collects tolls based on the vehicle type ($3 for a utility vehicle). Also, it
has a heavy traffic load and on-spot investigations shows an estimated
average of approximately 10,000 vehicles using the road everyday.

<Figure 2-21> NR5, 6 Road Status
The newly built beltway around Cambodia's Phnom Penh has good overall
maintenance conditions and has favorable road conditions. It is expected to
play a major role in Cambodia logistics as freight trucks are permitted to
use the road during the daytime. Other types of vehicles no longer need to
pass Phnom Penh to move to other regions, having a positive influence on
the overall traffic congestion.

<Figure 2-22> Newly Constructed Beltway
▲ Newly Constructed Beltway
▲ Adjacent Areas from Newly Constructed Beltway
There are 3 international highways passing through Cambodia and 5 types

of roads based on the width and pavement type of the road.
- Primary: Separated from motorcycle roads / Asphalt or concrete

pavement
- Class I: Highway of over 4 lanes / Asphalt or concrete pavement
- Class II: Roads consisting of more than 2 lanes / Asphalt or concrete
pavement
- Class III: Narrow road of 2 lanes / DBST pavement

Since Cambodia highways consist of Class II, Class III and lower than Class
III, in order to increase the regional traffic volume, Primary or Class I type
road constructions or improvements are required.
<Table 2-5> International Road Network in Cambodia (based on 2011)
Name Classification and Extension (km)

Extensio
Stopover n Below
GMS Asian ASEAN Prima Class Class
(km) Class Ⅲ Class
Road Highway Highway ry Ⅰ Ⅱ
Ⅲ
Central Poipet-Sisophon (NR5) 47.5 47.45

Sub-Co Sisophon-Phnom Penh (NR5) 360.0 360
AH1 AH1
rridor(R
1) Phnom Penh-Bavet (NR1) 164.0 57 107
Subtotal: extension (km) 571.5 104.45 467
Phnom Penh-Sihanoukville(NR4) 226.4 226.4

Inter-C
o Phnom Penh-Skun (NR6) 75.0 75
rridor AH11 AH11
Link Skun-Kampong Cham (NR7) 49.0 49
(R6) Kampong
411.8 411.8
Cham-Trapengkreal(NR7)
Subtotal: extension (km) 762.2 350.4 411.8
Cham Yeam-Koh Kong (NR48) 13.0 13

Coastal Koh Kong-Sre Ambel (NR48) 138.0 138
Sub-Co
r - AH123 Sre Ambel-Viel Rinh (NR4) 42.0 42
ridor
(R1) Viel Rinh-Kampot (NR3) 36.0 36
Kampot-Lork (NR33) 51.8 51.8
Subtotal: extension (km) 280.8 55 225.8
Norther Siem Reap-Talaborivath

(NR66+NR210+NR62+NR9) 305.2 38.8 266.38
n
Sub-Co Talaborivath-O
- - 19.0 19
r Pongmoan(NR7)
ridor
O Pongmoan-O Yadav 187.7 68.2 119.5
(R9) border(NR78)
Subtotal: extension (km) 511.9 68.2 57.8 385.9
Total: extension (km) 2,129.4 581.1 1,162.4 385.9

<Figure 2-23> International Road Network in Cambodia
(2) Highway Network Construction Plans
The Cambodian government is pursuing projects to improve, expand and build

new highways and to reenact relevant legislation under the leadership of the
Ministry of Public Works and Transport (MPWT). Although national highway
one was damaged from the civil war, it has been completely repaired, 2-Digit
and other major roads - which consist of approximately 90% of Cambodia's
roads - are making a slow progress, utilizing public and private capital to repair
and construct.
<Figure 2-24> Development Plan for Cambodian Road Network

Major Road Construction Plans and Status are as follows:
<Table 2-6> 1-Digit, 2-Digit Road Enhancement Project in Cambodia
Road Year Pavement

Org. Section
No. Start End status
Japan   2006 2009 AC
PK:13+000-Neak Loeung( and phase)
Japan  2010 2011 AC
PK:4+000-PK: 13+000( phase)
Japan  2014 2016 AC(Detailed Design)
1 Monivong Bridge-PK:1+000( Phase)
ADB Neak Loeung-Bavet 1999 2004 DBST
WB Neak Loeung-Bavet 2009 2013 Road Maintenance
(Upgrading)
ADB Kbal Thnal-Takeo 2001 DBST
Korea Kbal Thnal-Takeo - - -
2
Korea Takeo-Ang Tasaom(NR3) - - DBST
Japan Takeo-Phnum Den 2003 2007 AC
Korea Phnom Penh-Kampot(phase 2) 2008 2011 DBST
Korea Kampot-Trapeang Lopaou(phase 1) 2004 2007 DBST
3 WB Trpeang Lopaou-Veal Renh 1999 2006 DBST
Southern Coastal
ADB& Trach to Prek Chak,Corridor Project(NR3:Kampong DBST
NR3:Kampot to Veal Renh, 2011 2014 (upgrading&Peridodic
AusAid Cross-Border Facilities at Lok(Vietnam Border) Maintenance)
USA Chaom Chao-Sihanoukville 1996 AC
4 OT
AZ Chaom Chao-Sihanoukville 2001 2035 (periodic maintenance)
Cambodia Phnom Penh-Kampong 2003 DBST
Chhnag
ADB PK:6+00-Kampong Chhnang 2010 2011 Maintenance
ADB Kampong Chhnang-Sisophon 2000 2004 DBST
5
AC(4 lanes)
China Phnom Penh-Prek Kdam 2013 - 18.89%(As of 31 May
2014)
Japan Battambang-Sisophon 2013 2017 AD(Detailed Design)
ADB&
5+6 OPEC PoiPet-Sisophon-Siem Reap 2006 2008 Ac
Japen Phnom Penh-Chealea 1993 1995 AC
Japen Chealea-Skun 1996 1999 AC

(deteriorated condition)
ADB Cheung Prey- 2000 2004 DBST
WB Kampong Thom-Ro Lous 1999 2006 DBST
Japan Siem Reap-Bakong Temole 2000 2001 AC
6
ADB Sisophon-Siem Reap 2006 2008 AC
AC
China Thnal Kaeng-Skum(4 lanes), 2013 2016 (24.36% as of 31 May
Skun-Angkrong(2 lanes)
2014)
AC(4
China PK:4+000to Thnal Keng 2012 2015 lanes)-79.87%(as of
31 May 2014)

<- continued>
Road Year Pavement

Org. Section
Japan Skun-Kampong Cham 1996 1999 AC
Japan Kampong Cham-Chub 2001 2003 AC
7
ADB Chub-Kratie 2000 2004 DBST
China Kratie-trapeang Kriel(Lao boredr) 2004 2007 DBST
8 China Prek Tameak-Anlong Chrey 2007 2012 AC
8-1 China Krabao-Moeun Chey 2010 2012 AC
8-2 China Anlong Chrey-Krek 2010 2012 DBST
9 China Tbaeng Meanchey-Talaborivath 2012 2016 DBST
11 China NR1:Neak Loeung-NR7:Thnal Tortoeung 2015 DBST
13 ADB Svay R ieng-Anlong Chrey 2014 2016 DBST
23 China Pea Reang Leu-Chombork(bored) 2013 - DBST
WB Takeo-Kampong Trach-Kampot 2002 2005 DBST
33
ADB Kampong Trach-Lork(Vietnam border) 2007 2010 DBST
WB National Road 4 - Pr다 Thnout River - - DBST
41 DBST
China Thal Tortoeng-Chum kiri-Kampot 2010 2013
(Under negotiation)
43 China NR4:Treng Troyeng-NR3:Thvear Thmey 2015 - DBST
48 Thai Koh Kong-SreAmbel 2004 2007 DBST
WB Udong-Thnal Torteng 2003 2006 AC
51 DBST(next 5-year
China Udong-Thnal Torteng 204 -
plan)
Road
55 China Pursat-Thmar Da, Thai-Cambodia border 2013 -
improvement
ADB+
56 29km from Sisophon to Samrong 2009 2015 DBST
Korea
57 China Batambang-Pailin-Thai Border 2008 2012 DBST
1)Tmor Kol-Bovel-Sampov Luun
DBST
57B China 2)Bovel-Samseb-Phnom Prek 2010 2014
(Under negotiation)
3) Samseb-Kamrieng
Banteaymeanchey-Banteay Meanrit-Thmar
58 China 2014 - DBST
Daum-Phaong
59 China Nr 59(Koun Damrey-Malay-Sampov Luun- 2010 2013
National Road 5-Thai border(through Chay DBST(not yet
5x Private 2004 -
investment) atarted)
60B China Kg. Thmor-Kratic+Bridge 2015 - DBST(+bridge cost)
WB Prek Kdam-Thnal Keng(NR6) 2002 2005 Maintenance
61
China Prek Kdam-Thnal Keng(NR6) 2010 2012 AC
Koh Ke-Thnal Bek, Tbe ng Meanchey-Preah
China 2008 2012 DBST
62 Vihear temple
China Kampong Thom-Tbaeng Meanchey 2009 2013 DBST

<- continued>
Road Year Pavement

Org. Section
64C China Tbaeng Meanchey-Talaborivat 2011 2014 DBST
WB Phnom Dek-Rovieng 2004 2006 DBST
66 DBST(not yet
WB Rovieng-River Stung Sen
atarted)
Thai Choam Sa Ngam-Anlong Veng 2006 2007 DBST
67
Thai Anlong Veng-Siem Reap 2007 2009 DBST
Thai O Smach-Kralanh 2007 2009 DBST
68 DBST
Cambodia O Smach-Kralanh+Bypass Samraong town 2009 2011
Re-pavement
Tonlebet-Srey Santhor-Prek Tameak-Lvear
China 2015 - DBST
70B Em-Peam Ro
WB Traueng(NR7)-Kampong Thmar(NR6) 2004 2006 DBST
DBST(+Kroch
71C China Tbong Khmum-Kroch chmar-Chamkarleu 2015 -
Chmar Bridge)
72 ADB Memot-Tropeang Plong 2007 2009
71+72 China Tropeang Plong-Krek-Troeung-Kg. Thmar 2015 - AC
China Snoul-Sen Monorom 2008 2011 DBST
DBST
76
China Sen Monorom-Koh Nhek-Lumphat-Taang 2012 2016 (52.25%as of 31
May 2014)
VN Bang Lung-O Yadav 2007 2009 AC
78
China O Pong Moan-Ban Lung 2009 2013 DBST
DBST(not yet
78x Private Ban Lung-Bou sra(waterfall) 2008 -
started)
Sam An(NR9)-Kg.Sralaor 2-Kg.Sralaor
92 China 2015 - DBST
1-Mom 3
134B
+135 China Chumkiri-Chhuk-Dorng Tung-Kg. Trach 2015 - DBST
181 WB Samraong-ChongKal 2004 2006 DBST
207 WB Sautr Nikum-Beong Tonle Sap 2004 2006 DBST
210 Private Siem Reap-Koh Ke 2003 - DBST
258D China Kob(NR5, PK:383)-O Beychoann 2011 2013 DBST
314D ADB NR1-VN border:Prey Mlu 2014 2016 DBST
378 China NR7:Dong Krolor-NR78:Banlung 2015 - DBST
1551 China NR4:Samch Meanchey-NR55:Promomy 2016 - DBST
1554 China Veal Veng(NR55)-Samlot 2015 - DBST
1577 China Sek Sork-Samlot-Border Pass 400 2015 - DBST
3762 China Sen Monorom-Dakdam 2010 2012 DBST
3787 China Banlung-Kantuyneak 2015 - DBST

For road networks, China and Japan have suggested the following
construction plans.
① China's Road Construction Plan
According to China's proposal, Cambodia needs to build 850km of road

construction until 2020, and 2,230km of road construction by 2040.
<Table 2-7> China’s Road Network Plan Details

NO. Route Length, No. Investment Cost
Schedule
From To km Lane (Million USD)
E99 PP Ring Road - 145 8 Short Term
E1 PP Ring Road No.3 Svay Rieng 150 4 Short Term
E4 PP Ring Road No.3 Sihanoukville 205 4 Short Term
E3 PP Ring Road No.3 Sihanoukville 195 4 Long Term
E5 PP Ring Road No.3 Thailand border 380 4 Short, Medium
E6 PP Ring Road No.3 Banteay,Meanchey 390 4 25,500 Short, Medium
E7 PP Ring Road No.3 Kampong Cham 130 4 Medium Term
E27 Kg. Cham Stung Treng 225 4 Long Tern
E67 Siem Reap Koh Kong 230 4 Medium, Long
E042 Koh Kong Sihanoukville 145 4 Medium Term
E033 Kampot Kep 35 4 Medium Term
Total 2,230 25,500
<Figure 2-25> Road Network Plan (China)
Source: reconstitution of existing data

② Japan's (JICA) Road Construction Plan
Japan (JICA) conducted a pre-investigation for its road network plan, based on
China's road construction proposal, and proposed a road construction of 2,200km.
<Table 2-8> Japan’s Cambodian Road Network Plan Details

Route Pavement Length,
NO. Schedule
From To Type km
Phnom Penh (PP) Ring Road
E1 Bavet(Along NR1) AC 135 Short Term
No.3
E3 PP RIng Road No. 3 AC 150 4 Short Term
UE Sihanoukvill(Along NR4) 210 205 4 Medium Term
E5 PP RIng Road Short Term 195 4 Medium Term
E6 - AC 380 4 Long Term
E7 PP RIng Road No. 3 155 390 4 Long Term
E9 Poi Pet Medium Term 130 4 Long Term
E10 PP RIng Road No. 3 AC 225 4 Long Term
Total 2,200
<Figure 2-26> Road Network Plan (Japan)
Also, the capital city of Phnom Penh plans to build 4 beltways - Ring Road
No.1(RR- I), Ring Road No.2(RR-Ⅱ), Ring Road No.3(RR-Ⅲ), Ring Road
No.4(RR-Ⅳ) - in order to alleviate traffic congestion.

2) Railroads
(1) Current Status
Cambodia railroads consist of 2 parts - a Northern lane and Southern lane -

using a meter gauge (1,000mm) as the tracking gauge. The Northern lane is
386km and the Southern lane is 264km, but currently only the Southern lane in
operation.
<Figure 2-27> Existing Railroad Network in Cambodia

① The Northern Lane
The northern lane connects Cambodia's capital city of Phnom Penh and
Thailand's boundary region of Poipet city, totaling 386km, consisting of the lost
railroad which is 48km and the Phnom Penh~Sisophon part of 338km. Currently
most of the facilities have stopped operating due to either damage or a lack of
maintenance.
The Northern lane's degree of damage is approximately 200km (52% of total
length) of railroad lanes and 47 stops (96% of total railway stops), most of the
remains are also difficult to operate. The railroads, except for the repaired
48km portion of Sisophon~Poipet, were initially planned to have completed
repairs construction by 2013, but is being delayed due to insufficient budgets
and other reasons. The government is currently allocating the budgets in order
to restart the railroad operations.
<Table 2-9> Railroad Stations of Northen Route
No. Stations Lacation Distance (km) No. Stations Location Distance (km)
1 Phnom Penh 0+000 26 Krolaomplouk 209+600 11.909
2 Pochentong 6+723 6.723 27 Prey Svay 214+754 5.154
3 Fork 9+400 2.677 28 Maung Russey 223+104 8.35
4 Samraong 12+036 2.636 29 Koh Char 231+665 8.561
5 Trapeang Krasaing 15+200 3.164 30 Kork Trom 236+643 4.978
6 Tuol Leap 17+829 2.629 31 Phnom Thip Dei 244+240 7.597
7 Trapeang Thnaot 26+005 8.176 32 Svay Cheat 251+949 7.709
8 Bat Deng 31+443 5.438 33 Reang Kesei 256+236 4.287
9 Trach Torng 36+915 5.472 34 Sralso 262+125 5.889
10 Damnak Smach 42+563 5.648 35 O Dambang 268+158 6.033
11 Tbaeng Khpuos 47+131 4.568 36 Battambang 273+052 4.894
12 Meanork 55+665 8.534 37 Siem 279+367 6.315
13 Kraing Lovear 66+936 11.271 38 O Taky 284+536 5.169
14 Baraing 71+213 4.277 39 Chondeur Svar 298+171 13.635
15 Romeas 76+458 5.245 40 Chroy Srolao 306+222 8.051
16 Kraing Skea 93+834 17.376 41 Tuol Samraong 310+332 4.11
17 Kdol 111+147 17.313 42 Phnom Tauch 315+771 5.439
18 Bamnok 124+399 13.252 43 Chamcar Chek 321+930 6.159
19 Kamrieng 133+464 9.065 44 Mongkol Borey 330+204 8.274
20 Torteung Thngai 148+116 14.652 45 Sisophon 337+310 7.106
21 Pursat 165+467 17.351 46 Toeuk Thlar 342+420 5.11
22 Snam Preah 173+157 7.69 47 Sala Samraong 350+400 7.98
23 Trapeang Chorng 179+729 6.572 48 Sophy 356+800 6.4
24 Beng Khnar 187+541 7.812 49 Kaub 370+110 13.31
25 Svay Daunkeo 197+691 10.15 50 Poipet 384+300 14.19

<Figure 2-28> Northern Route Railroad in Cambodia
② South Route
South Route is a route that connects Phnom Penh and Cambodia’s

International port, Sihanoukville. South Route is 264km long. However,
110km (41.5% of the entire length) out of 264km of the South Route has
been destroyed due to civil war, mining, and flooding. Also, 16 bridges
(17.2%) and drainage facilities were damaged due to flooding and sea
water. Similar to the North Route, the communication system and signals of
the South Route were nearly all destroyed and it has not been in operation
since the end of 2010.
In May 31, 2014 reconstruction of the route took place from Phnom Penh
to Sihanoukville by a company in France called TSO. However, the average
maximum speed has not surpassed 50km/h as of yet. Containers and the
railroad terminal of Sihanoukville have been reconstructed by a company in
Japan called Sinohydro in 2014 and currently, the bulk processing facilities
of Sihanoukville are being renovated as well.
On the other hand, the container train operated from Phnom Penh to
Sihanoukville was reconstructed by a Australian company called TOLL in
2014 and is being operated 3 times a week.

<Table 2-10> Railroad History of South Route
Distance Distance
No. History Location between No. History Location between
stations (km) stations (km)
1 Phnom Penh 0+000 16 Ang Keo 98+500 14.800
2 Pochentong 6+723 6.723 17 Tani 100+500 2.000
3 Fork 9+400 2.677 18 Tram Sasar 110+600 10.100
4 Trapeang krasaing 15+200 5.800 19 Touk Meas 118+600 8.000
5 Prateas Lang 22+000 6.800 20 Kampong Trach 132+900 14.300
6 Doeun Russ 26+100 4.100 21 Damnak Changeur 148+600 15.700
7 Prey Toteung 29+900 3.800 22 Kampot 166+000 17.400
8 Ang Proch 35+008 5.108 23 Bokor 175+500 9.500
9 Srah Sre 40+600 5.592 24 Koh Tauch 182+400 6.900
10 Komar Reachea 44+700 4.100 25 Trapeang Ropeuo 197+700 15.300
11 Toek Ambel 51+500 6.800 26 Veal Rinh 216+600 18.900
12 Baley Chas 58+500 7.000 27 Siem Hao 230+800 14.200
13 Slakou 66+700 8.200 28 Roluos 240+600 9.800
14 Takeo 74+500 7.800 29 Thmar Reap 247+00 6.400
15 Thamda 83+700 9.200 30 Sihanouk Ville 262+600 15.600

<Figure 2-29> Overview of South Route Railroad in Cambodia
When observing the overview of the operation of the passenger train, the
South Route has been inoperative since 2004 and the North Route has been
inoperative since mid 2008. Freight cars are still operating on the South
Route but have been inoperative on the North Route since 2009.

<Figure 2-30> Annual Overview of Train Operation
Source: Royal Railways of Cambodia
The quantity of reliable transportation for freight cars in 2002 reached

557,000 tons but subsequently, it has started to decrease. Currently, freight
cars are only operating on the South Route.
<Figure 2-31> Transportation Progress of Freight Cars (ton)
Source: Royal Railways of Cambodia

(2) Railroad Development Plans
The Cambodia Railroad Development Plan was established by KOICA of

Korea in 2013. Based on 4 objectives and 7 strategies, 5 main routes, KOICA
proposed 8 local routes, a high speed route, an industrial railroad, and a
lead-in railroad. The main content of the Cambodia Railroad Development Plan
is as follows:
① Objectives and Strategies
The objectives and indexes for the railroad development plan are as follows.
4 objectives and 7 indexes are specified below.
∙ Objective 1: Railroad development to contribute toward national
policies and economic development
- Strategy 1: Development through establishment of various growth
poles
- Strategy 2: National integration
∙ Objective 2: Railroad development for the eradication of poverty and
also regional development
- Strategy 3: Development of regional economy
- Strategy 4: Regional development for resolving poverty issues
∙ Objective 3: Establishment of international traffic network for
international cooperation and economic development
- Strategy 5: Establishment of international traffic network
∙ Objective 4: Establishment of low-cost, high-efficiency traffic
system through connecting transportation means
- Strategy 6: Establishment of integrated traffic network
- Strategy 7: Improvement of speed
To establish the previously mentioned railroad development plan, the
following railroad development plan has been established to include 5 main
routes, KOICA has proposed 8 local routes, a high speed route, an industrial
railroad, and a lead-in railroad based on 4 objectives and 7 strategies.
Through the establishment and implementation of the Cambodia Railroad

Development Plan, plans have been set to promote integrated national
development and economic growth and to nurture balanced development
among regions. Railroad improvement and route establishment plans within
the railroad development plan are as follows:
<Table 2-11> Overview of Routes in the Railroad Development Plan
Length Categ Length
Category Section Section
(km) ory (km)
PHNOM PENH ~ SISOPHON PHNOM PENH ~ SISOPHON ~
High-speed Railroad
384 400
~ POIPET ~ THAILAND POIPET ~ THAILAND
PHNOM PENH ~ SIHANOUK PHNOM PENH ~ SIHANOUK
260 243
Main Routes
VILLE VILLE
SISOPHON ~ SIEM REAP ~ SISOPHON ~ SIEM REAP ~
326 314
CHEUNG PREY CHEUNG PREY
BAT DOENG ~ KAMPONG CHAM BAT DOENG ~ KAMPONG CHAM
249 236
~ SNUOL ~ VIETNAM ~ SNUOL ~ VIETNAM
SNUOL ~ KRATIE ~ STUNG
249 OTDAR MEANCHEY ~ PREAH VIHEAR 181
Industrial Railroad
TRENG ~ LAOS
PREY CHRUK ~ OTDAR
74 PREAH VIHEAR ~ STUNG TRENG 113
MEANCHEY
KAMPONG THOM ~ PREAH
139 MONDUL KIRI ~ RATANAK KIRI 151
VIHEAR
Local Routes
STUNG TRENG ~ RATANAK KIRI 158 KAMPONG SEILA ~ VEAL RING 48

KAMPONG CHAM ~ KRATIE 115 SVAY RIENG ~ SUONG 90
SNUOL ~ MONDUL KIRI 101 PHNOM PENH NEW PORT LINE 42
Lead-in
Railroad
BATTAMBANG ~ PAILIN 75 KAMPONG CHHNANG AIRPORT LINE 21

PHNOM PENH ~ KOH KONG 248 KAMPOT PORT LINE 4
PRETEAS LANG ~ SVAY RIENG 170 SIEM REAP NEW AIRPORT LINE 3
<Figure 2-32> Railroad Network Plan
Source: Existing Data Restructured

4. Overview of the Inland Waterway, Port, and Airport
1) Inland Waterway
The inland waterway in Cambodia is 1,750km long. However, ships can

only be operated in 580km of the inland waterways. Of the entire inland
waterway in Cambodia, the Mekong River makes up 30%, Tonle Sap River
makes up 15%, Bassac River makes up 5%, and all other rivers make up
the remaining 50%. As the main inland waterway, the Mekong River can
only be used during the daytime due to the absence of navigational lights.
Instead, buoy lights have to be used for navigation. Furthermore, ships
larger than 20 tons cannot be operated because the Kratie and Stung Treng
sections are relatively shallow. The rest of the inland waterways are
limited to ships that weigh equal to or less than 100 tons. There are 7
inland ports, Kampon Chnang, Kampon Cham, Stung Treng, Kratie,
Battambang, Siem Reap, and Phnom Penh in the 6 regions of the inland
waterway.
<Figure 2-33> Overview of Inland Waterways in Cambodia

In the 102km stretch of the inland waterway between the Phnom Penh
and the border of Cambodia and Vietnam, ships longer than 110 m are not
permitted to pass. Ships traveling in South China Sea and Phnom Penh use
the Mekong Route in Cambodia and the Mekong Route of Vietnam.
However, some sections of inland waterways in Cambodia have shallow
water depths which limits maximum ship capacity.
<Table 2-12> Maximum Ship Capacity of Mekong River
Operation Capacity Limit (DWT)

Length
Category Section during the
(km)
year Low water Full water
Golden Triangle - Luang Prabang 362 O 60

Luang Prabang - Vientiane 425 O 15 60
Vientiane- Savannakhet 459 O 200 500
Savannakhet - Pakse 261 10이하 50
Pakse - Khinak 151 O 50
Mekong Khinak - Veune Kham 14

Classific Veune Kham - Stung Treng 30 O 15 50
ation
Stung Treng - Kratie 128 O 20 50
Kratie - Kampong Cham 121 O 80 400
Kampong Cham – Phnom Penh 100 O 2,000
Phnom Penh- Junction of Vam Nao Pass 154 O 3,000 5,000

~4,000
Vam Nao pass – South China sea 194 O 3,000 3,000

~4,000 ~4,000
Phnom Penh - Junction of Vam Nao Pass O 20 50
Bassac
River Vam Nao Pass – South China Sea 188 O 5,000 5,000
~6,000
Phnom Penh - 5km South of Kampong Chhnang 94 O 1,000 2,000
Tonle
Sap Kampong Chhnang - Chhnok Trou 46 O 20 150
River
Chhnok Trou - Chong Kneas 109 O 20 150
Branch Dense network of man-made canals, natural creeks and 4,785 O

of tributaries, with a total navigable length of 4,785 km
Mekong
River Se-kong - Mekong tributary
(Lao PDR and Cambodia )
Source: Belgian Technical Cooperation, Master Plan for Waterborne Transport on the Mekong River System in
Cambodia, Final report(Volume 1 Main Report, Draft), September 2006

<Figure 2-34> Maximum Ship Capacity of Each Section of the Inland Waterway
in Cambodia
Source: Belgian Technical Cooperation, Master Plan for Waterborne Transport on the Mekong River System in
Cambodia, Final report(Volume 1 Main Report, Draft), September 2006
2) Inland Ports
(1) Phnom Penh Port
Phnom Penh Port is a traditional inland waterway that provides access to

ships coming from Vietnam which pass through the South China Sea. This
port is being managed and supervised by the MPWT (Ministry of Public
Work and Transportation) and the MEF (Ministry of Economy and Finance).
Phnom Penh Port is located in the heart of the Phnom Penh and it is
located 3 to 4km away from where the Mekong River and the Tonle Sap
River meets. Port 1 was established before 1991 and is being used as a
domestic port rather than an international port due to overcrowding. Due to
the increasing quantity of goods being transported, the Cambodian
government has established a new port located 25km downstream from
Phnom Penh Port 2 and this new port is currently in operation.

<Table 2-13> Size of Phnom Penh Port
Description Specification Remark
Container and General Cargo Quary : 20m × 300m
Water depth is -5.0m
Terminal Berthing Capacity : 3vessels at one time
Passenger Terminal 2 Pontoons of 15m × 45m each Water depth is -3.5m
70m × 50m = 3,500㎡
Warehouse
50m × 30m = 1,500㎡
ICD Area : 92,000㎡
Source: Phnom Penh Autonomous Port
<Figure 2-36> Phnom Penh Port Pier and

<Figure 2-35> View of Phnom Penh Port Cargo Handling Facilities
The quantity of imported goods transported through Phnom Penh Port in

2014 was 823,935 tons and exported goods were 467,850 tons which has
been steadily increasing. However, local cargo have been inoperative since
2008.
<Figure 2-37> Quantity of imported and exported goods through Phnom Penh Port

Cargo container processing at Phnom Penh Port has been steadily
increasing. It has increased by approximately 180 times from 746 TEU in
2002 to 133,666 TEU in 2014.
<Figure 2-38> Quantity of Imported and Exported Goods through Phnom Penh Port
(2) New Port of Phnom Penh
Construction of the new port at Phnom Penh started with borrowing 28.2
million dollars provided by China at the beginning of 2010 under the condition
of setting limitations for low water, weight of traffic, and a processed capacity
of Phnom Penh Port. The first stage of the port was completed in December of
2012. There is a total of 3 construction stages and the port is currently
undergoing development.
A multi-purpose pier and resource logistics complex project is to
construct a pier to export rice, cassava, tapioca, wood chip, corn, and other
goods. This project, in 2013, had an assigned budet of 31.35 billion KRW
for the purchasing of the site and reinforcing the existing pier. In 2016,
20.68 billion KRW was budgeted for constructing 160 m of pier (52.03
billion KRW in total). 30 billion KRW has been assigned to the lease

business with the new container terminal, which is being constructed to
accommodate three 300 TEU ships (length: 300 m, water level: ≥ 6 m).
This lease business will be administered by the Maritime and Port
Administration of Phnom Penh through borrowing unloading equipment from
private companies. Expected traffic volume of the new container terminal is
300,000 TEU in 2020. Maritime and Port Administration of Phnom Penh
and PCF have established a joint company for the Mekong River dredging
project to operate medium and small container ships with 250 TEC class.
<Figure 2-39> Landscape of Phnom Penh New Port
(3) Siem Reap Port
Siem Reap Port is located near the Tonle Sap River 5km away from the
city. This port can only be used when the water level is at its greatest.
During the dry season, the depth of the Tonle Sap Lake is 10 m on
average and is 11km long located along the Siem Reap Port. The accessible
road of the port is also connected to the lake. Although a temporary
wooden port is established every dry season, the accessible road becomes
flooded and completely loses its function during the rainy season. Siem
Reap Port is mainly used for cargo transportation coming from Phnom Penh
after passing through the Tonle Sap River. Also, some ships are being
operated along the route.

(4) Other Inland Waterway Ports
Other inland waterway ports consist of Sre Ambel Port, Kampot Port, and
Sihanoukville Port - which has an oil cargo handling facility - and Oknha
Mong Port. Of these ports, Oknha Mong Port is being widely used for
importing small scale cargo. Kampot Port is currently undergoing
development for expansion. The other port expansion plans will be
planned and implemented in Koh Kong and Kiri Sakor for transporting sugar.
Furthermore, there are plans to develop a new port in Kiri Sakor near Koh
Kong, a new international port in Stung Hav near Preah Sihanouk, and a
passenger port in Kep Province.
3) Marine Port
(1) Sihanoukville Port
Sihanoukville Port is located in the entrance of Kompong Som of

Sihanoukville Province and is the only marine port in Cambodia. The nature
of Kompong Som has an upside of having a natural condition of being able
to protect itself from typhoons. Currently, the processing capacity of
Sihanoukville Port is estimated to be at 3 million tons with a separate POL
facility in place.
<Figure 2-40> Sihanoukville Port
Source: Sihanoukville Autonomous Port

This port can accommodate 10,000 DWT class cargo and 20,000 DWT
class cargo. Sihanoukville Port has been established as a Special Economic
Zone for economic growth with financial support from Japan.
Sihanoukville Port is composed of one pier that extends out into the
water, and two other piers. The main facilities are as follows.
<Table 2-14> Sihanoukville Port Facilities

Berth
Channel Other Facilities
Name Structure Length Depth Year
Old External Jetty 290m -9.0m 1960 Warehouse: 5
Jetty Internal Jetty 290m -8.0m 1960 36,000㎡(84,000T)
New wharfs Concrete Block 350m -8.5m 1970 ,
[South Channel] Container Yard: 3
Container Berth Concrete Block 400m -10.0m 2007 174,000㎡
Length: 5.5km
Depth: -8.5m Oil Pier Stone
Width: 80~100m Jetty 53m -4.2m 1963 PAS Oil Terminal
Wharf 53m
(Private Facilities)
[North Channel]
Sokimex Jetty 200m -10.5m 2001 Oil Terminal
Length: 1.0km
Depth: -10.0m Tela Jetty 180m -7.5m 2003 Oil Terminal
Width: 150~200m LHR Jetty 150m -6.0m 2009 Oil Terminal
CEL Jetty 120m -6.0m 2013 Coal Terminal
CIIDG Jetty 200m -7.0m 2014 Coal Terminal
PTT Jetty 120m -6.0m 1996 Oil Terminal
Source: JICA, Prepared based on the Study on the Master Plan for Maritime and Port Sectors in Cambodia,
March 2007 (Updated by PAS)
<Table 2-15> Overview of Storage Facilities
Classification Area (㎡) Capacity Quantity
New Terminal 103,000 8,400 TEUs 1
Container Yard 46,000 3,000 TEUs 1
Container Refrigerator Van
54 boxes 9 sockets
Container
Container Cargo Depot 6,000 12,000 t 1
Warehouse 30,000 60,000 Tons 4
General Cargo
Yard 90,000 Tons
Route 500m 2
Railroad
Railroad Container
Cargo 35,000㎡ 232 TEUs/1slot 1
Terminal

<Figure 2-41> Cargo Warehouse at <Figure 2-42> View of Container Handling
Sihanoukville Port Facilities at Sihanoukville Port
98% of ships at the Sihanoukville Port consist of general cargo, oil

tankers, and container cargo. Passenger ships amounts to less than 2%.
<Table 2-16> Number of Ships at Sihanoukville Port

Type 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Container
481 460 433 509 491 480 432 427 400 443 506 504
Cargo
Oil Tanker 149 114 132 152 201 232 235 251 232 266 283 292
General
245 155 116 219 179 225 163 210 230 198 178 282
Cargo
Passenger
3 1 5 32 5 17 17 17 15 34 21 25
Ship
The amount of exports has increased by 5 times during an 11 year

period from 2003 to 2011. Although the amount of imports only increased
by a factor of 1.6 during the same period, the amount of imports have
always been maintained to be higher than the amount of exports.
<Table 2-17> Amount of Cargo Imported and Exported at Sihanoukville Port

Classificatio
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
n
Imported
1,589 1,285 1,129 1,256 1,418 1,681 1,579 1,803 1,890 2,105 2,213 2,509
(1,000 Ton)
Exported
183 218 252 331 401 377 296 406 549 555 799 915
(1,000 Ton)
Container cargo, which comprises of up about 60% of the cargo at

Sihanoukville Port, increased by a factor of 2.6 from 2003 to 2014. Fuel

cargo also has increased by a factor of 3. General cargo decreased from
2003 to 2007 but is currently showing a gradual increase.
<Table 2-18> Amount of Cargo Processed at Sihanoukville Port

Classificatio
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
n
Container
805 934 1,024 1,123 1,235 1,315 1,068 1,215 1,442 1,572 1,816 2,127
(1,000 Ton)
Fuel (1,000
318 261 249 267 390 452 565 627 625 785 924 987
Ton)
General Cargo
660 308 108 198 194 291 241 366 373 302 272 310
(1,000 Ton)
The number of passenger traffic at Sihanoukville Port was about 1,100 in

2003 and had reached up to 24,000 in 2010. In 2013, the number of
passenger traffic was about 16,000.
<Table 2-19> Number of Passenger Traffic at Sihanoukville Port

Classificatio
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
n
Arrival
1,113 447 1,797 8,303 1,141 11,780 19,850 24,140 7,964 16,320 16,400
(Persons)
Departure
1,169 354 1,909 8,162 1,318 11,920 20,210 24,260 7,958 16,440 16,520
(Persons)
PAS is planning the first port in Cambodia able to accommodate a ship

capacity of 30,000 to 40,000 DWT by considering operations in all regions
and international services.
<Table 2-20> Development Plans of Sihanoukville Port
1-Dry Bulk Cargo Terminal 2 -Terminal for Oil Exploration
- Length: 330 m
- Length: 200m
- Alongside depth: -13.50m
- Alongside depth: -7.50m
- Designed to accommodate vessel with 40,000 DWT.
- Logistic base yard: 26,900m2
- Dry bulk cargo storage yard: 27,900 m2

Furthermore, the Special Economic Zone (SEZ) of 70ha has been planned
to be established near the port terminal to decrease transportation costs.
<Table 2-21> Special Economic Zone of Sihanoukville Port (SEZ)
Type Area
Factory area 45ha
Commercial and Multi-purpose area 6ha
Inter-Modal logistic area 4.4ha
Green area 5.2ha
Admin maintenance office and parking 0.9ha
Utilities and roads 8.5ha
Total 70ha
<Figure 3-43> Sihanoukville Port SEZ Development Plans
(2) Other Sea Ports
Other sea ports include Koh Kong Port (SP1), Sre Ambel Port (SP2),
Oknha Mong Port (SP3), Stunghav Port and Oil Terminal (SP4 and SP5),
Kampot Port (SP6), and Kaeb Port (SP7). Koh Kong Port (SP1) is located
near the Thai border and has the most amount of ships and quantity of
transported goods compared to all other sea ports.

<Table 2-22> Summary of Other Small Sea Ports
No. Port GC ship GRT GC ship% GRT %
SP1 Koh Kong 213 1,196,371.96 34% 72%
SP2 Sre Ambel 194 98,721.54 31% 6%
SP3 Oknha Mong 206 202,335.51 33% 12%
SP6 Kampot 1 5,264.00 0% 0%
SP4,5,7 Others 11 167,867.00 2% 10%
Total 625 1,670,560,01
<Table 2-23> Other Sea Ports in Cambodia
No. Port Company Investment Cost in Agency Project

Million Strart
SP1 Koh Kong - - - DPWT 1992
SP2 Sre Ambel New Port MDH trading company - - Private 2003
SP3 OKNHA MONG OKNHA MONG PORT BOO Private 2004
Co, LTD
Port for Petroleum at
SP4 Strunghav SOKIMEX PAS 2001
Port for Petroleum at TELA PETROLEUM

SP4 Strunghav GROUP INVESTMENT BOO $14.50 PAS 2004
CO., LTD
Port for Petroleum at
SP4 Strunghav LHR PAS 2009
Port for Petroleum at CEL(Cambodia Energy

SP4 Limited) Power Plant PAS 2013
Strunghav Company
CIIDG(Cambodia
Port for Petroleum at International
SP4 Investment Group) PAS 2014
Strunghav Erdos Hongjun Electric
Power Co., Ltd
ATTWOOD IMPORT
SP4 Int. Port at Stunghav EXPORT CO., LTD - $30 Private
SP5 Port for Petroleum at PPT PAS 1996
REAM BASE
SP6 Int. Port at Kampot Veng Hour Co., Ltd. - $9 DPWT
Aussic-Cam Group
Int. Tourist Port at Investment and
SP7 Kaeb Development Co., BOT DPWT
Ltd(Local)
Int. Tourist Port at Rotong Development
SP7 Kaeb Co., Ltd(Local) BOT DPWT
SP7 Commercial Port at KAEB POWER BOT $41 DPWT
Kaeb SUPPLY CO., LTD
4) Dry Port
There are 7 main dry ports in Cambodia according to the Signed

International Agreement in 2013. Most of the dry ports in Cambodia are
located near Bavet (Cambodia-Vietnam border), Poi Pet (Cambodia-Thai

border), and Phnom Penh.
<Table 2-24> Overview of Main International Dry Ports
No. Name of dry Port Nearest town Remark

1
1 CWT Dry Port Phnom Penh Capital

2 Phnom Penh International Port Phnom Penh Capital
3 Phnom Penh Special Economic Zone Phnom Penh Capital
4 So Nguon Dry Port Bavet Border town with Vietnam
5 Teng Lay Dry Port Phnom Penh Capital
6 Olair World Dry Port Phnom Penh Capital
7 Tech Srun Dry Port Phnom Penh Capital
<Figure 2-44> Location of Main Dry Ports
5) Flight
Cambodia has 10 airports which are divided into 4 categories: (3

international airports, 1 military airport, 6 local airports, and 1 airfield)
according to the Cambodia Commercial Airline Executive Office. Only 3
airports are currently operating: the Phnom Penh International Airport, Siem
Reap International Airport, and Sihanoukville Airport. The Siem Reap
International Airport mainly attracts sightseeing passengers who come to
see the ancient cultural assets including Angkor Wat, and is continuing to
show an increase passenger numbers.

<Figure 2-45> Camodia Airport Location
A high tourist demand was expected for Sihanoukville Airport as the area
surrounding the airport has been developed into vacation destinations.
However, a domestic airplane crashed near the Sihanoukville Airport in
2007 resulting in the temporary closing of the airport. After this incident,
Sihanoukville Airport was reopened as an international airport. For domestic
flights, there are 6 flights a day from Phnom Penh to Siem Reap and 2
flights a week from Sihanoukville to Phnom Penh. Besides these domestic
flights, there are no other domestic flights being operated.

<Table 2-25> Facility Sizes of Cambodia Airports
Runway Owner/
Operating Proximity
Airport (m, Surface Type/Airport Area (ha) Supervisory
Conditions Distance
Designated Code) Office
International Airport
Phnom Penh 3,600×60 (Asphalt/4D) 387.00 RGC/SCA Operating 10km
Siem Reap 2,550×45 (Asphalt/4C) 197.00 RGC/SCA Operating 8km
Sihanoukville 2,500×34 (Asphalt/4C) 123.84 RGC/SCA Operating 19km

Local Airport
Kampong 2,400×45 Not
2011.00 RGC/Air Force
Chhnang (Concrete/4C) Operating
1,600×34
Battambang 128.68 RGC/SCA Operating 3km
(Bitumen/3C)
1,300×30
Stung Treng 112.50 RGC/SCA Operating 5km
(Bitumen/3C)
1,300×30
Ratanakiri 48.09 RGC/SCA Operating
(Laterite/3C)
1,300×30
Koh Kong 125.66 RGC/SCA Operating
(Laterite/3C)
1,500×30
Mondulkiri 36.00 RGC/SCA Operating
(Laterite/3C)
1,400×30 Not
Preah Vihear 150.98 RGC
(Laterite/3C) Operating
1,180×30
Kratié 112.50 RGC Operating 3.5km
(Laterite/3C)
Source: State Secretariat of Civil Aviation
(1) Phnom Penh International Airport
Phnom Penh International Airport is located in the intersection of NR3 and

NR4 road about 8km west of the airport and it takes about 20 minutes by car
from the central part of Phnom Penh.
<Figure 2-46> View of Phnom Penh International Airport

Phnom Penh International Airport has been operated by a French and
Malaysian joint venture company through the BTO method for nearly 25 years
since June of 1995. Recently, construction to expand the airport has been
completed. Phnom Penh International Airport operates flights to 9 countries
and 16 cities with about 80 flights scheduled daily. In 2015, about 3.08
million passenger traffic and 36,395 ton of cargo was processed at this
airport. The number of passengers and amount of cargo is continuing to
increase at this airport.
<Table 2-26>Overview of Operated Routes at Phnom Penh International Airport
Airlines Destination
Air Asia, Malaysia Airlines Kuala Lumpur

Korean Air, Asiana Airlines Incheon
Bangkok Airways, Thai Air Asia, Thai Airways Bangkok
Cambodia Angkor Air, Cambodia Bayon Airlines Ho Chi Minh
China Airlines, EVA Air Ho Chi Minh
China Eastern Airlines Kunming, Shanghai
China Southern Airlines Beijing, Guangzhou
Dragon Air, Hongkong Airlines Hongkong
Jetstar Airways, Silk Air Singapore
Qatar Airways Doha
Vietnam Airlines Hanoi, Ho Chi Minh
Bassaka Air Macao
Shandong Airlines Jinan
Source: CAMBODIA AIRPORTS(www.cambodia-airports.com)
<Table 2-27> Annual Overview of Passengers at Phnom Penh International Airport

(Unit : Persons)
Month
1 2 3 4 5 6 7 8 9 10 11 12 total
Year
2008 162,483 160,186 165,771 146,994 131,364 124,172 126,797 139,646 113,889 127,076 144,876 148,616 1,691,870
2009 152,898 137,208 137,486 124,690 115,260 105,620 128,326 136,446 111,789 130,329 149,515 158,419 1,587,986
2010 152,716 145,314 145,194 132,084 120,275 116,536 134,654 139,167 118,646 138,966 166,219 163,650 1,673,421
2011 167,291 155,829 155,376 147,440 134,837 130,321 153,006 157,112 140,785 147,185 170,858 179,852 1,839,892
2012 185,926 172,303 180,998 171,043 155,690 148,593 166,400 165,666 144,777 173,312 198,797 213,777 2,077,282
2013 206,132 195,239 214,699 192,837 184,511 180,848 188,723 196,384 173,880 193,052 228,308 239,067 2,393,680
2014 234,696 225,165 226,935 212,947 199,943 192,915 215,613 222,305 200,324 218,896 249,774 266,381 2,665,894
2015 267,782 250,286 266,611 249,495 242,565 228,000 255,409 263,089 227,363 254,096 282,678 291,694 3,079,068

<Table 2-28> Annual Overview of Handled Cargo at Phnom Penh International Airport
(Unit: Ton)
Month
1 2 3 4 5 6 7 8 9 10 11 12 total
Year
2008 2,295 1,826 2,568 1,708 2,372 2,388 2,195 1,940 1,797 1,531 1,300 1,334 23,254
2009 1,160 866 1,222 1,063 1,162 1,154 1,344 1,257 1,176 1,477 1,333 1,471 14,685
2010 1,482 1,496 2,076 1,687 1,737 1,957 2,287 1,856 1,970 1,897 1,586 1,707 21,738
2011 1,574 1,157 1,905 1,399 1,402 1,602 1,805 1,518 1,661 1,977 1,586 1,944 19,530
2012 1,870 2,033 2,503 2,062 2,223 2,571 2,665 2,804 2,777 2,154 2,763 2,645 29,070
2013 2,327 2,123 3,121 2,536 2,809 2,593 3,060 2,629 2,425 2,431 2,369 2,701 31,124
2014 2,286 2,700 3,606 2,706 2,696 2,656 2,720 2,821 2,332 2,503 2,394 2,738 32,158
2015 2,749 2,460 3,288 2,688 3,236 3,382 3,484 3,366 3,226 2,652 2,775 3,089 36,395
(2) Siem Reap International Airport
Siem Reap International Airport is the second largest airport in Cambodia

and is located 4km west from the central part of Siem Reap. The airport is
very convenient because of its accessibility. It only takes about 5 minutes
to get to the airport by car from the heart of Siem Reap. Siem Reap
Airport operates flights to 28 different cities and 9 countries with more
than 100 flights a day. In 2015, about 3.3 million passenger traffic and
1,674 ton of cargo was processed at this airport. An increasing number of
sightseeing passengers are continuing to visit this airport because of the
international cultural asset, Angkor Wat.

<Table 2-29> Overview of the Operated Routes at Siem Reap International Airport
Airlines Destinations
Spring Airlines, Cambodia Angkor Air, China Eastern Airlines Shanghai
Eastar Jet , Sky Angkor Airlines, Cambodia Angkor Air, Korean
Incheon
Air, Asiana Airlines
Cambodia Angkor Air Hangzhou
Cambodia Angkor Air, Sky Angkor Airlines Chengdu
Sky Angkor Airlines Wuhan
Air Asia, Malaysia Airlines Kuala Lumpur
Bangkok Airways, Air Asia, Cambodia Angkor Air Bangkok
Hong Kong Express, Dragon Air Hongkong
Lao Airlines Fakse
Cambodia Angkor Air, Vietnam Airlines Hô Chi Minh
Sky Angkor Airlines Nanning
Vietnam Airlines Hanoi
China Southern Airlines, Cambodia Angkor Air Guangzhou
Silk Air, Jetstar Airways Singapore
Korean Air Luang Prabang
Air Busan, Sky Angkor Airlines Busan
<Table 2-30> Annual Overview of Passengers at Siem Reap International Airport

(Unit: Persons)
Month
1 2 3 4 5 6 7 8 9 10 11 12 total
Year
2008 188,672 185,233 175,158 124,796 104,535 82,239 92,695 113,233 86,935 113,355 136,015 128,974 1,531,820
2009 147,034 131,978 127,406 97,077 76,220 56,752 81,042 103,096 75,100 93,717 124,789 140,955 1,255,166
2010 161,799 159,033 156,048 118,369 97,325 84,091 104,020 128,974 96,047 124,929 173,303 177,371 1,581,309
2011 202,814 192,525 169,558 124,112 102,909 942,227 127,233 151,695 114,044 138,062 194,665 214,274 1,826,118
2012 267,228 244,216 220,663 161,041 126,409 113,754 143,411 176,646 124,246 173,542 217,015 254,858 2,223,029
2013 340,425 316,615 265,154 182,939 150,965 138,986 169,375 197,575 149,661 189,108 257,450 305,084 2,663,337
2014 367,987 350,088 284,411 210,126 171,713 148,417 201,481 240,519 182,449 229,919 289,075 342,484 3,018,669
2015 399,192 376,033 316,623 239,231 198,366 176,201 229,496 264,861 201,856 240,427 309,193 345,034 3,296,513
<Table 2-31> Annual Overview of Handled Cargo at Siem Reap International Airport
(Unit: Ton)
Month
Year
1 2 3 4 5 6 7 8 9 10 11 12 total
2008 10 9 18 11 10 8 19 24 7 10 7 11 144
2009 8 9 11 9 10 6 11 6 5 6 17 16 114
2010 4 22 63 36 42 66 62 42 70 49 36 51 543
2011 18 6 15 10 11 17 16 17 16 24 24 27 201
2012 22 23 22 27 22 35 39 46 84 32 44 73 469
2013 85 47 77 79 67 96 93 93 106 54 59 69 925
2014 93 101 214 141 97 100 55 76 78 92 106 82 1,235
2015 138 75 143 78 78 115 177 130 143 130 159 308 1,674

(3) Sihanoukville International Airport
Sihanoukville International Airport is located about 23 east from Sihanoukville,

a harbor city, which takes about 20 minutes by car from the central part of
Sihanoukville. This international airport operates about 5 flights daily to
destinations such as Tianjin and Hangzhou of China as well as Phnom Penh.
<Table 2-32> Overview of the Operated Routes at Sihanoukville International Airport

Airlines Destinations
Cambodia Bayon Airlines Phnom Penh
Cambodia Angkor Air Tianjin
Skywings Asia Airlines Hangzhou
<Table 2-33> Annual Overview of Passengers at Sihanoukville International Airport

(Unit: Persons)
Month
1 2 3 4 5 6 7 8 9 10 11 12 total
Year
2012 1,495 1,154 1,084 944 572 613 792 1,007 551 1,106 2,019 1,685 13,022
2013 1,633 1,536 1,677 1,167 948 741 1,503 1,859 1,028 1,773 2,645 3,203 19,713
2014 4,246 4,777 3,634 3,091 1,824 1,646 3,245 3,893 1,596 3,792 5,510 6,146 43,400
2015 8,884 13,145 8,664 4,543 3,815 4,894 10,351 11,402 5,591 7,002 6,606 9,733 94,630
<Table 2-34> Annual Overview of Handled Cargo at Sihanoukville International Airport

(Unit: Number of Instances)
Month
1 2 3 4 5 6 7 8 9 10 11 12 total
Year
2012 26 28 30 36 28 26 26 29 24 36 32 28 349
2013 36 28 43 33 30 26 60 64 48 60 60 82 570
2014 82 104 84 72 38 58 64 84 58 88 76 190 998
2015 112 151 127 114 150 160 187 214 175 180 140 143 1,853
(4) Airport Development Plans
Cambodia anticipates 7 million international tourists per year by 2020. To

prepare for this, Cambodia plans to establish 4 airports. In accordance to this
plan Cambodia plans to establish a new airport in Siem Reap and Phnom Penh.
In addition, plans to develop new local airports are undergoing review for areas
such as Ratanakkiri, Mondulkiri, Stung Treng, Preah Vihear, and Koh Kong.

5. Special Economic Zone (SEZ)
The SEZ obtained business approval from Council for the Development of
Cambodia (CDC). The Cambodia government considers the SEZ as one of
the best methods to attract foreign capital because foreign capital
investment is 100% permitted for SEZ. Furthermore, foreigners can be
employed for SEZ if a particular position cannot be fulfilled through local
human resources.
<Figure 3-45> Overview of SEZs in Cambodia
Source: Existing Data Restructured

The SEZ stretches over the center of Phnom Penh, surrounding areas of
Sihanoukville, and border of Vietnam. This geographical area suitably
accommodates international exchanges. There are 34 SEZs in total which
are dispersed throughout different areas including 5 around the capital of

Phnom Penh, 12 near the border of Vietnam, 9 around Svay Rieng, 2 near
Banteay Meanchey located near the border of Thailand, 1 near Pursat
located close to Thailand, and 14 near Sihanoukville where most SEZs are
located. A total of 7 SEZs have their own SEZ Administration Organization
which are Phnom Penh SEZ, Koh Kong SEZ, Sihanoukville Port SEZ,
Sihanouk SEZ, Dragon King SEZ, Manhattan SEZ, and Thai Bavet SEZ.
However, there are only 4 SEZs currently operating which are located in
Svay Rieng (2), Phnom Penh (1), and Sihanoukville (1). This may be due
to the inadequate logistics infrastructure of Cambodia which makes it
difficult to invigorate the SEZs.
6. Issues
1) Lack of Transportation Infrastructure
The pavement rate of 1-digit road which is the national main road is
high due to Cambodia’s continuous investment geared toward transportation
infrastructure. Although the average speed in main roads is 56.2km/h, it is
only 39km/h in the inner part of the city where poor road traffic conditions
presents itself. Local roads are not being managed well and the rate of
unpaved roads is high. This significantly decreases the functionality of
roads. Since the road network is not adequate, cargo is only transported
through main roads where the road network is in good standing. However,
most of the main roads only have 2 lanes and thus, cars frequently pass
each other which leads to high rate of accidents and safety issues. The 2
lane roads are overcrowded, needing an expansion to 4 lanes. Furthermore,
highways need to be established in order to process traffic flow and resolve
the back up of traffic when passing through different regions. The
Cambodian railroad has a very low share of transportation of about 1%.
This is because only one route, the south route, processes cargo in the

sections between Sihanoukville and Phnom Penh. Although the ports and dry
ports are actively operated, operation cannot be performed safely because
of the variable water depths between the dry and rainy season. In addition,
the connection between different transportation means are not being
achieved because there are not enough cargo handling facilities and
hinterland facilities. With regards to airports, only airports in Phnom Penh,
Siem Reap, and Sihanoukville are being managed out of the 10 airports in
Cambodia, due to passengers mostly consisting of tourists. The other
remaining airports are not being managed adequately.
An effective logistics system involves decreasing the amount of cargo
handling and storage period to reduce distribution costs. If cargo handling
work is increased when connecting to different transportation means, then
single transportation means may be more efficient than having to cope with
complex transportation means. A complex transportation system may be
needed if the quantity of transported goods increase such as bulk or coal.
2) Absence of National Distribution Complex
Cambodia relies on imported goods for products including industrial

products, cars, and construction materials. Therefore, Cambodia has a high
quantity of transported goods. However, Cambodia does not have a reliable
distribution complex in place to efficiently gather and distribute the cargo
compared to its surrounding countries. As a result, the logistics cost is high
in Cambodia. For example, Cambodia aims to become the largest rice
exporting country in East Asia with the objective of exporting 1 million
tons, however, its rice exporting competitiveness is decreasing due to high
distribution costs. In addition, the empty container transportation rate is
high because small distribution companies and independent truck owners are
irregularly transporting cargo. Cambodia needs to establish a large scale
distribution complex that can transport large size cargo instead of high volume
of small-sized cargo. In order to efficiently transport cargo on a national
scale, this type of large distribution complex needs to be established in a

developed area that has an advanced transportation network located close to
consumers in large cities.
3) Inadequate Logistics System and Control Tower
It may be difficult for Cambodia to achieve the goal of reducing logistics

costs without a blueprint of logistics development. When compared to
surrounding countries, Cambodia does not have a comprehensive logistics
development plan in place on a national level. Other nearby countries such
as Thailand, Indonesia, and Malaysia are all in the process of striving
toward achieving their strategic policies encompassing a GMS Trading
Service Hub, establishment of an Asia Gateway, an international port hub,
and a global supply chain logistics service. The geographical location of
Cambodia is included in the AEC (ASEAN Economic Community. 2015) and
SEWC (Second East-West Economic Corridor) but in order to join the integrating
economic environment of Southeast Asia, the establishment of a logistics policy in
Cambodia is pressing.
Since various interested parties and authorities are involved in the
logistics system, uncooperative action from one of the authorities will
negatively affect the whole logistics system. Approximately 22 governmental
authorities are related to logistics in Cambodia (including the Ministry of
Commerce, Ministry of Economy and Finance, Ministry of Industry, Mining
and Energy, Ministry of Land Management, Urban Planning and Construction,
Ministry of Posts and Telecommunications, Ministry of Public Works and
Transport, Ministry of Rural Development, Cambodia Council of Development,
and Customs) and in the private domain, the Truck Association, Freight
Forwarder Association, and Port Companies are related to logistics. However,
since sharing of logistics related roles between these parties has not been
properly regulated, it has become a negative factor for logistics
competitiveness. Therefore, an authority which establishes logistics policies
and systems and allocates roles between each party is required.

4) Logistics Industry Falling Behind
Cambodia needs to place more emphasis for standardizing logistics on a

national level. Analysis of the logistics cost is difficult to carry out because
transportation is achieved through small-sized transportation truck
businesses. In addition, roads are becoming damaged and risks of accidents
are high because there are no set standards for load capacity limitations.
Furthermore, tax standards are not adequately enforced which causes
deviating prices in identical goods depending on the import period and
general consumers end up taking the burden for this outcome.
<Figure 2-48> Picture of Distribution Facility in Phnom Penh
<Figure 2-49> Picture of Poipet Customs

Cambodia has 6 stages for custom clearance. This process may take a
long time and unexpected costs may occur which is the cause of increased
logistics costs. In addition, customs data and information is recorded by
hand which causes inaccuracy and difficulties in transferring the information
to other departments that need the custom statement and report of quantity
of transported goods. Computerizing the data from the custom process can
contribute to improving transparency of information and decreasing
administrative costs to reduce the overall logistics cost.
5) Transportation Saturation in the Capital, Phnom Penh
Phnom Penh, the capital of Cambodia, is a dense city with a high number
of people, cars, and capital. However, transportation infrastructure is
inadequate. Although modern buildings are being constructed, expansion of
transportation facilities is not being implemented adequately and therefore,
traffic congestion are becoming worse. In addition, main roads (NR) are
designed so that Phnom Penh must be passed through as the center in
order to get to other regions which adds to the issue of traffic congestion.
Therefore, a complex city traffic environment in Phnom Penh caused by an
overwhelming amount of car and motorcycle traffic induces an increase in
logistics costs and additional costs. Cambodia relies on importing most
products from Thailand and Vietnam. Although the Cambodian government
strives to achieve stabilization of price, the uncontrolled traffic environment
provokes unexpected supply interruption and price variation. The
government is seeking to encourage concentrated traffic to detour to other
routes by constructing a beltway. However, the Cambodian government is
facing a budget deficit and thus, constructing circulation roads may be
difficult if there is no financial aid from other countries. Therefore,
tremendous efforts are needed to overcome traffic congestion near the
central part of Phnom Penh by expanding the road network. Resolving

traffic congestion near the central part of Phnom Penh is expected to
significantly contribute to reduce nationwide logistics costs.

Section 4. Implications on Policies
The analysis of strength, weakness, opportunity, and threat of logistics in

Cambodia based on examination of the current conditions and issues are as follows.
The strength is that Cambodia is striving to improve its logistics
development. Cambodia understands the importance behind the development
of infrastructure which is one of the goals of the rectangular strategy of
the National Development Strategy. From this perspective, Cambodia is
continuously taking an initiative to engage in infrastructure projects
including connecting the north and south railroads and managing roads to
actively prepare for development of logistics going forward.
The opportunity for Cambodia is having a circular-shaped geographical
location in the center of the Southeast Asian countries which may be
advantageous when developing infrastructure. Moreover, Cambodia is in a
good position to continuously attract foreign capital because its economy
has an stable annual growth rate which in turn will have a positive effect
on developing a stabilized infrastructure in the future. In particular,
Cambodia’s economic growth may take a favorable turn starting from 2015
through the initiation of the Asian Economy Integration Plan.
On the contrary, there are many weaknesses that Cambodia must
overcome for the advancement in logistics. Above all, Cambodia currently
lacks established laws pertaining to logistics and there are no organizations
in charge of logistic policies. Currently, Cambodia lacks consolidated plans
compared to other countries. Infrastructures including roads, railroads, ports,
and airports have not integrated and therefore, duplicated investment on
infrastructure and a decrease in efficiency may be caused. Moreover, since
there is no directive governmental body to mediate logistics related
authorities, it causes barriers in achieving logistics development.
Some of the weaknesses that Cambodia has are high logistics costs and a

poor transportation system. Logistics is mainly performed through the roads
which causes traffic congestion and in turn increases transportation time. As
a result, logistics costs are raised. Furthermore, Cambodia does not have a
national-scale logistics complex. Instead, small-sized transportation trucks
independently account for the distribution which is adding to the traffic
congestion issue in the main cities.
Lastly, Cambodia does not have adequate standards for logistics
industries. They do not have standards for a customs and clearance process
which causes difficulties when analyzing the logistics time and cost, thus it
can lead to a diminishing desire for investments. Moreover, there are high
risks for road damage and car accidents because Cambodia does not have a
limitation for load capacity.
<Figure 2-50> SWOT Analysis of Logistics Conditions in Cambodia
The threat lies in the fact that the economic structure of Cambodia
depends on external economic environments. In addition, the geographical
features of the land is vulnerable to weather changes such as flooding of
rivers during the rainy seasons which may become an obstacle when
striving to achieve logistic advancement in the future.

2015 Economic Development Experience Sharing Project Ⅲ
Chapter 3. Institution and Operation of

Logistics in Korea
Park Jongil, Ko Yongseok (KRIHS)

Lee Hyangsook (Incheon University)
Summary
Chapter 3 seeks to deduce critical points for Cambodia's logistics
development strategy by reviewing the history of Korean logistics
institution. Initially, Korea focused on reorganizing and readjusting legal
institutions related to railway and marine transport, as well as legal
institutions related to transport vehicles that serve as a critical component
of logistics and transport. Also, Korea promoted efficiency in managing
logistics by introducing various logistics management systems combined with
information technology. In the initial phase of logistics development,
particularly concerning the infrastructure for logistics, Korea, at the
government level, set up a Basic Plan on Logistics to select logistic
complexes for each regional units, and connected each complexes with
logistic axes, establishing a basic framework for a logistics policy. This
article thereby deduced critical points for Cambodia's traffic and logistics
development strategy by reviewing the initial stages of Korean logistics
infrastructure and legal institutions.
Chapter 3. Institution and Operation of Logistics in Korea  77

Section 1. Legal Institutions
1. History of Logistics Policies
1) Logistics Policies before 1990
Korea's logistics policies before 1990s were applied in a decentralized

and separated manner. Due to the lack of infrastructures such as roads and
railways, most logistics were done with cargo vehicles. The Ministry of
Transportation, a government agency in charge of logistics, concentrated on
executing cargo vehicle transportation industry policies to foster
transportation.
□ Cargo Vehicle Transportation Industry Policies
The cargo vehicle transportation industry in the 1950s and 1960s was
mostly managed by minor vehicle owners with petty capital, and was
developed into a system where the business operator who acquired a
transportation vehicle business license would buy the vehicles and entrust
them to a third party as he managed the company. As over-extended,
chronic problems concerning practices of registering a privately-owned
vehicle to a transportation company, in order to earn and receive payment
for each work (The 'Jiip' system), worsened, the Korean government sought
for the corporatization of those companies based on commercial law.
In 1970s and 1980s, the corporatization policy for the cargo vehicle
transportation industry continued due to its success in the passenger vehicle
transportation industry in the 1970s. Cargo vehicle companies sent a
petition to the National Assembly calling against direct management policies
due to the petty size of each of the companies, and certain limitations of

the direct management system, resulting in a de facto deferment of a direct
management policy. Since then, the government has changed its policy
direction from direct management to legalizing entrusted business. After
enacting the 'Trucking Transport Business Act,' entrusting business
management became possible as of January 1998 without any legal
restrictions.
□ Railroad Transportation Policy
Korea's critical means of transportation before highways in the 1970s

were railways. In 1963, the Korean government revised the National
Government Organization Act to take the external agency of Ministry of
Transportation and turn it into the Korea National Railroad Agency as a
specialized institution. After the Gyeongbu Expressway was built and
competition arose between cargo vehicles and cargo transportation, the
financial burden increased due to a decrease in transportation demand and
income. The Korea National Railroad took various initiatives including
resetting transportation fares to increase income and to cut spending, which
would lead to the lightening of financial burdens and better management.
They visited shipping companies, held various conferences, and set flexible
cargo fare standards by expanding contract cargo transportation services to
invite and attract additional cargos.
□ Maritime Transportation Policy
The Maritime Transportation Industry in the 1950s was too small to be

employed overseas. However, due to economic growth in the 1960s, an
increase in foreign trade led to an increase in the quantity of goods
transported. In the 1970s, economic recession, following an oil shock, led to
a decrease in quantity of goods transported, a rise in labor and operation
cost, all contributing to the accumulation of a deficit. The Korean
government initiated the Maritime Transportation Rationalization Policy in

1983 to merge or systemize some 70 maritime transportation companies
into 17 larger ones to minimize the side effects of over-competition and
maximize its chance of the survival of companies through economies of
scale. The government also provided financial assistance by exempting
various registration tax, acquisition tax, and surtax to support the
companies until the market stabilized.
□ Air Transportation Industry
Korea's air transportation industry was marked by 20 years of monopoly

by Korea Airlines, a private airline, ever since it acquired the Korea
National Airlines in the 1960s. By the late 1980s, Asiana Airlines, the
second private airline, entered the market, transitioning into a duopoly
system. Although the air transportation industry is run by private
companies, the Korean government has been imposing numerous restrictions
and sanctions on entering the air transportation market and selecting flight
routes. Such trends continues to this day.
2) Logistics in the 1990s
Logistics policy in the 1990s was independently and comprehensively

developed. A Basic Plan for Cargo Logistics (1994~2003) was designed in
1994 to expand the policy scope of logistics. The plan was in effect from
1994 to 2003 with a purpose of offering a quick, affordable, easy, and safe
logistics service.
□ Critical Points of the Basic Plan for Cargo Logistics
The following lists 11 critical points of the Basic Plan for Cargo
Logistics.
- Expansion of Area Central Logistics Facility
- Establishment of Cargo Transportation Network between Areas

- Rational Reform of Transportation Structure
- Operational Efficiency of Logistics Facility
- Expansion of Storage Facility
- Promote Standardization of Logistics
- Establishment of Comprehensive Logistics Information Network
- Improvement of Institutions and Procedures related to Logistics
- Strengthening of the Role of International Logistics Center
- Innovation of Logistics Technology
- Training Logistics Specialists and Strengthening Administrative Support
The purpose of this plan is to design a system of strategic area-to-area
transportation hubs for the betterment of cargo logistics and to allow long
term easing of cargo logistics throughout all areas of the country.
<Figure 3-1> Expansion of Area Logistics Complexes
Source:Ministry of Construction and Transportation(1994), Basic Plan for Improving Cargo Logistics
System to Cut Logistics Costs (1994~2003)

□ Other Policies
A detailed plan on inland cargo station was designed in the 1990s which
led to the establishment of inland cargo stations in the capital area and
Busan area. Restrictions on 'Cargo Vehicle Transportation Businesses' were
lifted to replace the license system with a registration system. A
government-led comprehensive logistics information network was initiated
to informationalize logistics and a logistics consultants certification system
was introduced.
3) Recent Policies: Basic Plan on Logistics
Since 2001, Korea has been conducting a logistics policy as part of a

national growth strategy by designing the 'National Basic Plan on Logistics'
that deals with all areas of logistics. The purpose of this plan is to execute
a more comprehensive and efficient logistics policy by unifying haphazard
and dispersed logistics-related plans to ultimately achieve the government's
logistics goals.
First, the National Basic Plan on Logistics (2001-2020) was designed in
2001, and the Revised National Basic Plan on Logistics (2006-2020) was
published on September, 2006 to reflect dynamic changes in the
domestic/international environment in the early 2000s. The Framework Act
on Logistics Policies serves as legal background for the National Basic Plan
on Logistics. This Act sets 10 years as the duration of the National Basic
Plan on Logistics, with replanning every five years.

Legal Grounds for the Establishment of the National Basic Plan
on Logistics (Framework Act on Logistic Policies)
Clause 2 Establishment and Execution of the Logistics Plan

Article 11 (Establishing the National Basic Plan on Logistics) ①
<Minister of Land, Transport and Maritime Affairs should design a
10-year National Basic Plan on Logistics that sets the basic
direction of national logistics policies every 5 years. <Revised
2008.2.29, 2009.2.6>
Today, the Revised National Basic Plan on Logistics (2011~2020) is

being executed. The government designs and executes detailed plans every
year to achieve what is laid out in the National Basic Plan on Logistics.
The Minister of Land, Infrastructure and Transport and Minister of
Maritime Affairs and Fisheries designs yearly implementation plans in
accordance with Article 13 of the Framework Act on Logistic Policies.
Currently, three basic plans have been designed since 2001, all setting
the year 2020 as their goal. The original National Basic Plan on Logistics
(2001~2020), under the slogan of an advanced nation of logistics
excellence, seeks to develop cutting-edge technology for logistics networks,
hardwares and softwares, raising competitiveness by improving the working
environment of the logistics industry, establishing an eco-friendly logistics
groundwork, and setting up an international logistics network to tap into the
world.

<Table 3-1> Comparison among the National Basic Plans on Logistics
Original Plan('01~'20) Revised Plan('06~'20) Revised Plan(2011-2020)
Global Logistics Leader
Advanced Nation of Logistics
Slogan Excellence in the 21st Century
2020 Global Logistics Leader Guiding Low-Carbon, Green
Growth for the 21st Century
• Set up a Logistics Network to
become a Logistics Leader
• Development of Logistics
Technology through
Harmony between Logistics •Create National Wealth
Hardwares and Softwares through Logistics
• Create National Wealth
• Raise International Improve Efficiency of
through Logistics
Competitiveness by National Logistics
Objective Improving Working
• Improve Efficiency of
System
National Logistics
Environment of the Logistics •Secure the driving factor
System
Industry for long-term growth
• Establishing Eco-Friendly of the logistics industry
Logistics Environment
• Establishing International
Logistics Network that can
tap on the world
•Achieve Logistics
Efficiency by
establishing Army,
Navy, Air Force
Integrated Logistics
System
•Establish Global Logistics
•Secure Soft
System
Infrastructure to offer
•Foster High Added-Value
High-Quality Logistics
Logistics Industry
Service
•Expand Hardware
•Establish Advanced
Strategy ※ Overlaps with the Objectives Logistics Infrastructure
Logistics System by
•Enhance Software Logistics
Enhancing Green
System
Logistics System and
•Establish Integrated
Logistics Security
System for Logistics
•Raise Competitiveness of
Policies
Logistics Industry to
enter Global Logistics
Market
•Enhance Competitiveness
of Logistics Industry by
Restoring Market
Performan
2 General Indicators 3 General Indicators
ce 15 Indicators
13 Detailed Indicators 16 Detailed Indicators
Indicator
Lists Offices of
Role
N/A Primary/ Col lateral
Allocation Responsibility
Synchronize Basic Plan/Medium-Term
Integration of Basic and Basic Plan and Detailed
System Plan/Yearly Plan
Medium-Term Plans Plan
Separate Basic and Medium-Term Plans
Source: National Human Resources Development(http://www.nhrd.net/board/view.do?boardId=BBS_0000004&orderBy=&startPage=198&dataSid=16601)

Under the slogan of 2020 global logistics leader, the strategy called forth
by the Revised Plan('06~'20) seeks to establish a global logistics system,
foster a high added-value logistics industry, expand hardware logistics
infrastructure, enhance the software logistics system, and establish
integrated system for logistics policies.
Under the slogan of global logistics leader guiding low-carbon, green
growth for the 21st century, the Revised Plan (2011-2020) seeks to
create national wealth through logistics, enhance efficiency of the national
logistics system, and secure the driving factor for long-term growth in the
logistics industry.
Overall, the Basic Plans are focusing on integration (cooperation),
informationalization, and standardization of logistics. To become a logistics
leader that the government approves, integration of policies and a logistics
system is necessary. To establish an efficient logistics system,
informationalization and standardization are necessary.
Currently, Korea is in the process of drafting the 6th National Logistics
Plan(2016~2025). The vision for the 6th National Logistics Plan is to
'become a global logistics leader, guiding creative, innovation and sustainable
growth,' from which it can be understood that the government regards
logistics as a critical factor for economic growth. As for the objectives, the
plan seeks to enter the top 10 LPI countries, and fostering growth of a
logistics enterprise that is capable of entering the world's top five. As for
its strategy, the plan seeks for expansion of the Korean logistics system in
the international logistics market, raising competitiveness of the logistics
industry by lifting restrictions, establishing future-oriented smart logistics
R&D and safe, eco-friendly, and a sustainable logistics environment, and
establishing complex logistics infrastructure.

<Figure 3-2> 6th National Logistics Plan (Draft)
Source: Logistics Policy Division, Ministry of Land, Infrastructure and Transport,

Development History of Korea's Logistics Industry, 2016.3.30
2. Legal Institutions related to Logistics
1) Related Laws
Notable Korean laws related to logistics can be categorized into six types
for each subfield of logistics (port transportation, logistics industry, cargo
vehicle transportation, railroad, logistics facility) and the comprehensive
Framework Act on Logistics Policies superseding all areas of logistics.

<Table 3-2> Logistics-related Laws in Korea
Road ․ Railroad Harbor ․ Vessel Air · Aircraft Logistics Industry Logistics Complex
Promotion of
Logistics
Harbor Logistics
Industry
Road Act Transport Aviation Act Complex
Development
Business Act Development
Act
Act
Air Transport Framework Act
Korea Highway Logistics
Harbor Act Business on Logistic
Corporation Act Facilities Act
Promotion Act Policies
Trucking Safety of
Port Authority Sustainable
Transport Aircraft
Act Transport Act
Business Act Operation Act
Framework Act
on the Aviation Safety
Development of Ships Act and Security -
Railroad Act
Industry
Korea Rail International
Aviation
Network Ship - -
Security Act
Authority Act Registration Act
Ballast Water
Korea Railroad
Management - - -
Corporation Act
Act
Ship
- Management - - -
Industry Act
NOTE: Promotion of Cargo Logistics Act was changed to Framework Act on Logistics
Policies in 2008. Safety of Aircraft Operation Act was changed to Aviation Safety and
Security Act in 2002 which was once again changed to Aviation Security Act in 2014.
Promotion of Logistics Complex Development Act was changed to Logistics Facilities Act
in 2007.
Framework Act on Logistics Policies serves as legal foundation of

logistics policies and provides rules and restrictions on planning, executing,
and supporting logistics policies. Several features of the Framework Act
include, first, that it regards not only domestic, but also an international
logistics policy design to be within its policy purview. Second, it defines
logistics companies and the logistics industry, and seeks to systematically
address changes in the logistics environment by considering not only

logistics facilities, but also other facilities related to logistics cooperation,
automation, and informatization. Third, it fosters and supports
comprehensive logistics companies by introducing comprehensive logistics
enterprise certification to identify companies specializing in logistics and by
providing relevant support. Fourth, it lays out policies and relevant
assistance channels to establish an international logistics system, attract
foreign logistics companies, and to promote Korean logistics companies to
enter foreign markets.
Logistics laws are essential in increasing efficiency of the logistics
system, raising competitiveness of the logistics industry, and advancement
and internationalization of logistics. The government should enact not only
laws related to roads, railroads, harbors, and air transport, but also enact
laws related to the logistics industry and logistics complexes in order to
promote easy access to various logistics needs. At the same time, the
government should define, restrict, and obligate relevant actions.
2) National Logistics Survey
To come up with an efficient logistics policy, periodic logistics survey

should be conducted to track logistics status, and provide basic data for
various future policy and strategy designs.

<Table 3-3> Logistics Surveys in Korea
Survey Category Survey Content Related Surveys

․ Overview of the Company
․ Company's Yearly/Three-day Transport ․ Nation-wide Cargo Origin and
Performance Destination Traffic Survey
Company Logistics Survey
․ Resident Companies in each Logistic ․ Cargo Unit Load Survey
Complex ․ Logistics Route Survey
․ Cargo Logistics Route for each Product
․ Cargo Vehicle Features
․ One-day Patterns of Cargo Vehicle
Movement ․ Nation-wide Cargo Origin and
Cargo Vehicle Traffic Survey ․ Cargo Vehicle Driving Patterns in each Destination Traffic Survey
Logistics Complex ․ Cargo Unit Load Survey
․ Entrance and Exit Traffic in each Logistics
Complex
․ Facility Status in the Company

․ Release Status of Logistics Storages ․ Logistics Storage Survey
Logistics Facilities Survey
․ Cargo Vehicle Operation Status ․ Cargo Unit Load Survey
․ Personnel Information
․ Nation-wide Cargo Origin and

․ Traffic near Logistics Complex and
Logistics Complex Traffic Survey Destination Traffic Survey
Entrance and Exit Traffic Survey
․ Cargo Unit Load Survey
․ Maritime Import and Export Cargo
Movement ․ Martime Cargo Origin and Destination
Maritime Cargo Survey
․ Harbor-to-Harbor Transport of Coastal Traffic Survey
Cargo
In Korea, a nation-wide Cargo Origin and Destination Traffic Survey is

held every five years based on Article 12 (National Transport Survey) of
National Transport System Efficiency Act, and Article 7 (Logistics Status
Survey) of the Framework Act on Logistics Policies. The scope of the
logistics survey is being gradually expanded to include a cargo unit load
survey, logistics route survey, and logistics storage survey. Through the
survey, a survey method is designed and conducted, and the results shed
light on the current status of companies, cargo transport performance, cargo
logistics route, cargo vehicle movement patterns, and practices of operating
logistics storages.
Through this, a cargo database such as cargo origin and destination
traffic, logistics route for each product, traffic for each logistics centers are
finally created to understand logistics patterns. DBs such as these serve as
foundational data for the establishment of transport plans including the
national basic transport network plan, medium-term transport facility plan,

plans to set up indirect social capital facilities for transportation, location
plans for logistics facilities, and designing an efficient national logistics
network strategy.
3) Logistics-related Organizations
Korea's logistics policy is designed by various organizations. Specifically,
The Ministry of Land, Infrastructure, and Transport (formerly known as
Ministry of Construction and Transportation), the Ministry of Oceans and
Fisheries, the Ministry of Commerce, Industry, and Energy, and the
Ministry of Agriculture and Forestry participate in policy design. The roles
and responsibilities of each agency are listed in the figure below. Logistics
policy can generally be divided into logistics complex facilities, logistics
operation, logistics industry, green logistics, and international logistics. The
reason why various agencies participate in the logistics policy design is due
to its influence over various fields within the industry, transport, and
economy. The Ministry of Construction and Transportation (currently known
as the Ministry of Land, Infrastructure and Transport) has been at the
center of the logistics policy design to this day. The Ministry of Land,
Infrastructure, and Transport mainly deals with inland transportation and
logistics-related projects, notably managing logistics centers such as cargo
terminals, ICDs, and logistic complexes, and researching and developing
comprehensive logistics information networks and logistics equipment
standard pallets. The Ministry of Commerce, Industry and Energy is in
charge of establishing delivery centers and a common delivery complex that
has a direct influence on industries. The Ministry of Oceans and Fisheries
is responsible for managing logistics and its harbor facilities. The Ministry
of Agriculture and Forestry deals with logistics related to the agricultural
industry such as logistics of agricultural and livestock products, while
KORAIL participates in logistics policy design for comprehensive railroad
logistics stations and railroad information networks.

<Table 3-4> Agency Responsibilities
Logistic Complex Logistics Logistics Green International
Category
Facility Management Industry Logistics Logistics
Provide
Expand Low
Build
Logistics Comprehensiv Pollution
Harbors and
Ministry Centers incl. e Logistics Cargo Cars,
Airports,
of Cargo Information Transportati Hazardo
Complex
Land, Terminal, Network, on, Storage us
Transportati
Infrastr ICD, Logistics Logistics Management Material
on
ucture, Complex, Equipment/St , Cargo s
Brokerage,
and Air Cargo andard pallet, Transportati Transpor
North-Sout
Transpo Terminal, Logistics on t
h Border
rt Urban Technology Brokerage Manage
Logistic
Logistics Development ment
Complex
Facility through
CVO
Introduce
Logistics
Information
System, Check
Ministry Build Local
financial SCM, POS Northeast
of Delivery
Support to Systems, Pipeline
Commer Centers or Pipeline
Purchase Logistics Constructio
ce Common Construc
Standard Bar Support, n Project,
Industry Delivery tion
Codes, Standard Free Trade
and Complex
Standard Package Area
Energy
pallet, Size
Standard
Logistics
Equipment
Develop Harbor Expanding Maritime
harbor and Management Coastal Transpor
Ministry nearby Information Express t
of Sites, System, Routes, Industry
Harbor
Oceans Maritime Standardizati High-speed ,
Constructio
and Logistics on of Container Loading
n
Fisherie Center, Maritime ships, Large and
s Wholesale Products Cargo Unloadin
Market for Logistics, Vessels, g Cargos
Maritime Automation Manage entering

Loading and
Unloading
Products Harbors
Services in
Harbors
Standardiza
Agricultural tion of
and Livestock Packaging
Logistics Establish Agricultural
Ministry Center, Comprehensiv Products,
of Wholesale e Agricultural Automated
Agricult Market/Joint Products Loading and - -
ure and Market for Logistics Unloading,
Forestry Agricultural Information Direct
Products, Rice Network Transaction
Processing s of
Complex Agricultural
Products
Railroad
Small-Tran
CY,
sportation,
Comprehensiv Establish
Expand
e Railroad Railroad
KORAIL Pallet Cargo - -
Logistics Information
Vehicle,
Station, Network
Container
Cement Silo,
Cargo
Vehicle
Manage
Establish Import and
Korea Manage
Customs Export
Customs Bonded
Information Clearance
Service Warehouse
Network and Customs
Free Zone
Source:Shin, Dong Sun(2002), Research on Government Functions in the field of Logistics
and Establishing Responsibilities, The Korea Transport Institute

Section 2. Logistic Infrastructure
When reviewing the conditions of logistic infrastructure in Korea today,

the following can be observed: it encompasses 105,673 km of the entire
road network and 2,112 km of the entire railroad network in Korea. Also,
there are 5 ports which include Incheon and Pyeongtaek located near the
capital area, Busan and Ulsan located in the Gyeongnam area, and
Gwangyang located in the Jeolla area. There many international airports
located throughout Korea. Incheon International Airport and Gimpo
International Airport are located in the capital area and Cheongju
International Airport is located in the inland of Korea. Furthermore, Daegu
International Airport and Gimhae International Airport are located in the
Gyeongsang District, Mokpo International Airport is stationed in the Jeolla
District, and Jeju International Airport is located in Jeju Island. The Korean
government developed these roads, railroads, ports, and international
airports centered around hubs.
<Figure 3-3> Current Conditions of Logistic Infrastructure in Korea

1. Logistic Complex and Axis
Korea has been establishing logistic policies by focusing on hubs. The

National Logistic Plan suggests logistic policies encompassing 6 axes that
connect 5 logistic complexes. Each logistic complex is connected through
transportation infrastructure with combined freight. In other words, this
refers to having not one but two or more transportation means for each
logistic complex. The following figure is a concept of logistic development
centered around hubs and axes.
<Figure 3-4> Concept of Logistic Complex and Axis Development in Koreas
Source: Dong-sun Shin (2002), Studies Related to Establishing Government Laws and Roles,
Reconstitution of Korea Transport Institute
1) Inland Cargo Bases

The Korean government established the enactment of the Goods
Distribution Promotion Act and inland cargo bases (Composed of Inland

Container Depot (ICD) and integrated freight terminal). Under the Goods
Distribution Promotion Act, an integrated freight terminal and general terminal
are determined based on the need of the public cargo terminal or specialized
terminal according to the characteristics of the users. The existing cargo
terminals mainly perform functions suggested by the cargo shipper and cargo
transportation company (owner of cargo transportation) and thus, the roles of
the cargo facilities require improvement. Due to this reason, the government
decided to develop inland cargo bases that facilitate the roles of integrated
freight terminals with the objective of strengthening the trans-shipment
function which is a fundamental aspect of cargo terminals.
The inland cargo bases are categorized into integrated freight terminals
and ICDs which have been established near 5 major areas.
Main facilities of the integrated freight terminals are as follows.
① Cargo handling center, ② delivery center, ③ railroad
Integrated
transportation handling site, ④ maintenance utility
Cargo
facilities, ⑤ parking lot, ⑥ gas station, ⑦ washing
Terminal
facilities
① Container loading site, ② container work site, ③ sash
ICD equipment site, ④ maintenance utility facilities, ⑤
Parking lot
Inland cargo bases have been through the private sector project based on
Private Investment Promotion Law and the project initiatives are as follows.
It is composed of a plan confirmation stage, an execution stage, and a
construction stage. Validity inspection and location selection has been
conducted by the Ministry of Construction and Transportation which means
the construction plans for an inland cargo complex has been facilitated by
government bodies.

<Figure 3-5> Procedures of Private Investment Projects Managed by Government
The basic facilities of inland cargo bases including ramps, railroad

entrances, and waterworks have been established and provided to the
businesses by the government. The government provided a guarantee to
finance the entire expenses of land purchases and also offered 30% of total
private investments (excluding expenses for land purchases).
Terms and conditions for loans were set as with a 15 year payment
period after a 5-year grace period in order to minimize the financial burden
of companies. In addition, government reduces 50% of special surtax
imposed on income generated by site creation and transfer of buildings and
approved 15% of total investments as the reserve funds for investment.
Also, tax benefits including corporate tax exemption have been provided.
2) Logistic Complex Facilities

Requests have been increasing from various changes based on the
establishment of the Ministry of Land, Transport and Maritime Affairs in
2008 including added problems associated to logistics system efficiency in
three aspects which are land, sea, and airway.
Since 2008, the Korean government established a Law Related to the
Development and Operation of Logistic Facilities in order to come up with
measures to develop an efficient logistic network through the prevention of
overlapping and inefficient expenses and the supply of reasonable logistic
facilities. In addition, they are currently establishing the Comprehensive
Plan for Development of Logistics Facilities based on Article 4 of the same
law. The Comprehensive Plan for Development of Logistics Facilities is a 5
year plan related to development of logistics facilities for “Reasonable
Development and Placement of Logistics Facilities and Efficiency of
Logistics System.” This comprehensive plan for logistic complex facilities
has the characteristics of having an interconnecting plan for logistic
facilities to achieve the basic direction of the National Logistics Basic Plan.
The first plan has been established with the time scope of 2008 to 2012.
The second plan (2013-2017) has been established and is being
implemented with comprehensive plans to control overall businesses and
reestablishing the direction of initiatives of logistics facilities policies
planned, implemented for 5 years by analyzing the outcome from the
existing plans and applying the new national, economic, and social changes
after the end of the first plan.
The Comprehensive Plan for the Development of Logistic Complex

predicts the demands of logistic facilities to assess the amount of supply.
In order to do so, the following items must be implemented: ① Defining
type and subject of logistic facilities, ② classifying regional units, ③
measuring demands from domestic logistic facilities, ④ providing basic plans
to systematically supply logistic facilities, ⑤ establishing plans to supply
facilities for each regional unit.
First, ① Definition of Type and Subject of Logistic Facilities are as

follows.
<Types of Logistics Facilities>

ㅇUnit Logistic Facilities: Smallest unit of logistics facilities which
perform logistic activities independently includes Railroad CY4),
General Cargo Terminal, Home Delivery Center, and Warehouse
ㅇ Cluster Logistics Facilities: Logistics facilities that have been installed
with more than two unit logistics facilities such as ICD, integrated
logistics terminal, logistics complex, and railroad CY.
ㅇ Connecting Logistics Facilities: Transportation facilities including roads
and railroads that provide easy cargo transportation among logistics
facilities.
<Definition of logistic facilities which are subject to demand estimatio

n>5)
ㅇ Supply and demand is estimated through analyzing the unit logistics
facilities (railroad CY) which affect the demand similar to clustered
logistics facilities, international logistics facilities (logistics complex
near ports and airports) which is systematically supplied based on
administrative functions, and clustered logistics (integrated logistics
terminal, logistics complex, and market for agricultural & marine
products) facilities among domestic logistics facilities.
ㅇ Out of these, suggestions for future supply and demand of logistics
complex near ports and airports and market for agricultural & marine
products are in place according to various related plans. Therefore,
this plan accepts the above original information.
ㅇ Targeted facilities for estimate of demand: inland container processing
facilities (ICD, Railroad CY) and general cargo processing facilities
(integrated logistics terminal and logistics complex).
4)container yard
5) Ministry of Land, Transport and Maritime Affairs (2012), Quotation of Definition in the
“Second Comprehensive Plan of Logistics Facilities”

Next, ② Zone classification system is composed of a total of 250 zones
(cities, counties, and boroughs) similar to the classification system of
national transportation DB. As for Korea, 16 cities and counties and 42
medium-sized districts have been classified.
For the next step of ③ demand estimation of logistic facilities in Korea,
the demand was estimated by dividing inland container processing facilities
and general cargo processing facilities. As for inland container processing
facilities, forwarded cargo related to complexes near ports were excluded
from estimated values of import/export containers in the target year.
<Figure 3-6> Estimation of the Demand of Area for Inland Container

Processing Facilities
By estimating the total supply from this, the demand of area and
distribution area per region is estimated to be distributed for each region.
The estimated method and direction for general cargo processing unit is as
follows: the general cargo processing facilities are divided into two
categories: a cargo handling center and a delivery center. This is because

accumulated trans-shipment and collective delivery are needed in order to
process cargo. Therefore, the quantity of goods for trans-shipment and
goods for collective delivery are divided into daily available goods. Then the
area and number of buildings are calculated to come up with the total
demand of area. Although the construction of the integrated logistics
terminal has been completed during the existing plan, this plan has expired
so it is presumed that there will be no additional supply for an integrated
logistics terminal. Therefore, the processing amount of general cargo in the
integrated logistics terminal has been eliminated for estimation of the
processing amount for general cargo processing facilities.
<Figure 3-7> Estimation of the Demand of Area for General Cargo Processing
Facilities
For the estimated data for the quantity of cargo OD goods in the target
year, the total quantity of goods with general cargo that surpass 100 km
from the entire cargo OD data of the National Transportation DB, of the
target year to calculate the cargo handling centers, has been estimated. For
collective delivery centers, the total quantity of goods was estimated by

using the inflow of general goods from under 50 km and inflow of general
goods from over 50 km in the cargo OD data of the National Transportation
DB of the target year.
The plan for logistics facilities have been prepared through this process
and the plan to allocate supply per region will be drawn up by establishing
policy direction. The plan for national allocation of logistics facilities are
as follows.
<Figure 3-8> Overall Layout of the Logistics Facilities

in Korea
Source: Ministry of Land, Transport and Maritime Affairs (2013), “Second Comprehensive Plan for
Development of Logistics Facilities” (2013~2017)

<Table 3-5> Current Condition of Logistics Facilities Per Region
Numb Cargo Cargo

er of Processing Processing
Region Type of Facilities Total Area
Facilit Capacity Capacity
ies (TEU) (TON)
Gang
Logistics Complex 1 173,883 0 662,000
won
ICD (Inland Container
1 753,127 1,370,000 0
Depot)
IFT (Integrated Freight
Gyeo 1 381,736 0 5,810,000
Terminal)
nggi
Logistics Complex 3 1,028,320 0 3,921,000
Port Terminal 2 704,000 1,455,000 0
Cargo Car Terminal 4 104,406 0 1,397,000
1 951,940 1,400,000 0
Gyeo Depot))
ngna 1 316,944 0 3,710,000
Terminal)
m
Port Terminal 3 2,081,000 4,580,000 0
Cargo Car Terminal 1 21,574 0 342,000
1 456,499 330,000 3,570,000
Depot))
Gyeo IFT (Integrated Freight
1 460,000 0 0
ngbuk Terminal)
Gwan
gju
Daeg Airport Terminal 1 844 0 30,000
u Cargo Car Terminal 3 114,410 0 1,667,000
Airport Terminal 1 2,765 0 55,000
Daeje
Logistics Complex 2 1,022,756 0 1,760,000
on
Busan
Port Terminal 8 2,712,653 11,780,000 0
Cargo Car Terminal 1 85,667 0 0
Airport Terminal 1 126,470 0 1,440,000
Seoul Logistics Complex 1 560,694 0 1,946,000
Logistics Complex 1 467,314 0 1,784,000
Ulsan
Port Terminal 2 350,079 740,000 0

Airport Terminal 8 292,269 0 3,870,000
Inche Logistics Complex 1 302,888 0 260,000
on Port Terminal 6 978,880 3,233,000 0
1 520,782 340,000 0
Depot))
Jeolla IFT (Integrated Freight
1 520,782 0 4,700,000
nam-d Terminal)
o Airport Terminal 2 3,915 0 66,000
Port Terminal 3 2,279,259 2,255,000 0
Jellab
Port Terminal 1 192,000 300,000 0
uk-do
Jeju Airport Terminal 1 17,574 0 327,000
Chun Logistics Complex 1 463,517 0 1,770,000
gnam Cargo Car Terminal 2 55,371 0 879,000
1 480,736 350,000 2,360,000
Depot))
Chun 1 480,000 0 0
Terminal)
gbuk
Logistics Complex 2 445,512 0 1,725,000
Source: Ministry of Land, Transport and Maritime Affairs (2013), “Second Comprehensive Plan
for Development of Logistics Facilities” (2013~2017)
In 2015, the total number of logistics facilities in Korea is 96 and the
number and type of facilities are as follows.
<Table 3-6> Current Conditions of Logistics Facilities in Korea
Type of Facilities No.

ICD (Inland Container Depot)) 5
IFT (Integrated Freight Terminal) 5
Airport Terminal 16
Logistics Complex 15
Port Terminal 25
Cargo Car Terminal 30
Total 96
Source: Restructured statistical data from the National Logistics Integrated Information Center
(http://www.nlic.go.kr)

Section 3. Logistic System
1. Logistics Industry
1) Development in Logistics Industry
The logistics industry in Korea is becoming more renown every

year. The Korean government has selected the logistic industry as
one of the 7 major promising service industries which will lead
economic development in Korea. As of 2014, the Korean government
set a goal for the logistics industry to achieve total sales of 76.4
billion USD and to provide jobs for 587,000 people in 184,000
companies. This goal amounts for 6% development based on total
sales of the nationwide logistic market. As for inland logistic
infrastructure, the road network accounts for 97.7% of total traffic
volume and the railroad network amounts to 2.3%, and therefore,
the road network is seen as the backbone of the Korean logistics
system.
The reason why the road network takes a high proportion in
traffic volume is because there are significant demands for parcel
delivery service. As for marine traffic volume, import volume is 3
times higher than export volume and therefore, most of import
goods are delivered via the marine route. Container traffic volume in
the Busan Port is in 6th position in the world and in particular,
trans-shipment traffic volume accounts for more than half of total traffic
volume. Regarding logistics through airways, export and import traffic
volume are of a similar level and in particular, Incheon International Airport
is ranked 2nd for processing international airway traffic volume.

<Figure 3-9> Current Status of the Logistics Industry in Korea
Source: Logistics Policy Division, Ministry of Land, Infrastructure and Transport,

Development History of Korea's Logistics Industry, 2016.3.30
2) Advanced Logistic Technologies
As logistics industries are being developed, advanced logistic

technologies are consistently being introduced. Cross-docking is an
example of advanced logistics technology. This technology is being
used to deliver goods quickly and accurately. Cross-docking is a
technology which enables inbound trucks to unload goods and have
the goods sorted and classified by a conveyer belt system. The
good are sorted and immediately loaded on to outbound trucks,
obviating the need for warehousing. By using this technology,
warehouses are rarely required and therefore, this technology
enhances the efficiency of the time and the cost of logistics
simultaneously.

<Figure 3-10> Cross-docking System
In Korea, the logistics complex in Jangji-dong is located in the

central part of Seoul and its land price is very expensive. However,
if cross-docking technology is used, the use of a warehouse would
be obviated and therefore, it may achieve maximum effect in the
limited land space.
2. Logistic Information System
1) Logistic Information System
Logistics related informatization policies in Korea can be described

as the comprehensive logistic information business conducted by the
government. To define comprehensive logistic information system
simply means this: a system which connects relevant systems
including finance, trade, and customs with the individual cargo
information system in land, sea, and airway. By establishing this
comprehensive logistic system, it becomes possible to integrate and

automate cargo transportation tasks to provide an integrated logistic
process service which reduces logistics costs. Once logistic tasks
are separately processed, its efficiency is lowered. In order to
obtain maximum effects with minimum costs, the integration of
logistics is crucial. In order to integrate a logistics system,
standardized logistics related information must be used.
<Figure 3-11> Overview of Comprehensive Logistics Information Network
Source: Dong-sun Shin (2002), Study related to Laws and Roles of Government, Korea Transport
Institute

<Table 3-7> Staged Plans to Establish Comprehensive Logistic Network
Short-Term Mid-Term Long-Term
Category
1996 ∼ 1997 1998 ∼ 2000 2001 ~
- Establishment of - Expansion of service
- Make it super fast and
comprehensive logistic - ultimedia/international
Objective advanced
information network service
- CALS/EC service
- Trial service - Commercial service
- Development of handling
civil affairs and
implementation of its trial
service - Commercialization and
- Realization of e-commerce
- Development of new expansion of
- Establishment of
service in meritorious E-document exchange
integrated DB
service section service (civil affair
- Provision of multimedia
- Establishment of public DB handling and logistic
service
Service preferentially exchange)
- Provision of supporting
- Basic design of cargo - Expansion of DB for
service to establish
transportation service and private sector
optimized cargo
implementation of its trial - Commercialization of
transportation plans
service cargo transportation
- Integrated internet service
- Establishment of additional service
service system and
implementation of its trial
service
- 44 types in government - 39 types in government - Supplementation of
E-document/
sector sector e-documents and
standardized form
- 58 types in private sector - 25 types in private sector additional development
- Establishment of CALS
- Establishment of EDI relay - Rendering CALS/EC
- Multimedia DB service
System system - Establishment of
(introducing advanced
- Text-centered DB service integrated DB
DBMS)
- Connecting super fast
network to arterial
- Arterial network for digital - Broadband ATM network
networks
device only - Super speed carrier
Telecommunicatio - High speed
- General carrier network network
n network communication carrier
- Communication node - Addition of 5
network
between Seoul and Busan communication nodes
- Addition of 4
communication node
- Expansion of Seoul
- Additional establishment
- Establishment of Seoul Central Center
Computing center of 4 local centers in
Central Center - Establishment of Busan
central cities
Local Center
Cargo
- Establishing environment
transportation - System-based - Expanding and
to provide advanced
information establishment stabilizing the system
service
system
- Expansion of relevant
network connection
- Connection between major
- Connection of existing
networks
logistic network - Expansion of oversea
Connection - Connection between
- Connection of core logistic network
between networks existing logistic networks
national network connection
- Connection between
- Expansion of oversea
oversea logistic networks
logistic network
connection

In 1994, the “Basic Plan for Cargo Distribution System
Enhancement” was initially established, followed by the “National
Computing Adjustment Committee” that was organized in 1995.
Then, the Korean government designated the comprehensive logistic
network as the national computer network, then this area of
business was implmented in full scale.
In order to establish an efficient logistic information network, the
Korean government enacted laws and regulations such as the Goods
Distribution Promotion Act. This Act authorizes relevant content including
e-documents and selection of business operators to have full authority and
in turn, the“Basic Plans for a Comprehensive Logistic Information Computer
Network” was enacted in 1996 through consultation and agreement between
government bodies including the Ministry of Information and Communication
based on research conducted by the Korea Transport Institute and Korea
Information & Communication Co., Ltd.

<Table 3-8> Major Services and Staged Establishment Plans
Short-Term Mid-Term Long-Term

Category
1996 ∼ 1997 1998 ∼ 2000 ~ 2001
Establishment of To make the system
Objective service provision Expansion of service advanced and extremely
system rapid.
‧ Preferentially applying
forms regarding
import/export domain: ‧ Apply to all documents
civil affairs documents related to civil affairs:
related to entry and including civil affair
departure based on documents related to
Electronic ‧ Introduction and
ports and airports, cargo transportation
Data application of CALS/EC
customs, and importing ‧ Apply to all logistic
Interchange service system
(EDI) service and exporting goods related tasks: all
‧ Multimedia service
‧ Expansion and document forms related
supplementation for to import/export and
existing services domestic cargo
‧ Development of new transportation
service in meritorious
service section
‧ Development and
expansion of private DB
‧ Establishment of
‧ DB connection service
public DB ‧ Provision integrated
for oversea networks
Database (DB) preferentially DB service: domestic
‧ Establishment of DB for
service ‧ DB connection service and international
tracking cargo
between relevant ‧ Multimedia service
‧ Expansion of finding
networks
Information Provider
(IP)
‧ Basic design and trial
service ‧ Real-time cargo and
Cargo track ‧ Promote vehicle tracking service
‧ Cargo tracking service
and informatization of by using ITS/CVO
between major logistic
transportation major logistic complex technology
complexes
availability facilities ‧ Support service to
information ‧ Vehicle maintenance
‧ Technology establish optimized
service service
development for cargo cargo transportation
and vehicle tracking plan
system
Source: Dong-sun Shin (2002), Study related to Laws and Roles of Government, Korea Transport
Institute
According to the basic plans described above, an Electronic Data

Interchange (EDI) system has been established by Korea Information
& Communication Co., Ltd. to start its trial service. Also, the
comprehensive logistic information network establishment business
has been implemented with 3 stages and the plans for each stage is
described in the table above.
As for the comprehensive logistic information system, even though
there is a common consensus for its need for informatization of
transportation data, there are huge difficulties for distributing to
small sized domestic transportation companies which have a small
amount of initial investment. However, plans to reduce the burden
for users by leasing CVO terminals with/without costs have been set
and implemented.
Since then, the logistic informatization process has been further
developed due to the establishment of the Framework Act on Logistics
Policies in 2008. According to Article 30 (Establishment of National
Logistic Integration Database), it aims to provide 16 services by
establishing an integrated national logistic DB, a hub which connects
logistics related information between private and government domains (such
as transportation in land, sea, and airway and customs, national logistics
portal, decision making support, multidimensional information analysis, and
an inland logistic approval system.
Specifically, this aims to integrate government bodies’ information
based on real-time cargo and logistics information, hazardous
substances, and geographical information and to incorporate ocean
port logistic information and to establish international logistic
information center (KLIC) and a common use system for
import/export logistics information.
Pertaining to each stage of this plan, connection and integration of
the existing unit network as the first stage (2008 to 2009); in the
stage 2, establishment of a portal system based on the
achievements from stage 1 (2010 to 2011); and making each
system advanced through the establishment of an approval system

and customized system as stage 3 (2012).
2) Standardization of Logistics
Standardization of logistics is the activity to enhance logistic

efficiency through simplification, specialization, standardization, and
unitization of logistic factors including logistic equipment and cargo, types of
external package, specification, structure, and logistic information. This
process is crucial to achieve efficient handling and transportation of cargo.
Therefore, the government must provide standards and facilitate related
institutes, companies, and individuals. As for the unitization of specification,
a container is the representative example. A container is the representative
type of a unit loading method which enables complex transportation and
integrated transportation and also, a container is an effective system for
reducing load time and preventing damage of cargo. In addition, it is
relatively safe against theft and damage, and provides an advantage in
reducing insurance premium and packing costs. Specifications of containers
are provided by ISO (International Organization for Standardization) and this
specification is commonly used worldwide. The most representative
transportation unit of containers is TEU (Twenty-foot Equivalent Unit)
and FEU (Forty-foot Equivalent Unit).
Another example of a loading method is a pallet. Unlike
containers, different standards are applied to each country and in
some countries standards do not exist. Therefore, providing a
standardized size on a national level is required. If different
specifications are provided per company, this may cause chaotic
situations in the future.
<Table 3-9> Specification of Pallet
Type Korea Japan Europe United States

800×1,200
Pallet size (mm) 1,100×1,100 1,100×1,100 1,016×1,219
1,000×1,200

Source: Korea Pallet Association
Unitization of pallet specification will facilitate mechanization by

using a crane and palletizer and help to determine appropriate rack size and
height of a warehouse, as well as to enable standardization of the size of
the cargo bed. As for package processing, standardization of package size,
package strength, material, technique, and management is required but such
efforts have not been successful thus far. In terms of informatization, it is
required to participate in projects for barcode modification and technology
introduction which are being facilitated worldwide. In addition, unification of
a cargo item code and achievement of compatibility in documents including
quotes is required.
In Korea, standardization of logistics started from the 1970s,
however, achievements have not been sufficient compared to
advanced countries. Most standardization has merely been
company-wide or organization-wide.

Section 4. Implication of Policies
1. Logistic Infrastructure (Hardware)
In Korea, the entire land was classified with regional units and
major logistic complexes were selected for each regional unit in
order to obtain nationwide logistic infrastructure. By selecting
sub-logistic complex areas adjacent to each logistic complex, “Hub
and Spoke” logistic complex facilities was established. This concept
refers to necessary facilities to reduce the travel distance of
logistics and to efficiently process import/export traffic volume
between each region. Korea assesses the size of facilities with basic
unit method along with selecting complex facilities for each region
and considers the size of traffic volume.
In order for Cambodia to advance its own logistic system to be
like Korea’s, the selection of logistics complex facilities by dividing
the whole nation into regional units is required. In addition, selection
of axes which connect each logistic complex by considering current
transportation facilities and traffic volume, along with expansion of
transportation facilities is required. However, in order to assess
specific size of facilities, logistics plans have to be established in
the future.
2. Logistic System (Software)
Basically, the objective of logistics is to facilitate the flow of

goods and the flow of goods can be facilitated under a standardized

and automated system. The Korean government has invested
tremendously in standardization and the automation of logistics in
consideration of such basic properties of logistics. In Korea, both
the government and companies have strived to reduce logistics costs
through Electronic Data Interchange, informatization of logistics, and
standardization of logistics.
Items to be prioritized in the Cambodian logistic system are
e-documents and a logistics standardization system. However,
systematic enhancement is also required since these systems can be
realized through the establishment of IT infrastructure and
agreement between each government body.
3. Cooperation between Public and Private Sectors
In the perspective of establishing logistic infrastructure and its system,

along with policies related to logistics, establishment of relationships
between government bodies (central government and local governments) and
private companies is necessary. Government bodies must establish logistics
related plans and policies, and facilitate direct participation of private
sectors as well as to collect difference opinions. Through the harmonization
and sharing of roles between public and private sectors, efficiency of the
logistics system can be enhanced.
The effects of various types of logistics policies collected by
government institutions increase when collaboration with the private
sector is achieved. For a successful outcome, the following must be
established and operated: a logistics consultative group with
government employees at the government institutions, employees
who work at the businesses and facilities related to logistics, and
academic professionals.
Depending on the circumstances, such consultative groups needs to
be established on a regional level, as well as on a central level.

There needs to be a system in place that discusses topics including
changes related to logistics, issues between bodies, items for
cooperation, and effects of current policies by holding meetings
regularly under the leadership of government institutions. This
system should apply to such topics for the establishment of policies
and also provide subsequent feedback.
Funds which are invested into the logistics project are generally
covered by the following funding sources: government fund including
local taxes and non-tax receipts, dependent fund including aid fund
from central government and grant, various pensions and funds,
regional development fund, leading from financial institutions,
advances received and distribution price from urban development projects,
local bond issuance, foreign loan, etc.
However, is sensible to supplement financing through the
rationalization of a system that can attract private funds to increase
the effectiveness because government institutions cannot satisfy the
demand for basic facilities related to logistics. To achieve this,
systems for licenses and permits based on related laws, business
sites, financing, right of management and the assurance of profits,
and foreign exchange bonds should be used. In the long-term
perspective, a private sector financing system and conditions should
be established to invigorate foreign investments from foreign
companies for logistics facilities.
Korea has been striving to systemize a logistics system and
invigorate its logistics industry on a national scale, and as a result,
it has made amazing achievements. However, many issues were
encountered along the way, encompassing: a lack of awareness, lack
of professionals, and poor development of infrastructures. If such
cases are analyzed and applied beforehand, this may promote
prosperous improvement for the logistics industry in Cambodia.

4. Korea’s experience and lesson
◦ Lacking awareness of the importance of logistics ->

Awareness needs to be increased on a national level
- Although there is significant level of contribution toward
employment and economic growth, national awareness of the
importance of logistics is insufficient.
- Logistics facilities is recognized as unwanted facilities
◦ Lacking professionals in the field of logistics -> Government

needs to provide support for an education system
- Absence of professionals who have specialty and knowledge
in the field of logistics
- Lack of institutions, businesses, and programs to train and
promote professional in the field of logistics
- Lacking a combined network that consists of industries,
academic institutions, and research institutions
◦ Poor development of infrastructure -> need continuous

development of logistics complex and precise estimation of
demand
- Poor development of integrated logistics facilities and
supply of logistics complex
- Issues including overlapping development in same district
and inaccurate estimation of demand when establishing
development plans
◦ Excessive regulations -> vitalizing markets through

deregulation is required
- Road: approval system for cargo trucks, limiting drive for
trucks with heavy cargo and long cargo, etc.
- Port: compulsory pilotage standard, night pilotage standard,
etc.

- Airport: approval system for flight cargo transportation fare,
etc.
◦ Tax burden -> establishing plans to reduce taxes for logistic

companies
- Less favorable system compared to manufacturing industry
(electric charges, comprehensive real estate holding tax,
etc.)
- Traffic generation charges are imposed for owned logistic
warehouse
- Not providing tax-free oil to cargo ships sailing along the
shore
◦ Poor certification system -> establishing a certification

system and providing incentives to outstanding companies
- Supportive measures are insufficient for those who have
acquired certification
- Since similar logistics related systems are indiscriminately
implemented, it requires to acquire unnecessary certification
and generate maintenance costs

Chapter 4. Logistics Development Strategy for

Cambodia
)Kim Jonghak, Hong Kyoungsun, Park Bora(KRIHS)

Lee Hangsook (Incheon University)
Summary
Logistics development strategies for this project will be presented with
the categories of “hardware” including roads, railroads, and logistics complex
and “software” including laws, systems, and the industrial system. As for
the hardware strategy, national logistics centers in Cambodia and logistics
axis which connects each logistics center have been suggested. Also, an
outline of investment priority for these axes has been proposed. From the
perspective of software, a basic plan on logistics and application plans for
logistics related laws and organizations have been proposed in order to
develop a logistics system in Cambodia.
Chapter 4. Logistics Development Strategy for Cambodia  119

Section 1. Basic Direction
1. Outline
Logistics development strategies for this project will be presented with

the categories of hardware and software. Transportation structures including
roads and railroads along with logistics centers that are the basic
infrastructure for logistics and transportation, these fall under the category
of hardware. On the other hand, software refers to elements other than
hardware structures, such as systems, laws, and organizations which are
required to transport domestic and international goods. The logistics system
in Cambodia must be developed in accordance with the basic systematic
connections between elements of hardware and software.
<Figure 4-1> Direction for Development Strategies

2. Hardware Improvement Plans for Logistics Development
As presented through the cases in Korea, logistics development strategies

proposed at the initial development stage aim to select national logistics
centers for each regional area and to design logistics axes which can connect
each logistics center. For this project, the logistics axis which is centered
around a logistics center and transportation infrastructure is to be defined as
the hardware of the logistics system. Hardware improvement plans for
Cambodia will be presented.
<Figure 4-2> below explains the concept of connecting Cambodian
logistics centers and sub-complexes which can be considered as “Hub and
Spoke.” The Cambodian government has established specific plans for
transportation infrastructure including roads, railroads, airways, and ports.
However, the Cambodian government lacks plans for a building logistics hub
which can incorporate each of the elements described above. Therefore, we
have strived to choose a desirable location of the logistics center and
logistics axis by considering comprehensive factors including the direction of
the master plan of the Cambodian government, population distribution, and
traffic volume between each region.

<Figure 4-2> Conceptual Diagram for Cambodian Logistics Complexes
2. Hardware Improvement Plans for Logistics Development
In order to achieve development of the logistics system in Cambodia,

improvement on the elements of hardware including roads, railroads, and
logistics centers as well as software factors including systems and the
logistics industry should be implemented simultaneously. The software
required to develop a logistics system has been categorized into 4 factors.
First of all, a national basic plan on logistics should be established. As
previously mentioned, establishment of a national basic plan on logistics”
should be prioritized as Cambodia currently lacks a blueprint for logistics
system development. A national basic plan on logistics includes

mid/long-term strategies, visions for logistics system development, and
establishment of objectives to prepare changes in elements for the logistics
environment going forward.
Second of all, the establishment of laws relating to logistics is required
to plan and implement logistics policies because legal grounds are
mandatory elements. The Framework Act on Logistics Policies and
Distribution Industry Development Act can be considered fundamental laws
relating to logistics. Integration and modification of logistics related policies,
items that make the logistics system more efficient, terms to improve
competitiveness of the logistics industry, and other major factors must be
included in the Framework Act on Logistics Policies. In addition, the
Distribution Industry Development Act must include plans for developing the
distribution industry, establishing infrastructure for the distribution industry,
and terms to make distribution functions more efficient. Thirdly, policies for
facilitating the logistics industry must be established. Above all, establishing
a logistics information system and logistics standardization should be
prioritized in order to foster the logistics industry. Lastly, relevant
organizations which can implement logistics related tasks that have been
previously mentioned such as the establishment of a national basic plan on
logistics, enactment of major laws relating to logistics, and the
establishment of policies for the logistics industry are required. An
organizational system should be improved to implement logistics policies in
the most efficient way by reviewing current logistics related organizations
in Cambodia.
<Figure 4-3> Software Elements that Need to Be Improved

Section 2. Improvement Strategies for Logistics
Infrastructure
1. Outline
In order to select the location of logistics centers and logistics axes

which are considered as the core logistics infrastructure, we have conducted
the processes described in Figure 4-4. At the first stage, existing master
logistics related plans in Cambodia has been reviewed and a GIS analysis
for regional demographic distribution has been implemented in order to
understand the framework of the existing logistics network conditions and
current demographic distribution situation in Cambodia.
<Figure 4-4> Flowchart for Selecting Logistics Complexes and Axes

In the second stage, domestic and international traffic volume was
analyzed. Origin-destination traffic analysis has been conducted to
understand the pattern of domestic traffic volume in Cambodia. For
international traffic volume, international trade volume for Thailand and
Vietnam has been analyzed. In the third stage, Cambodia has been
categorized into 6 regional domains to select a logistics complex for each
domain based on the analysis results from first and second stages. In the
fourth stage, logistics axes which connect 6 regional domains have been
selected. In order to select logistics axes, O/D traffic volume between six
regional domains has been analyzed.
2. Analysis of Network and Demographic Distribution in
Cambodia
1) National Growth Center and Road Network Plans
MPWT (Ministry of Public Work and Transportation) of Cambodia has

established plans to develop a road network in 2004 and terms of the plans
were revised according to the NSDP (National Strategic Development Plan).
Growth centers and national network frames established in Cambodia are
described in <Figure 4-5>. Cambodia has selected 6 regions (Phnom Penh,
Sihanoukville, Battambang, Siem Reap, Stung Treng, and Kampong Cham) as
the major hubs for economic growth. In the figure below, growth centers
with Phnom Phnh at the center are connected with an arterial road axes
(NR 1 to NR 7). Isolated provinces are connected to arterial axes with
sub-axes to facilitate balanced development. With Phnom Penh as the
center, Cambodia attempted to design national land development by
connecting major growth centers nationwide with a radial road network
system. Thus, these major growth centers should be reviewed when
selecting logistics complexes.

<Table 4-1> Existing Road Network Conditions in Cambodia
Major Growth Centers Roads Connecting Hubs

PHNOM PENH NR 1, 2, 3&4, 5, 6, 7
P-SIHANOUK NR 3&4
BATTAMBANG NR 5
SIEM REAP NR 6
STUNG TRENG NR 7
KAMPONG CHAM NR 7
<Figure 4-5> National Growth Axes in Cambodia
Source: IRITWG, Overview on Transport Infrastructure Sectors in the Kingdom of Cambodia,

2015
2) Demographic Distribution Analysis

Population size and traffic volume data can be considered fundamental
data which can describe the movements of people and products. For this
project, traffic volume data in 2012 has been used to grasp traffic patterns
between 24 provinces in Cambodia. The highest population size was found
in Phnom Penh and Kampong Cham among 24 provinces, followed by
Kandal, Battambang, and Siem Reap. As for the analysis results of traffic
volume, Phnom Penh has the highest figure, followed by Kandal and
Kampong Cham. This pattern is similar to the population size pattern.
<Figure 4-6> Population Size and Traffic Volume for Each Province
<Figure 4-7> describes the road network in Cambodia and demographic

distribution for 24 provinces. As a result of assessing population size and
distribution for each province, many people resided in southern areas
adjacent to Phnom Penh, including Kampong Cham, and border areas
between Cambodia and Thailand including Battambang and Siem Reap. In
addition, many people were clustered in the area around NR5 (Phnom Penh
– Battambang) and NR6 (Phnom Penh – Siem Reap) which are the main
roads connecting these two major population concentrated regions.

<Figure 4-7> Demographic Distribution for Each Province
<Table 4-2> Population and Traffic Volume for Each Province

Province Population (2015) Daily Traffic Volume
(2012, %)6)
PHNOM PENH 1,835,100 15.6
KAMPONG CHAM 1,741,400 10.1
KANDAL 1,443,100 14.2
BATTAMBANG 1,215,600 5.9
SIEM REAP 1,096,500 5.6
PREY VENG 983,200 5.8
TAKEO 886,100 6.5
BANTEAY MEANCHEY 806,800 3.7
KAMPONG SPEU 797,800 4.4
KAMPONG THOM 684,800 4.1
KAMPOT 625,500 4.8
KAMPONG CHHNANG 542,700 4.5
SVAY RIENG 503,400 2.1
PURSAT 447,500 1.8
KRATIE 376,900 2.4
P-SIHANOUK 272,900 1.7
ODOR MEANCHEY 252,800 0.8
PREAH VIHEAR 196,700 1.0
RATTANAK KIRI 179,500 0.8
KOH KONG 149,500 1.9

STUNG TRENG 133,000 0.6
PAILIN 92,400 0.5
MONDUL KIRI 80,800 0.7
KEP 46,100 0.4
Note: Generated traffic volume has been calculated as the ratio of the traffic volume of each province to total traffic volume
2. Domestic and International Traffic Volume Analysis
1) Traffic Volume Analysis for Each Region
As a result of analyzing traffic pattern from Phnom Penh to other

regions, areas adjacent to Phnom Penh have shown a higher rate of traffic
volume. When analyzing the traffic pattern based on geographical directions,
south-west axis (Sihanoukville - Angkor Borei) and north-west axis
(Battambang – Siem Reap) have shown higher traffic volume than other
axes. It has been estimated that traffic volume will increase in the future
but major traffic axes will not be changed significantly. It is also anticipated
that traffic volume in the north-west axis may continuously be increased
with Phnom Penh as the center rather than the south-west axis in the
future.
<Figure 4-8> Traffic Pattern in 2012 (Left), Expected Traffic Pattern in 2020 (Phnom
Penh – Other Regions; Right)
6) This is the proportional traffic volume based on the total traffic volume.

When expected traffic volume in 2020 and 2025 is analyzed based on the
origin and destination (O/D) traffic volume for 24 provinces in 2012,
whereas traffic volume around the capital area was the most significant in
2012, traffic volume between the border area between Cambodia and
Thailand including Battambang and Siem Reap is expected to significantly
increase in 2020. In 2025, a significant increase in traffic volume may be
shown in the axis between breadbasket of Phnom Penh (Kampong Cham and
Kratié) and Svay Rieng adjacent to the Vietnam border.
When the traffic volume between each province of Cambodia is
demonstrated as the axes, it can be shown as <Figure 4-9> below.
According to the figure below, traffic volume has a radial axis structure
which stretches to nationwide regions with Phnom Penh as the center. In
particular, higher traffic volume is shown in the north-west axis which
stretches from Phnom Penh to the Thailand border area, the south-west
axis in which Sihanoukville port is located, and the south-east axis which
reaches the Vietnam border area.
<Figure 4-9> Expected Traffic Volume Between Each Province
Expected Traffic Volume in Expected Traffic Volume in

Traffic Volume in 2012
2020 2025
In addition, abundant traffic volume is shown in the axes which connects
the northwest and northeast provinces located close to the Vietnam border.
It is recommended that Cambodia establish plans for logistics complexes
based on the traffic volume analysis described so far. The result of

conducting a comprehensive analysis for traffic volume in 24 provinces is
shown in <Figure 4-10> below. Higher correlation pertaining to the traffic
volume is shown between the northwest regions including three provinces
(Bantei, Manchai, and Battambang) located near the Thailand border. Also,
higher correlation of traffic is shown between the southeast regions
including Phnom Penh as the center, Kampong Cham, and Svay Rieng etc.
<Figure 4-10> Analysis for Traffic Volume Patterns in 24 Provinces
2) International Traffic Volume Analysis
(1) Major Facilities in Border Regions
Cambodia shares its border with Thailand, Laos, and Vietnam. Major
facilities in border regions which function as the pathway for international
activities are shown in the following figure. Entrance points to Cambodia
other than the border areas of Siem Reap International Airport, Phnom Penh
International Airport, and Sihanoukville International Airport.

<Figure 4-11> Major Border Region Facilities in Cambodia
Source: KINGDOM OF CAMBODIA, Cambodia Trade Integration Strategy 2014-2018, 2014
There are multilateral border checkpoints in Preah Vihear around the

Laos border and Ratanakiri, Mondulkiri, Svay Rieng, and Kampot which are
located at the Vietnam border. Bilateral border checkpoints are located in
Banteay Meanchey and Koh Kong which are placed around the Thailand
border and in Stung Treng which is located near the Laos border as well as
in Svay Rieng, Prey Veng, Kandal, and Takéo. It has been shown that
border checkpoints are located around the Vietnam border which occupies
the largest border line in Cambodia.
(2) Logistics Passage and Trade Volume
As for the international logistics axes in Cambodia, it can be categorized as

follows:
1. Western Cambodia-Poipet-Bangkok
2. Central/Eastern Cambodia – Bavet-Ho Chi Minh

3. Central Cambodia- Mekong- Saigon Port to Cai Mep
4. Phnom Penh- Sihanoukville
<Figure 4-12> Current Logistics Passage in Cambodia
Delivery time to reach Sihanouk Port is about 2 to 3 days and delivery

time to reach Cai-Mep Port in Vietnam is about 4 to 5 days. In the above
figure, number 2 and 3 mean the axes which connect to the ports in
Vietnam. Through these axes, Cambodia can deliver freight to overseas
countries including the United States, European countries, and China. Since
Cai-Mep International Port has high logistics demands, this port can
provide relatively reasonable carrying charge compared to other ports.
Therefore, many SEZs around Phnom Penh export to other countries by
using the axis 2 and 3. When considering trade volume for each axis, the
axis of Sihanoukville takes up about 73% of trade volume in total.
This may be because the SEZ located in Sihanoukville imports base
materials and exports finished products at the same time within
Sihanoukville. The main country to import and export from/to Sihanoukville
is China. The biggest importing country is China, followed by Indonesia,

Taiwan, Korea, Thailand, Malaysia, Japan, the U.S., Singapore, and India.
The largest exporting country is China, followed by France, India, the U.S.,
and Thailand.
<Table 4-3> Trade Volume of Major Trade Passage in Cambodia
International Logistics Axis Trade Volume

TEUs % of total
Sihanoukville (International) 260,000 73
Vietnam) 62,000 17
Thailand 34,000 10
Source: World Bank, Cambodia Trade Corridor Performance Assessment, 2014
It is a noteworthy fact that the import volume is more than 5 times of

the export volume to indicate that the export volume is significantly lower
than the import volume.
<Figure 4-13> Major Importing Countries (upper graph) and Exporting Country
(lower graph) in Sihanoukville Port
Source: World Bank, Cambodia Trade Corridor Performance Assessment, 2014

3. Selection of Logistics Axes and Six Major Logistics
Complexes in Cambodia
In order to select a logistics complex for Cambodia, we have classified

Cambodian land into 6 regions by considering the location of water resources
(Mekong River and Tonlé Sap Lake), topography (northern mountainous
terrain and southern plain terrain), and human-social conditions. Mekong
River divides Region 5 and Region 6 and Tonlé Sap Lake is the boundary
line between Region 4 and Region 5. Southern Cambodia is mostly plain
areas and most of the mountainous terrain is concentrated in Region 5,
located in northern Cambodia. For southern Cambodia, regions are divided
centering on the location of the capital, Phnom Penh. Region 1 is the capital
area and Region 3 is located to the left side of Region 1, whilst Region 2 is
located to the right side of Region 1. Centered to these geographical
conditions, Cambodia classifies its regions with other fields also in
compliance with this regional system.
<Figure 4-14> Regions in Cambodia

Six logistics complexes for each region were selected based on the
analysis previously mentioned. Phnom Penh (Region 1), Kampong Cham
(Region 2), Sihanoukville (Region 3), Battambang (Region 4), Siem Reap
(Region 5), and Stung Treng (Region 6) were selected as the major
logistics complexes in Cambodia.
<Figure 4-15> Major Logistics Complexes for Each

Region of Cambodia
<Table 4-4> Traffic Zone for Each Hub

Hub Zone Province Hub Zone Province
1 BANTEAY MEANCHEY 8 KANDAL
2 BATTAMBANG 5 12 PHNOM PENH
1
15 PURSAT 4 KAMPONG CHHNANG
24 PAILIN 21 TAKEO
6 KAMPONG THOM 5 KAMPONG SPEU
17 SIEM REAP 7 KAMPOT
2 6
22 ODOR MEANCHEY 9 KOH KONG
13 PREAH VIHEAR 18 P-SIHANOUK
10 KRATIE 23 KEP
11 MONDUL KIRI
3 7 25 Laos
16 RATTANAK KIRI
19 STUNG TRENG
8 26 Thailand
3 KAMPONG CHAM
4 14 PREY VENG
9 33 Vietnam
20 SVAY RIENG
Note: shaded cells refer to the major cities of traffic zones

When aggregating traffic volume of each region to the representative
province, traffic volume in Region 1 (Phnom Penh) accounts for 30% of
total traffic volume. Subsequently, Region 3 (Sihanoukville) accounts for
21% and Region 2 (Kampong Cham) 19% of total traffic volume.
<Figure 4-16> Traffic Volume for Each Region (2020)
According to the analysis results of O/D traffic volume in 6 regions, most

regions have a similar O/D traffic volume. However, the Phnom Penh region
showed a higher destination traffic volume compared to the origin traffic
volume.
<Figure 4-17> O/D Traffic Volume for Each Region

4. Selection of International Axis and 8 Major Axes in
Cambodia
Analysis for selecting axes which connects major logistics complexes has
been conducted. As for transportation hubs, 6 domestic hubs and 3 overseas
hubs have been set by considering demographical information, a life zone,
and other relevant factors. There are 30 axes between the 6 major domestic
hubs. In order to consider the traffic demands in the future, expected traffic
in 2020 was estimated by using O/D traffic volume data in 2012. According
to the analysis result of traffic volume between the domestic hubs, the
highest traffic volume was presented between hub 5 (Phnom Penh) and hub
6 (P-Sihanouk) which accounts for 34% of total traffic volume. The second
highest traffic volume was shown between hub 5 (Phnom Penh) and hub 4
(Kampong Cham) which amounts to 24% of total traffic volume.
<Figure 4-18> Current Domestic Traffic Volume in Cambodia (2020)

<Figure 4-19> Traffic Volume between Domestic Hubs (2012) (Unit: %)
<Figure 4-20> Traffic Volume between Domestic Hubs (2020) (Unit: %)
We have tried to integrate traffic passages centered between the top 8

axes which account for the highest traffic volume from 30 axes in total. If
there is no axis that directly connects the hub, it has been considered that
the corresponding traffic detours to another hub. For example, in the case of
“Hub 2 – Hub 4” which takes a small amount of traffic volume, it shall be
considered that the traffic generated from hub 2 detours to hub 5 to reach
hub 4. The following table shows the summary of traffic passage and traffic
axis between each logistics center.

<Table 4-5> Traffic Passage and Traffic Axis between Each Hub
Traffic Passage Stopover Traffic Axis

Hub 1-Hub 2 - Axis 4
Hub 1-Hub 2-Hub 3 Hub 2 Axis 4, Axis 6
Hub 2-Hub 5-Hub6 Hub 5 Axis 5, Axis 1
Hub-Hub 4 - Axis 7
Hub 3-Hub 4-Hub5 Hub 4 Axis 7, Axis 8
Hub3-Hub 4-Hub 5-Hub 6 Hub 4, Hub 5 Axis 7, Axis 8, Axis 1
Based on the above traffic passage analysis, traffic volume generated from
major 8 axes which connect 6 hubs has been analyzed. 8 axes were
analyzed by categorizing traffic volume into private cars and trucks. As for
the traffic volume of private cars, traffic volume between the center hub 5
(Phnom Penh) and hub 4 (Kampong Cham) accounts for the highest volume
of 33%. Subsequently, the traffic volume between hub 5 (Phnom Penh) and
hub 6 (P-Sihanouk) amounts to the second highest traffic volume of 28%.
Traffic volume between hub 5 (Phnom Penh) and hub 2 (Siem Reap) was
14% and traffic volume between hub 5 (Phonm Penh) and hub 1
(Battambang) was 7%.

<Figure 4-21> Traffic Volume of Private Cars (2020)
As for the traffic of trucks, traffic volume between the center hub 5
(Phnom Penh) and hub 4 (Kampong Cham) accounts for the highest
proportion of 27% and the same proportion was found between hub 5
(Phnom Penh) and hub 6 (P-Sihanouk). Subsequently, the proportion of
traffic volume between hub 5 (Phnom Penh) and hub 2 (Siem Reap) was
15%, followed by 11% of the proportion found between hub 5 (Phnom
Penh) and hub 1 (Battambang). Traffic volume of trucks has a different
tendency compared to traffic volume of private cars. Whereas the highest
traffic volume of private cars was found between hub 5 (Phnom Penh) and
hub 4 (Kampong Cham), the highest traffic volume for trucks was shown
between the center hub 5 (Phnom Penh) and hub 4 (Kampong Cham) and
between the center hub 5 (Phnom Penh) and hub 6 (P-Sihanouk). Hub 6
which includes Sihanouk Port has a higher traffic volume than other regions
and therefore, it has been confirmed that the traffic axis between
Sihanoukville and Phnom Penh is the main axis for traffic volume of trucks.
For private cars, traffic for work including commute vehicles seemed to be
highly generated due to many people being concentrated in Kampong Cham
and many business offices clustered in the area of Phnom Penh.

<Figure 4-22> Traffic Volume of Trucks (2020)
Contents that have been previously analyzed are summarized in <Figure

4-23>. 8 axes were selected as they connect 6 domestic logistics centers.
Axis 1 which connects Phnom Penh with Sihanoukville and Axis 8 which
connects Phnom Penh with Kampong Cham seems to have a relatively higher
traffic volume and more advanced infrastructure compared to other axes.
Even though traffic volume was shown along Axis 2 which connects
Sihanoukville with Battambang, there are currently no roads in the axis.
China has established plans to construct roads along this axis. As for Axis 6
and Axis 7, roads are currently existing but the condition of roads is poor
and traffic volume is relatively low compared to other axes. There are
relatively low demands for Axis 2, Axis 6, and Axis 7 compared to other
axes and therefore, these axes need to be developed on a long-term basis.
As for international axes, 4 major axes (Thailand Axis, Laos Axis, Vietnam
Axis, and Internal Axis) which connect Cambodia with adjacent countries
and other countries were selected.

<Figure 4-23> Domestic Logistics Axes in Cambodia
<Figure 4-24> International Logistics Axes in Cambodia

5. Evaluation of Logistics Axes in Cambodia
Development priority for each axis was examined by analyzing the current
situations of axes which connect 6 logistics complexes in Cambodia.
Similarly, current circumstances of axes which connects each hub(logistics
complex) to adjacent countries and overseas countries were analyzed in
order to determine priority when establishing an efficient international
logistics system.
In order to achieve this objective, current conditions and plans for a
transportation system in 8 axes which connect 6 domestic hubs(logistics
complexes) in Cambodia were analyzed and 4 international axes
(Thailand Axis, Laos Axis, Vietnam Axis, Internal Axis) which connect
adjacent countries and overseas countries were analyzed to decide upon
a development priority.
1) Assessment Method
After selecting major assessment indices for each axis and conducting
comprehensive evaluation, a development priority has been determined by
assessing scores for each alternative passage through scoring of each item
and applying weighted values as shown in the following table. Assessment
of domestic axes was based on the planned logistics infrastructure level
(40%) and the current infrastructure level (60%). As for the planned
infrastructure level, scores were given based upon development plans to be
implemented for roads, railroads, ports, and airports. With respect to the
current logistics infrastructure level, scores were given based on the
current condition of roads (paving ratio), railroads (whether they're being
operated), ports, and airports (number of ports/airports being operated).
Regarding the international axes, it has been evaluated based on a
planned logistics infrastructure level (40%), trade volume (35%), and

current logistics infrastructure level (25%). Planned logistics infrastructure
level has been scored according to the plans for roads, railroads, ports, and
airports. In terms of trade volume, the proportion of trade volume for each
axis was considered as the standard in scoring. For the current logistics
infrastructure level, it has been scored based on road conditions (whether
the road is connected), railroad conditions (whether the railroad is
connected), and port/airport conditions (whether they are operated).
<Table 4-6> Scoring Standard for Domestic Axes
Elements Score
1. Planned Logistics Infrastructure Level (40%) 40
1.1 Road Grade 10
1. Arterial Roads 10
2. Service Roads 6
3. Others 2
1.2 Railroad Grade 10
1. Arterial Railroads 10
2. Service Railroads 6
3. Others 2
1.3 Port Grade 10
1. International Port 10
2. Domestic Port 6
3. None 2
1.4 Airport Grade 10
1. International Airport 10
2. Domestic Airport 6
3. None 2
2. Current Logistics Infrastructure Level (60%) 60
2.1 Road Condition 30
1. Unpaved (< 10%) 30
2. Unpaved (≥ 10% and < 50%) 15
3. Unpaved (≥ 50%) 5
2.2 Railroad Condition 10
1. Operative 10
2. Non-operative 2
2.3 Port and Airport 20
1. ≥ 3 20
2. ≥ 1 and < 3 10
3. None 5
Total 100

<Table 4-7> Scoring Standard for International Axes
Elements Score
1. Planned Logistics Infrastructure Level (40%) 40
1.1 Road Grade 5

1. Arterial Road (1-Digit) 5
2. Service Road (2-Digit) 3
3. None 1
1.2 Railroad Grade 3
1. Arterial Railroad 3
2. Service Railroad 2
3. None 1
1.3 Port Grade 30
1. International Port 30
2. None 0
1.4 Airport Grade 2
1. International Airport 2
2. None 0
2. Trade Volume (35%) 35
2.1 Trade Volume 35
1. Trade Volume > 60% 35

2. Trade Volume < 60% 10
3. Current Logistics Infrastructure Level (25%) 25
3.1 Road Condition 8
1. Connected to International Axes 8

2. Not Connected to International Axes 0
3.2 Railroad Condition 7

1. Connected to International Axes (Operative) 7
2. not Connected to International Axes (Not-operative) 0
3.3 Port and Airport 10
1. Operative 10
2. Not Operative 0
Total 100

2) Evaluation Results for Domestic Axes
According to the evaluation results for 8 domestic axes, Axis 1 received

the highest score, followed by Axis 3, 5, and 8. Axis 6 scored the lowest
grade.
<Table 4-8> Domestic Axes Assessment Result

Rank 1 2 3 4 5 6
Axis Axis 1 Axis 3, 5, 8 Axis 4 Axis 7 Axis 2 Axis 6
<Table 4-9> Domestic Axes Assessment Result
Elements A1 A2 A3 A4 A5 A6 A7 A8
1. Planned Logistics Infrastructure Level (40%) 40 24 40 34 40 22 28 40

1.1 Road Grade
1. Arterial Roads 10 10 10 10 10 10
2. Service Roads 6
3. Others 2
1.2 Railroad Grade
1. Arterial Railroads 10 10 10 10 10 10
2. Service Railroads
3. Others 2 2
1.3 Port Grade
1. International Port 10 10 10 10 10
2. Domestic Port 4 4 4
3. None
1.4 Airport Grade
1. International Airport 10 10 10 10 10 10 10
2. Domestic Airport 4
3. None
2. Current Logistics Infrastructure Level (60%) 60 27 52 52 52 17 52 52
2.1 Road Condition
1. Unpaved (< 10%) 30 30 30 30 30 30
2. Unpaved (≥ 10% and < 50%)
3. Unpaved (≥ 50%) 5 5
2.2 Railroad Condition
1. Operative 10
2. Non-operative 2 2 2 2 2 2 2
2.3 Port and Airport
1. ≥ 3 20 20 20 20 20 20 20
2. ≥ 1 and < 3 10
3. None
Total 100 51 92 88 92 41 82 92

(1) Idea of IPA (Importance-Performance Analysis)
IPA is the method to evaluate the adequacy of each assessment item by

quantifying the assessment items as 2 factors (importance and performance)
to display them in quadrant. In this project, the adequacy of each traffic
axis was analyzed based on the demands of the transportation and
infrastructure level (roads and railroads). As for the domestic axes analysis
in Cambodia, the y axis was set as the demand (traffic volume) and x axis
was set as the logistics infrastructure level for each axis that has been
analyzed previously. In order to interpret the result, the contact point
between the mean value of the x axis and y axis was set as the center to
divide the area as a quadrant. The 1st quadrant refers to the area with a
high demand and low performance that needs to be improved. The 2nd
quadrant is a desirable area because it refers to high demand and high
<Figure 4-25> Conceptual Diagram of IPA
performance. For the 3rd quadrant, both demand and performance are so low
that need to be improved in the future. The 4th quadrant reflects low
demand and high performance and therefore, maintaining the current status
is recommended. In summary, it is recommended to select prior domains to
be selected from the 2nd and 1st quadrant.

(2) Result of IPA (Importance-Performance Analysis)
According to the assessment results for domestic axes drawn from IPA,
Axis 1 (Phnom Penh-Sihanoukville), Axis 8 (Phnom Penh-Kampong Cham),
Axis 5 (Phnom Penh-Siem Reap), and Axis 3 (Phnom Penh-Kampong
Cham) were located in the 1st quadrant. These axes have a high demand
and high infrastructure level. Of these 4 axes, Axis 1 has the highest
demand and infrastructure level and therefore, it has been considered that
the current condition is highly advanced. Axis 3 and Axis 5 have a
relatively low demand but high performance. There are no axes located in
the 2nd quadrant. Axis 2 (Sihanoukville-Battambang) and Axis 6 (Siem
Reap-Stung Treng) were located in the 3rd quadrant. Since Axis 6 has a
low demand and very low performance, this axis needs to be improved on a
long-term basis. Axis 4 (Battambang-Siem Reap) and Axis 7 (Kampong
Cham-Stung Treng) were located in the 4th quadrant and thus, these axes
have a low demand and high performance. Since Axis 3 has higher a
infrastructure level compared to its demand, it has been shown that there
are already sufficient logistics infrastructure plans for this axis.
<Figure 4-26> IPA Result

3) Assessment Result for International Axes
According to the prioritization analysis on the 4 international axes, the

International Axis (Sihanoukville) achieved the highest score whereas the
Thailand Axis and Laos Axis scored the lowest grade. It is recommended to
develop such Axes by centering on the International Axis (Sihanoukville)
which shows a high trade volume and the Vietnam Axis which has advanced
infrastructure plans when considering the current situation in Cambodia.

<Table 4-10> International Axes Assessment Result
Others
Elements Thailand Laos Vietnam (Sihanoukville
)
1. Planned Logistics Infrastructure Level
10 10 40 34
(40%)
1.1 Road Grade
1. Arterial Road (1-Digit) 5 5 5
2. Service Road (2-Digit)
3. None 1
1.2 Railroad Grade
1. Arterial Railroad 3 3 3
2. Service Railroad
3. None 1
1.3 Port Grade
1. International Port 30 30
2. None 0 0
1.4 Airport Grade
1. International Airport 2 2 2 2
2. None
2. Trade Volume (35%) 10 10 10 35
2.1 Trade Volume
1. Trade Volume > 60% 35
2. Trade Volume < 60% 10 10 10
3. Current Logistics Infrastructure Level
(25%) 18 18 18 10
3.1 Road Condition
1. Connected to International Axes
2. Not Connected to International 8 8 8
0
Axes
3.2 Railroad Condition
1. Connected to International Axes
(Operative)
2. not Connected to International Axes 0 0 0 0
(Not-operative)
3.3 Port and Airport
1. Operative 10 10 10 10
2. Not Operative
Total 38 38 68 79

6. Summary of Logistics Infrastructure Enhancement
Strategies
Based on analyses that have been conducted previously, the infrastructure

enhancement strategies can be outlined as follows. Firstly, development of
6 logistics complexes and 5 international logistics complexes and
establishment of logistics sub-centers which can assist major logistics
complexes are required to improve the logistics system in Cambodia.
Logistics sub-complexes should be established in locations which can easily
access major logistics complexes and other regions. Also, areas with higher
traffic volume compared to other regions are preferred. It is recommended
to develop logistics sub-complexes after activating major logistics
complexes.
<Figure 4-27> Major Logistics Complexes in Cambodia
6 Domestic Logistics Complexes 5 International Logistics Complexes
Secondly, plans to establish facilities to be located in the selected

logistics complexes are required. Logistics complexes need diverse
transportation and logistics facilities. Major facilities to be located in the

diverse transportation and logistics facility include a cargo terminal,
warehouse, housing, and supplementary support facilities. Regarding major
regions which have logistics complexes, storing and delivery facilities,
including a cargo terminals, warehouses, logistics complexes for agricultural
and marine products, collection and delivery centers, wholesale and retail
centers, and wholesale and retail distribution centers should be accompanied.
This is because major logistics complexes should promptly process various
and vast logistics activities including delivery, packaging, and storage with 2
or more complex transportation systems such as railroads and roads.
Furthermore, major logistics complexes should enhance their efficiency by
integrating production and distribution functions altogether.
As for logistics sub-complexes, volume and types of products are
relatively limited compared to major logistics complexes. Since these
sub-complexes focus on delivery functions rather than distribution functions,
supplementary functions such as production and commercial functions are
also required to facilitate economic growth in the local community. Roles of
logistics sub-complexes are to collect products manufactured from adjacent
regions to deliver them to the major logistics complexes or to deliver base
materials to major logistics complexes in adjacent regions. By doing so,
adjacent regions can produce goods with provided base materials. If a
factory is built in the logistics facility, it can provide the advantage of
producing goods within the logistics facility to deliver goods to major
logistics complexes without a shipping charge.
<Figure 4-28> Major Logistics Facilities in Cambodia
Major Logistics Complex Facilities Logistics Sub-Complex Facilities

It is advisable to establish urban logistics center in logistics
sub-complexes which will be located in city areas. Since land prices in
urban areas are relatively expensive and the location tends to be limited,
vertical development is recommended over horizontal development.
Moreover, it can draw a synergy effect by developing a logistics system, a
business area, and housing altogether.
<Figure 4-29> Urban Logistics Center
An advisable example for urban logistics center development is as

follows: locate the warehouse in the first basement level and establish a
parking lot for trucks on the second basement level and a parking lot for
private cars on the third basement level. On the first floor, locate
urban-type factories to produce goods and place a shopping mall on the
second floor. On the third and fourth floor, establish financial and R&D
centers to facilitate business and locate housing facilities on the fifth floor
in order to provide advantages of an urban-type logistics center within the
living place.

<Figure 4-30> Example of Urban Logistics Center
Third of all, 8 axes to connect 6 major domestic logistics complexes and

4 international logistics axes should be developed. As previously mentioned,
8 axes are required to establish logistics network between 6 major logistics
complexes. In the short term, Axis 1, 3, 5, and 8 which have a high
demand for development should be prioritized for improvement. Although the
establishment of a road network is planned for Axis 2, this axis currently
lacks logistics infrastructure which connects Battambang with Sihanoukville.
Axis 6 and 7 connect the Stung Treng hub located in the northern
mountainous region, however due to mountainous terrain, linking
infrastructure is difficult and traffic volume is low. Therefore, 4 axes with
a high demand, which are centered around Phnom Penh, should be initially
developed. There are 4 international axes composed of Thailand Axis,
Vietnam Axis, Laos Axis, and International Axis (Sihanoukville).
Development should be centered on the International Axis (Sihanoukville)
and the Vietnam Axis as these axes have the largest demand.

<Figure 4-31> Major Logistics Axes in Cambodia
8 Domestic Logistics Axes 4 International Logistics Axes
<Figure 4-32>Comprehensive Conceptual Diagram

Section 3. Software Improvement Strategies
1. Outline
In order to improve the logistics system in Cambodia, enhancement in the

software domain including the establishment of a basic plan, improvement of
systems, fostering industry, and organizational restructuring as shown in
<Table 4-11> is required.
<Table 4-11> Improvement Items of Cambodian Logistics Policies and Systems
Category Details
Based on the laws relating to logistics policies,
Establishment of National Basic establish mid/long-term strategies, visions,
Plan on Logistics and objectives to prepare changes in logistics
environment in the future
Framework Integration/modification of logistics policies,
Act on enhancing efficiency in logistics system, and
Logistics reinforcing competitiveness in logistics
Enactment of
Policies industries
Logistics Related
Distribution Establishment of distribution industry
Major Laws
Industry development plans, establishing infrastructure
Development for distribution industry development, and
Act enhancing efficiency of logistics functions
Establishment of Logistics Informatization of logistics and standardization
Industry Fostering Policies of logistics
Allocating roles for each governmental body
including Ministry of Public Transportation,
Restructuring of Governmental Ministry of Commerce, Industry and Energy,
Bodies Ministry of Land, City, and Construction,
Ministry of Trade, and Office of Customs
Administration

2. Establishment of a National Basic Plan on Logistics
Cambodia must establish the mid/long-term master plan in order to

become the logistics power in the Southeast Asia region by establishing a
national basic plan on logistics to promote efficiency and rationalization of a
nationwide logistics system and to settle a sustainable logistics system.
Therefore, the National basic plan on logistics should be able to analyze
changes and forecasts for the domestic/international logistics environment
and to set objectives and visions to provide strategies of various logistics
policies and systematic approaches.
The national basic plan on logistics should focus on establishing
mid/long-term nationwide logistics strategies based on laws Framework Act
on Logistics Policies to prepare for changes in the logistics environment for
the future. The applicable scope is the entire land of Cambodia and it
should be expanded to adjacent countries and Southeast Asia regions if and
when required. A long-term plan on a 20-year basis should be established
to propose a vision of logistics and directions of policies, and at the same
time, a mid-term plan on a 5 to 10 year basis should be set to provide
specific action plans. If needed, these plans can be modified or renewed
during the process.
<Figure 4-33> Visions and Objectives of a National Basic Plan on Logistics

<Figure 4-34> Detailed Action Plans for the Objectives of a National Basic Plan
on Logistics
<Figure 4-35> Specific Action Plans for Each Stage

3. Enactment of Logistics Related Major Laws
Logistics related laws deal with logistics facility and freight transportation
means including roads, railroads, ports, and airports and logistics industry or
logistics complex. The objective of these laws is to promote logistics
development and conveniency, and at the same time, to regulate logistics
related activities. In Cambodia, only the Road Act and Road Traffic Act are
currently enforced but there are no bills pertaining to logistics. Therefore,
the Framework Act on Logistics Policies and Distribution Industry
Development Act should be enacted in a timely fashion.
The objective of the Framework Act on Logistics Policies is to set basic
terms pertaining to establishment, implementation, and supportive measures of
domestic/international logistics policies, which aim at promoting efficiency,
advancement, and internationalization of a logistics system and competitiveness
of logistics industries, to contribute to nationwide economic growth.
In addition, this Act has set its basic ideology as perceiving the important
role of logistics, promoting quick, accurate, convenient, and safe logistics
activities, and harmonizing governmental logistics policies to facilitate
systematic development of logistics industries.
The Framework Act on Logistics Policies defines responsibilities in which
governmental bodies, local governments, logistics companies, and shippers
shall bear such conditions and its details are described below.

<Table 4-12> Responsibilities of Government and Local Governments and
Responsibilities of Logistics Companies and Shippers
· Government should establish and implement nationwide logistics

policies in order to facilitate logistics activities and to increase
Responsibilitie efficiency of logistics system.
s of · Government should train human resources for sound and balanced
Government
development of logistics industry.
and Local
· Local government should establish polices and plans pertaining to
Governments
local logistics while harmonizing government’s logistics polices and
plans and considering local characteristics.
Responsibilitie · Logistics companies and shippers should be committed to facilitate

s of Logistics logistics industry and enhance efficiency of logistics system and
Companies must strive to cooperate with logistics policies and plans of the
and Shippers government or local governments.
The objective of the Distribution Industry Development Act is to promote

efficient growth of distribution industry and to set sound business order to
protect customers and contribute to nationwide economic growth. This Act is
required to establish policies pertaining to advancement of the distribution
system, promotion of efficiency in distribution functions, improvement of
customer’s convenience in distribution industry, establishment of balanced
development in distribution industry for each region, restructure and enhancing
competitiveness of medium and small sized distribution companies,
improvement of international competitiveness in distribution industry,
establishment of sound business order in the distribution industry, and creation
of fair competition.
4. Establishment of Logistics Industry Fostering Policies
The important elements among nationwide policies which aim at

promoting logistics industry in Cambodia are informatization and
standardization of logistics. If these elements are settled in a systematical
way, it will reduce the trial and error process and confusion that may be

arise to enable a quicker and more efficient nationwide logistics system. In
addition, it may be helpful to attract foreign companies to increase
international competitiveness through reducing regulations, for example,
establishing a free economic zone and free trade zone.
1) Informatization of Logistics
Government should establish an integrated logistics information system in

connection with an individual freight information network including land, sea,
and air and related information networks combining customs, trade, and
finance, in order to automate transportation of freight and to provide an
all-in-one logistics service to reduce logistics costs.
<Figure 4-36> Conceptual Diagram for Integrated Logistics Information System in

Cambodia

This system can support all functional areas including transportation,
delivery, warehouse management, and placing/receiving orders. Also, it
enables the connection of systemization of various functional systems in
connection with various managerial activities including purchase, production,
and sales to enhance efficiency in modification and control.
2) Standardization of Logistics
Standardization of logistics refers to efforts in making devices, containers,

and equipment that are used in each stage of logistics including
transportation, storage, loading and unloading, package, and information as
the standard to establish unit load system which can secure connectivity
and compatibility between such elements. Standardization is one of the most
necessary policies to achieve systemization, efficiency, and economic
feasibility of logistics under circumstances where movement and traffic flow
are good and increasing. Nationwide standardization should be prioritized
before standardizing company-wide specifications to provide easier supply
and reduce wastage. The targets of nationwide logistics can be categorized
as transportation, storage, package, and loading/unloading, informatization.
The common domain and details are describe in the table below.
5. Restructure of Governmental Bodies
Logistics related government bodies in Cambodia include the Ministry of

Public Transportation, Ministry of Commerce, Industry and Energy, Ministry
of Land, City, and Construction, Ministry of Trade, Office of Customs
Administration. The Ministry of Public Transportation plays a pivotal role in
supervising, controlling, and facilitating logistics industries. Other
governmental bodies should support each logistics domain and role share. A
nationwide logistics system should be improved through facilitating
cooperations and communications between these bodies.

<Figure 4-37> Targets of Logistics Standardization in Cambodia
The Ministry of Public Transportation, Ministry of Commerce, Industry

and Energy, Ministry of Land, City, and Construction, Ministry of Trade,
and Office of Customs Administration can share the roles described in the
table below.

<Table 4-13> Sharing Roles between Logistics Related Governmental Bodies in
Cambodia
Logistics
Logistics Logistics Environment International
Ministry Complex
Operation Industries al Logistics Logistics
Facilities
Expanding hub
facilities Establishment Cargo Transportation
Construction of
(including cargo of integrated transportation and
international ports
terminal, ICD, logistics industry, marine management
and airports and
Ministry of distribution information transport industry, of dangerous
supporting
Public complex, air network and warehousing, substances and
complex
Transportation freight terminal, development of cargo establishment
transportation
port terminal) automated transportation of green
brokerage
and background logistics brokerage logistics
industry
land development devices industry policies
of port
Promoting
informatization
of logistics; Participation of
Collection and Supplying Underground
Ministry of standard bar international
delivery center; advanced system; logistics;
Commerce, code; standard construction
construction of establishment of pipeline
Industry and pallet; projects;
collection and standardized construction
Energy introduction of management of
delivery complex packaging industry
standard free trade zone
logistics
devices
Construction and
expansion of
urban logistics
Ministry of Establishment Promotion of
complex Supplying urban Policy of
Land, City, of urban international
facilities; logistics facility green urban
and logistics logistics in
establishment and equipment logistics
Construction policies regional level
and improvement
of connected
logistics system
Establishment
of trade
information
network; trade
automation Connecting
Ministry of
- system; - - oversea trade
Trade
supporting EDI network
system;
financial and
insurance
information
Customs for
Establishment
Office of import and
of tax Management of
Customs - - export; operation
information bonded warehouse
Administration of customs free
network
zone

Section 4. Comprehensive Action Strategies
Comprehensive strategies for logistics development in Cambodia are

presented by categorizing them as logistics infrastructure development and
logistics system development. As for logistics infrastructure development,
staged plans for 6 hubs(logistic complexes) and 9 logistics axes and
expansion plans for transportation infrastructure have been presented. With
regard to system development, establishment of a basic logistics plan and
relevant bills along with facilitating policies for logistics industries such as
a logistics information system were provided. Also, plans to share roles
between governmental bodies including the Ministry of Trade and Industry
and Ministry of Public Transportation were provided to propose effective
policy plans.

<Figure 4-38> Comprehensive Action Plans for Logistics Development in Cambodia

Chapter 5. Conclusion
Kim Jonghak, Hong Kyoungsun (KRIHS)
Summary
In Chapter 6, comprehensive suggestions from this project have been
proposed by categorizing three domains: expansion of a national logistics
complex, establishment of a national logistics axis, and establishment of a
logistics policy and system. Achievements from this project are to propose
plans to develop Cambodian logistics infrastructure based on experiences in
developing logistics in Korea. In addition, plans to acquire assets for
initiating logistics strategies proposed from this study have been described
in order to assist the Cambodian government in establishing action plans
going forward.
Section 1. Comprehensive Suggestions on Policies
For this project, we would like to suggest the following three feasible
policies based on the analysis of traffic volume between each region and its
geographical characteristics.
□ Expansion of National Logistics Complexes
Chapter 5. Conclusion 169

In order to reduce logistics costs in Cambodia, establishment of national
logistics complexes are required. In Cambodia, logistics facilities are not
sufficient and scattered in each region, and therefore, an efficient
transportation system has not been achieved. As a result, Cambodia lacks
connectivity between each logistics complex, unable to meet the demands
from the altered generation. This unreasonable logistics system causes
unfavorable outcomes including an increase in logistics costs and traffic
volume. In particular, Cambodia depends on imports for most industrial
products and construction materials and therefore, its economic structure
leads to an increase in market price from increased logistics costs. Thus,
efforts for the advancement of a logistics system by constructing logistics
complexes are especially required.
6 logistics complexes proposed from this project are available to apply
the hub-spoke concept for an efficient logistics system by prioritizing
logistics complexes which include the traffic volume of each province and
adjacent regions. Based on generated traffic volume for each region, the
outline of 6 logistics complexes has been described below.
Phnom Penh (1) ⇒ Sihanoukville (2) ⇒ Kampong Cham (3) ⇒ ⇒

Siem Reap (4)
Battambang (5) ⇒ Stung Treng (6)
Phnom Penh, the first and foremost prioritized region, is the capital area
in which population and economic infrastructure are highly concentrated and
requires efficient process for a logistics volume. Sihanoukville is the second
prioritized region due to high traffic volume from ports and adjacent areas.
Kampong Cham is the third prioritized region because it’s located near
Phnom Penh and this region has a high population along with a high traffic
volume in adjacent areas. Siem Reap is the fourth prioritized region due to
its developed tourism industry and Battambang is the fifth region because it
generates a high volume of agricultural products from its plains and is
located near Thailand. Stung Treng's proposal for balanced development

nationwide has been placed in sixth position.
From the perspective of policies, plans to expand national infrastructure

including national logistics complexes can be categorized into two
approaches. First, install facilities in need and establish basic plans to
construct the remainder of the facilities. Second, establish basic plans and
subsequently, expand the logistics complexes according to set priorities.
There are no right or wrong answers for these approaches. However, if a
national logistics complex has the proper functioning, planning after
establishing the facilities might be a plausible option. Since population,
economic and social infrastructure are concentrated in Phnom Penh, and
Phnom Penh has been ranked as the top prioritized region, selecting an
appropriate location and preferentially constructing a logistics complex needs
be considered. Since a logistics complex is not a facility in which
construction and operation are separated the way in which roads are, if an
efficient logistics system has not been established, it may become an
isolated facility from the market. Therefore, in order to achieve successful
construction and operation of logistics complexes, they should be
implemented as the PPP (Public-Private Partnerships) project. In addition,
the government must provide overall systematic supports including
standardization and informatization of logistics in order to achieve efficient
operation and support for the logistics complexes.
□ Establishment of a National Logistics Axis
Logistics costs are composed of transportation costs which are incurred

from transportation means and costs which occur from logistics complexes
including unloading costs and storage costs. Transportation costs which are
generated from the logistics axis are costs from the transportation system
including roads and railroads and therefore, it is the characteristic that
costs depend on efficiency of the transportation system.

Cambodia has a radial form of a national arterial road system with Phnom
Penh as the center. In addition, the paving ratio of the N1 digit road is
high and various projects are in progress such as international supporting
projects. Although future expansion of railroads is planned, so far, it is not
possible to discern achievements. Even though Cambodia has optimal
conditions for developing a inland waterway due to the Mekong River, there
are no distinct operational achievements except for the new port in Phnom
Penh. This is because the difference in water level is high between the dry
season and rainy season. In order to establish an efficient logistics and
transportation system, not only reduction in travel time of cargo from
departure to arrival is required but also minimizing unloading work for
trans-shipment between each mean of transportation is needed. In the
mid/long term, introduction of a complex transportation system through the
interconnection between different means of transportation is required.
However, at present, establishing a systematic transportation network by
focusing on efficient single transportation means is needed rather than
aiming to establish a complex transportation system.
8 logistics axes proposed from this program, selecting the most
appropriate transportation means per type of cargo handled for each axis
and subsequently establishing transportation infrastructure, are advised.
However, for this program, priority for each axis has been suggested based
on full-size trucks due to limitation on acquiring relevant data. As for
items to determine priority, two items which are demands on traffic and
supply level of a transportation facility were considered in proposing the
following priority for 8 axes using the IPA technique.
Axis 1 (Phnom Penh – Sihanoukville ①)⇒ Axis 8 (Phnom Penh – Kampong Cham ②) ⇒
Axis 5 (Phnom Penh – Siem Reap ③) ⇒ Axis 3 (Phnom Penh – Battambang ④) ⇒ Axis
7 (Kampong Cham – Stung Treng ⑤) ⇒ Axis 4 (Battambang – Siem Reap ⑥) ⇒ Axis 2
(Sihanoukville – Battambang ⑦) ⇒ Axis 6 (Siem Reap – Stung Treng ⑧)
As for the analysis results for the Cambodian logistics axes, Axis 1, Axis 8,

Axis 5, and Axis 3 which are interconnected with Phnom Penh are highly
prioritized. Axis 1, the main priority, connects Phnom Penh, considered the top
priority for a logistics complex and Sihanoukville which is the second priority
for a logistics complex in Cambodia. Thus, this axis has to be developed in
advance because it has high demands on traffic and has a well established
facility level and expansion plans. The second logistics axis is the axis which
connects Phnom Penh (the top priority in developing a logistics complex) and
Kampong Cham (the third priority in establishing a logistics complex), followed
by Axis 5 (Phnom Penh – Siem Reap) and Axis 3 (Phnom Penh – Battambang).
Priority of a logistics axis that has been proposed from this program, reflects
the supply plans for each transportation facility including roads, railroads, and
inland waterways, as well as the traffic demands and therefore, it could be
utilized in considering logistics when expanding the Cambodian transportation
network in the future. In particular, the reason why a logistics complex is
needed to be constructed in Phnom Penh, is the same for the analysis of
prioritizing a logistics axis. Thus, it has been considered that establishment of a
national logistics complex in Phnom Penh is urgent.
□ Establishment of a Nationwide Logistics Policy and System
As described earlier, a logistics complex and logistics axis are physical

facilities. In order for these facilities to be connected systematically and to
facilitate internal operations, supports by policy and system are mandatory.
Government must legislate the system through enactment. As for the
corresponding acts, such acts should include the establishment of basic plans on
logistics, logistics infrastructure, the logistics industry, and informatization of
logistics as advised from this program.
When a logistics system can be established based on the logistics system
facilitated by the government, government and corporations may participate in
logistics activities with close interconnection between the two entities. For
example, introduction of a pallet which is the leading case for standardization of
logistics lead by government, enables the mechanizing of the unloading process

for corporate logistics and to reduce unloading time by handling heavy cargo
which cannot be processed by human labor. In addition, it has the advantage
which enables to load and transport cargo under a set standard when storing
and transporting cargo. Although a corporation may pursue company-wide
logistics standardization, nationwide logistics standardization plans should be
established for exchange between other companies and interconnection with
national logistics facilities.
Whereas standardization of logistics can be enabled through the introduction
and expansion of a standardized pallet, informatization of logistics needs further
effort than standardization of logistics due to the need of cargo information
exchange and networking between relevant organizations, establishment of
e-documents, and others. As previously mentioned in the enhancement of
systems from this program, it is advised to implement the informatization of
logistics by an organization which can control relevant parties.
Section 2. Project Achievement
Korea has suggested logistics complexes and logistics axes that connects
these logistics complexes for systematic expansion of logistics infrastructure in
the early stage of the enactment surrounding logistics plans for logistics
development. Subsequently, the government expanded the logistics complex
and traffic network based on this plan. In order to apply Korean’s background
and experiences encompassing logistics development to Cambodia, 6 regional
logistics complexes and 8 logistics axes were proposed based on the analysis of
baseline data. Furthermore, Korea strived to create opportunities for logistics
development in Cambodia through proposing policies for establishing logistics
systems and organizations. This project aims to draw conclusions suitable for
the current conditions in Cambodia through information on geographical features
and data on traffic volume. These drawn conclusions were reviewed in a local
briefing session.

The logistics infrastructure and measures for system improvement which
have been proposed in this project conform to the Basic Plan on Logistics and it
has been concluded this proposal can be utilized for publicizing the future
logistics infrastructure system of Cambodia on both a national and international
level.
<Figure 5-1> Proposal of Cambodia Logistics Improvement Measures
6 Major Logistics Complexes 8 Domestic Logistics Axes

Section 3. Financing Plans
This is a proposal for financing the aspects that Cambodia needs such as
establishment of a Basic Plan on Logistics and development of logistics
complexes as part of the logistics development strategies proposed through this
project.
1. Basic Plan on Logistics
In order to establish a Basic Plan on Logistics and development of

logistics complexes, financing must be obtained. Financing for this project
can be secured through the following systems.
1) Supporting Project for a Establishing Basic Plan on

Infrastructure
This is a supporting project that discovers successful profitable

businesses and establishes basic plans for industries with comparative
advantages in Korea including urban development, water resources, and
transportation. This provides both technical and financial support when
corporations in Korea implement projects.
<Table 5-1> Supporting Project for Establishing a Basic Plan on Infrastructure

Description
Institution in Charge Ministry of Land, Infrastructure and Transport
Supporting Field Overall infrastructure
Description of Support Supports technology and financing when implementing projects
Project Size Up to 1 billion KRW for each project
Source: Korea Research Institute for Human Settlements, 2014 KSP Advise on Policies for
Developing Both Banks of Red River in Hanoi, Vietnam. 2015

2) Global Infrastructure Fund (GIF)
This is a supporting project for securing continuous expansion in the

international construction market by promoting the advancement of
international infrastructure development projects of investment development
corporations in Korea. It supports the financing of discovering new projects
to assist Korean corporations to expand overseas and reduces the costs of
initial investment to decrease investment risks.
<Table 5-2> Supporting Project for Global Infrastructure Funding

Description
Institution in Charge Ministry of Land, Infrastructure and Transport
Supporting Field Overall infrastructure
Support financing of feasibility study and funding of outstanding
Description of Support
projects
Project Size Up to 500 million KRW for each project
3) Supporting Project for an Establishing International Construction

Market
This is a supporting project where the government provides financial

support for part of the project costs that have a high risk, for continuous
growth of the international construction market and Korean corporations
establishment of new markets.

<Table 5-3> Supporting Project for Establishing an International Construction Market
Description
Ministry of Land, Infrastructure and Transport/International
Institution in Charge
Constructors Association
Supporting Field Infrastructure Development Project led by MDB
∙ Supports feasibility study of projects
∙ Supports human resources for ordering organization and
engineering training
Description of Support
∙ Supports local contract negotiations and studies
∙ Supports dispatch of market research groups and market
establishment
200 million KRW for each project (Feasibility study: 300 million
Project Size
KRW)
2. Expanding Logistics Complexes
For development of logistics complexes, it is recommended to obtain

fiancing for SPC (Special Purpose Company) established through collaboration
from Cambodia’s consortium and Korea’s consortium. The purpose behind
establishing a SPC is to divided (asset securitization) the risks of the initial
capital in order to efficiently implement the project and the development of
infrastructure.
Cambodia’s consortium relates to business in the field of logistics
including transportation businesses and distribution businesses. The
Cambodian government invites these private corporations to participate in
the development of logistics complexes. Korea’s consortium consists of
construction businesses and investors who have been gathered by the
Korean government.
The development of logistics complexes requires high initial costs in

order to create infrastructure such as land development, ramps, water and
sewage, and logistics warehouses and facilities. Due to the significant high
initial costs, it is difficult for Cambodia to bear this cost from financing

through the government, private corporations, and private investments.
Therefore, it is effective to use government funds from Korea in order to
disperse the risks associated with initial costs and encourage participation
of private companies in Cambodia for project implementation. If the risks
associated with the high initial costs are reduced this way, the project may
be implemented by joining forces with export financing departments of
foreign banks.
<Figure 5-2> Diagram of Project Structure
3. Comprehensive Measures for Financing
Within the ODA (Official Development Assistance), funds from ODA or

the EDCF (Economic Development Cooperation Fund) can be utilized. It is
presumed that both funding channels can be used for the establishment of a
Basic Plan on Logistics and development of logistics complexes in

Cambodia. In particular, it may be advantageous to use the ODA projects
for a Basic Plan on Logistics as it is free of charge. For the development
of logistics complexes, the establishment of infrastructure is required. This
entails a high initial cost. Therefore, the Cambodian government needs to
establish an integrated package plan that consists of utilizing the ODA funds
provided by each ministry including the Ministry of Strategy and Finance,
the Ministry of Foreign Affairs, and the Ministry of Commerce & Industry
and EDCF provided by an import-export bank of Korea. In addition, it is
highly important to prepare a legal system related to this project and show
a strong will of implementing this project to private investors in Cambodia.
<Table 5-4> Utilization of ODA and EDCF

ODA Funding EDCF Funding
Supporting Conditions Free of charge Charged
Within 85% of total
Support Limit 100% project costs
(May vary per project)
Interest Rate on Loans - 0.1~2.5% annual interest
Period of Repayment - Within 40 years
All projects excluding the Applies to projects which
Supported Facilities projects that have military conform to the
objectives development plan
Source: http://www.edcfkorea.go.kr/, http://www.koica.go.kr/

Reference
KOICA, 2013, Master Plan for Railway Network Development in Cambodia

Ruth Banomyong, 2014.9, 「Developing National Logistics Policy: Lesson
Learned from ASEAN」, World Bank National Trade Logistic
Blueprint Workshop
Asian Development Bank, 2014, Country Partnership Strategy
Enrique Aldaz-Carroll, 2014.9, 「Improving rice trade logistics to help
reach 1 million tons export target」World Bank National Trade
Logistic Blueprint Workshop
IRITWG, 2015, Overview on Transport Infrastructure Sectors in the
Kingdom of Cambodia
Belgian Technical Cooperation, 2006, Master Plan for Waterborne
Transport on the Mekong River System in Cambodia, Final
report(Volume 1 Main Report, Draft), September
JICA, 2007, Prepared based on the Study on the Master Plan for Maritime
and Port Sectors in Cambodia, March
KINGDOM OF CAMBODIA, 2014, Cambodia Trade Integration Strategy
2014-2018
World Bank, 2014, Cambodia Trade Corridor Performance Assessment
Ministry of Construction and Transportation, 1994, Basic Plan for Improving
Cargo Logistics System to Cut Logistics Costs (1994~2003)
Ministry of Land, Infrastructure and Transport Logistics Policy Division,
2016.3, Development History of Korea's Logistics Industry
Ministry of Land, Transport and Maritime Affairs, 2011,「the Revised
National Basic Plan on Logistics (2011~2020)」
Ministry of Land, Transport and Maritime Affairs MLTM, 2013, Second
Comprehensive Plan for Development of Logistics
Facilities(2013~2017)
KRIHS, 2015, 2014 KSP Advise on Policies for Developing Both Banks of
References  181
Red River in Hanoi, Vietnam. 2015
Shin, Dong Sun, 2002, Research on Government Functions in the field of
Logistics and Establishing Responsibilities, The Korea Transport
Institute
Cambodia Ministry of Public Work and Transport , http://www.mpwt.gov.kh/

Cambodia Ministry of Rural Development , http://www.mrd.gov.kh/
Phnom Penh Autonomous Port, http://www.ppap.com.kh/
Cambodia Airport, www.cambodia-airports.com
Sihanoukville Autonomous Port, http://www.pas.gov.kh/
Cambodia Ministry of Railway, http://royal-railway.com/
Korea Pallet & Container Association, http://www.kopal.or.kr/
Korea Free Economy Zone(KFEZ), http://www.fez.go.kr/global/why/incentive.do
Korea Ministry of Government Legislation, http://www.law.go.kr/main.html
State Secretariat of Civil Aviation(SSCA), http://www.civilaviation.gov.kh/
National Human Resources Development, http://www.nhrd.net
National Logistics Information Center, http://www.nlic.go.kr
Clarkson Research, https://clarksonsresearch.wordpress.com/
International Monetary Fund(IMF), http://www.imf.org/external/index.htm
System Analysis and Program Development(SAP), http://go.sap.com/index.html
KNOEMA, http://knoema.com/
International Monetary Fund(IMF), http://www.imf.org/
www.sap.com

Appendix. Logistics Functions & System
Section 1. Concept and features of logistics
1. Definition and role of logistics
1) Definition of logistics
The concept of logistics began from the military terminology meaning

logistics and it has been defined by various experts in the private sector.
Smykey & Londe (1970) define it as, “Auxiliary activity in the
manufacturing sector to sales, warehouse position to supply adequate
quantity of products at the right price at the right place, transport methods,
storage methods, and an activity that requires a rational combination, such
as, communication.” J. Copper et al. (1994) define it as, “Movement and
storage of relevant information flow and wealth from the beginning to the
end of the supply chain.” According to the American Logistics Association
(1998), “Logistics is a process of planning, executing, and controlling
efficient and effective flow of goods, services and related information from
the supply point to the consuming point to meet the demands of the
customer.” MoonGyu Yoon (2008) defined logistics as, “An activity that
comprehensively manages, plans, and controls seeking to optimize the
management technical activities from the procurement of raw materials
through accurate sales forecasting, production, and follow-up to the
consumption stage to the flow of goods.”
In combining all the various definitions, logistics can see viewed as an
“act which includes planning, controlling, and managing activity to overcome
time and space, environmental, and financial resistive elements which exist
during the process of transport, storage, packaging, cargo, and logistics
information in order to maximize the benefits of subjects of cargo
Appendix. Logistics Functions and System 183

movement from one point to another a certain point.” The ultimate goal of
logistics is to provide goods and services of the appropriate state at the
right place and time at a minimum cost. Logistics activities are largely
classified into three areas of supply, material management, and distribution.
Material logistics is a process of procuring materials to provide them to the
plant, and material management is a process for smooth and secure supply
of these materials. As a key part of logistics, distribution is defined as all
of the actions involved in delivering the produced product to the consumer.
2) The role and importance of logistics
From an national economic point of view, rationalization of logistics

enables a convenient and broader view of commerce, and the reduction of
logistics costs induces improvement of the company’s constitution and
suppresses inflation. Also, it maintains and improves the quality of various
products to provide a quality service to the customer. In addition, through
enhanced investment in infrastructure and other facilities, investment
opportunities for national economic growth and development can be
increased and promote the development of local communities.
From a socio-economic perspective, logistics serve as a role which
adjusts the distance of the production and consumption location, temporal
distance, price distance, numerical distance, quality distance, etc. In
particular, the increase in international freight due to increased global
exchanges are making today’s logistics role increasingly important.
From a separate corporate perspective, efficient design and operation of a
logistics system reduces transportation costs, leading to an inevitable
increase in corporate profits. Logistics costs are more than 10% of the
national GDP, which is 10% or more of individual companies sales that
accounts for a large portion of sales. The role of logistics can be said to
be of enormous importance as the current state shows an exponential
increase in logistics costs with the continuous increase in goods

movement(purchases, returns). In addition, due to the possibility of various
marketing through logistics, it can be utilized as a means to promote sales
functions and reduce inventory through efficient inventory management.
Also, fast and accurate delivery and various customized products allow for
an increase customer satisfaction and continue to ensure customer
confidence.
2. Logistics and supply chain relationship
Supply chain is a network of organizations and business processes of the

logistics of converting materials to supply goods or final products and
distributing the final product to the customer. The supply chain connects
suppliers, manufacturing plants, warehouses, logistics complexes, retail
discount stores, and customers in terms of the products and services
reaching the consumer. In general, by integrating, managing, and controling
all activities through strategic supply chain management, cooperates seek a
sustainable competitive advantage.
<Figure 1> Supply Chain Concepts
Logistics, being a part of the supply chain, manages materials to enable

distribution to the factory, and then, it performs processes related to the
logistics supply of products from the factory to the consumers including
transportation, storage, packing, and loading and unloading. An information
management system combines all of these processes organically to perform
logistics management efficiently.

<Figure 2> Logistics Concept
3. Logistics System
Process of the supply chain system comprising a logistics system is

shown in <Figure 2-3>. If you represent a raid chain system as a node
and link nodes, the node will be the logistics facilities or logistics
performance element, and the link will be the route between two nodes. In
other words, it is a transport network.
The supply chain system includes the entire process ranging from the
origin to the consumer. Suppliers transport materials from the origin to
factories, factories use the materials to manufacture and assemble goods,
and manufactured goods reach consumers through the logistics complexes.
As mentioned earlier, a logistics system is responsible for a portion of
the supply chain system. It plays a role of managing and supplying
materials to the factories and distributing the products to the consumers
from the factories. Products that move through a link is done through
selecting appropriate freight transportation, marine transportation in the case
of international transport, and most domestic transport accounts for truck
transportation.

<Figure 3> Supply Chain System
Products that are delivered immediately without being stored in

warehouses as stock after being received from the logistics complex is
called the cross-docking system. This system aims to save time and
money by eliminating the non-productive stock and to promote the smooth
flow of products. Products that have arrived are delivered to each consumer
directly from the logistics complex after the classification process.
Therefore, the synchronization of the delivery can be said to be critical.
<Figure 4> Cross-Docking System

4. Function of Logistics
1) Shipping
(1) The definition of transit
Transit is divided into shipping and transport. It is an activity that

delivers the shipping object physically from the origin location to the
destination. Long-distance transport is mainly over a 'long distance' with
mass transport that moves between logistics complexes. Delivery means
short distance with small transport that moves between the logistics
complexes to individual stores.
<Figure 5> Concept of Transport
(2) Components of Transport
Features of transportation include overcoming the location and physical

distance of cargo and the increased efficiency of transport when the three
elements, means of transport, transportation infrastructure, and operation
works in harmonization. Means of transport is made up of freight cars, rail,
air, marine, and pipelines. Transport infrastructure means the road network,
rail network, airport facilities, port facilities, pipelines, warehouses and

logistics complexes. Operation mainly includes administrative aspects of its
related facility, such as optimum site selection, determining the optimum
transport route, vehicle scheduling, and information sharing.
2) Storage
(1) Definition of Storage
Storage is an activity that manages and maintains cargo at a warehouse,

a logistics complex or at a particular space over a period of time. An
appropriate storage space, method, and location is determined based on the
cargo items, status, destination, and movement time. This process is
necessary as it adjusts the temporal goods due to the temporal mismatch
that exists between supply and demand by production and consumption.
(2) Features of the Archive
Archiving basically serves to store and distribute the product. In addition,

it creates a temporary effectiveness through adjusting the distance of
production and consumption as well as function as inventory management to
regulate supply and demand. In addition, it can also reduce issues caused
by the lack of customer responsiveness through securing customer orders
with a prompt response using the stored cargo and preparing for unexpected
incidents, such as natural disasters and material supply problems by
ensuring the inventory beforehand.

<Figure 6> Internal Storage
3) Packaging
(1) Definition of Packaging
Packaging means to protect the value and status of a product during its
transport of freight, storing, and handling during the distribution process, as
well as wrapping the products with appropriate materials or containers to
promote sales. It can be seen as a versatile activity in which protecting the
cargo’s (materials, semi-finished products, finished products, returns, used
products, waste products, etc.) biochemical value and promoting efficient
transportation to increase the level of service.
(2) Classification of Packaging
Packaging is divided largely into consumer packaging and transportation

packaging. Transportation packaging is for the convenience and ease of
cargo handling, whilst consumer packaging is to ultimately increase sales
with commercial packaging for marketing purposes. In recent years,
originating from developed countries, there has been a movement to
introduce a packaging technique that considers the environment in
commercial packaging. Packaging is divided into the following four types.

<Figure 7> Forms of Packaging
1st Packaging – Ease of Handling

2nd Inner-Packaging – Ease of Handling
3rd Outer-Packaging – Marketing, Sales Promotion
4th Packaging by Freight Transport – Container Ship, Aircraft Packaging etc.
4) Loading and Unloading
(1) Definition of Loading and Unloading
In the logistics activity process, loading and unloading of cargo can be

defined as an act of loading and unloading cargo into various means of
transportation and an act of loading and unloading cargo within a storage
warehouse, or other relevant operations. The greater the number of cargo
loaded and unloaded, the higher the probability of damage. As such,
sophistication and rationality is required while handling cargo. An
automatic loading and unloading system is constantly being developed and
introduced as a trend.
(2) Rationalization Principles of Loading and Unloading
There are some principles in promoting rational loading and unloading

activities. First, unnecessary work needs to be eliminated and transport
activities needs to be improved. If possible, gravity should be used to
reduce force resistance and it is necessary to maintain smooth flow. Also,
efficient a logistics system should be built and various loading and
unloading machinery should be used to increase mobility and reduce labor.
It is important to prevent loss due to a variety of safety issues by
establishing and following the safety rules for all related tasks.
<Figure 8> Loading and Unloading Work
5) Logistics Information
(1) Definition of Logistics Information
Logistics information is all the information that allows for efficient

logistics management by being organically combined with transport, storage,
handling, packaging, etc. constituting logistics activities ranging from
production to consumption. The role of information makes it possible for
each function of logistics to maintain ties with one another to achieve
efficiency. Today, it is not an overstatement to say that the key to a
successful logistics industry is in the systematic logistics information
system.

(2) Types of Logistics Information
Logistics information is typically divided into adjustment and operational

activities information, strategy, management and business activities
information, logistics activities subject information, and each information
includes details as follows:
<Figure 9> Types of Logistics Information

Section 2. Logistics Decisions
1. Step-by-step Logistics Decisions
Various decisions are made at each phase for the logistics process.
Decision-making is a very important process that should be delicately dealt
with in order to achieve successful and efficient operation of the entire
logistics system. First, the raw materials provider should decide which raw
materials to use and how much, how to manage those materials, to which
factory such materials can be most effectively provided, and how to
transport them. Storage and logistics complexes should decide where to
establish their workplace, how their layout and space is allocated, how to
manage incoming products, how much stock to store in their inventories,
and how much they should receive in terms of storage cost. Transport
companies decide upon transport facilities, means of transportation, transport
routes, amount, each unit of transport, duration of transport, and
loading/unloading procedures. In recent years, an optimized transport
scheduling system and realtime location tracking system using cutting-edge
technology is becoming a reality.
<Figure 10> Phases of Logistics Decision Making Process

2. Logistics Decision Makers
Major decision makers within the logistics system are producers,

shippers, carriers, forwarders, governments, and consumers. They decide
upon various logistics issues through their interests and mutual transactions.
Producers are corporate or private entities that produce the goods.
Customers are entities that consume the goods. Shippers generally purchase
goods from the producers and sell them to generate profit. In many cases,
producers also take the role of a shipper. Shippers use transport services
generally provided by transport companies to send their goods domestically
or internationally.
<Figure 11> Decision-making and Mutual Transaction between Shippers and Transport
Service Providers
Transport companies establish and operate transport infrastructure and

provide various transport services. Today, transport service providers in the
logistics system can be categorized into ocean carriers, land carriers, and
port terminal operators. From a decision-making standpoint, port terminal
operators transport and manage vehicles and cargo from port complexes, so
they should be independently regarded as a carrier, entirely separate from
ocean or land carriers. Ocean carriers transport cargo from
harbor-to-harbor, port terminal operators take care of cargo arriving at

harbors, land carriers are in charge of transporting goods from harbors or
points of departure to each destination. In a complex transport network
such as these, decisions on service charges and transport routes are made
by mutual transactions among the carriers. In a globalized transportation
market such as the one we see today, one should understand the
mechanism between these carriers to set a competitive and profitable
service charge, minimize transport costs, and provide quality services.
Ocean carriers generally take a leading position in the cargo transport
system, because all kinds of transport is available for ocean carriers to
choose from thanks to multimodal transport. Ocean carriers can select
harbors they would like to embark/disembark, and select certain land
carriers to manage local transport. As such, all works and procedures for
harbors and land carriers are decided by the transport route the ocean
carrier chooses.
<Figure 12> Decision-making and Mutual Transactions among Carriers
Forwarders are transport brokers who deal with all work that is required
after cargo are transferred from consignors until the cargo is delivered to a
consignee. They are responsible for assembly, store/release, shipment,
transport, insurance, storage, and delivery of the cargo.
Government agencies are a combination of various departments, local

governments, research institutions, and associations of a public nature
dealing wholly or partially with logistics decision-making. As much as they
are public organizations, they prefer prosperity and development of state
and local communities over profit, and conduct investment and management
of facilities. One notable example of a government agency is the port
authorities that has became a major decision maker as harbors have
developed alongside an increase in international trade. Port authorities take
responsibility in building, expanding, and managing harbor infrastructure. In
many cases, port authorities outsource management of harbor terminals to
private contractors. In exchange, they decide upon various strategies,
policies and restrictions, and monitor how each harbor is being operated.

Section 3. Logistics System Design
Pertaining to logistics system design, all four elements of logistics system

design should be considered, these include: logistics network design, logistics
process design, logistics organization design and logistics information system
design. An efficient and systematic logistics system cam be implemented
when each design is properly configured and balanced between the designs.
<Figure 13> Logistics System Design Elements
1. Logistics Network Design
A logistics network is a set of all the features and activities that are
related to transport, ranging from the supply point (generating), point of
goods and services, through to the demand point, and it can be shown in
various forms in accordance to the steps of the flow and its characteristics.
Logistics network design includes the material supplier location, factory
location, number of warehouses and their location, number of logistics
complexes and their location, product allocation and management methods,
transportation and schedule, vehicle travel route, and consumer location and

its type, as well as a variety of decision making issues, sometimes it even
includes a contingency plan prepared for unexpected situations.
<Figure 14> Logistics Network Design Elements
2. Logistics Process Design
The logistics process design includes the warehouse and logistics facility
location strategy, inventory management strategy, transportation strategy,
and their performance has a direct impact on the customer service level.
Thus, according to an efficient logistics process design and combination, the
level of customer service can be improved.
<Figure 15> Logistics System Design Elements

3. Logistics Organization Design
It is very important to design a logistics organization from a strategic

management process standpoint of a company. Traditionally, management
has been separated by specialization of each department. Such management
had no problem as long as each department took responsibility for its own
management, without any coordination with other departments. However,
dynamic change and complexity of today's era called for a new logistics
strategy and process management. Today, logistics organization is a closely
tied web of interdepartmental and external coordination, thanks to the
advancement of information technology. Mutual flow of information supports
efficiency of a logistics system through an active logistics organization
structure, requiring speed and precision when dealing with customer needs.
<Figure 16> Logistics Organization Design

4. Designing a Logistics Information System
A logistics information system refers to a computer system for

supporting the management of all information related to logistics including
transport, storage, load/unload, packaging, and distribution processing.
Establishing a logistics information system can allow quick and precise
logistics activities in all areas, and allows for immediate action in all kinds
of emergency situations. Designing a logistics information system requires
the support of cutting-edge technology. Notable logistics information
technologies include CVO (Commercial Vehicle Operation), EDI (Electronic
Data Interchange), EPOS (Electronic Point of Sale), RFID (Radio Frequency
Identification), and as for management systems, there are storage
management systems, inventory management systems, and optimized vehicle
route programs.

Section 4. Trends in Logistics Industry
1. Change in Quantity of Transported Goods
The amount of world container trade has shown a continuous increase

from 1999 to 2014. From 60 million TEU in 1999 to 170 million TEU in
2014, the amount of goods transported has grown by almost three-fold.
Yearly data indicates a 4~14% increase compared to previous years except
for 2009. 2009 recorded a 8% drop, reflecting a direct impact from the
economic recession.
<Figure 17> World Container Trade
Source: Clarkson Research Service Limited
Quantity of goods transported is known to have a direction correlation

with various economic indicators. Statistically, economic recession led to
drops in the amount of trade. GDP growth rate, a notable economic
indicator, shows a pattern very similar to the amount of goods transported.
According to <Figure 18>, continuous world GDP growth stalled only in
2009. Among advanced nations, there was a 4% drop in 2009. Among
developing nations the growth rate was drastically reduced. As previously
mentioned, this can be understood as having a close correlation with a drop
in world container trade in 2009.

<Figure 18> World GDP Growth Rate
Source: International Monetary Fund(IMF)
Trends in the amount of goods transported can be measured by looking

into the predictive value of economic indicators. Quantity of goods
transported to and from harbors refers to the quantity of goods transported
by marine transportation which makes up the majority of international trade.
The quantity of goods transported to and from harbors shown in
<Figure-19> matches with yearly GDP growth rate. The rates dropped in
2009, but as the current world GDP growth rate seems to maintain a 5%
growth rate, it is likely that there will be no significant impact on the
logistics industry until 2017.
<Figure 19> Quantity of Good Transported through Harbors

Worldwide
Source: International Monetary Fund(IMF)

2. Change of Environment in Logistics Industry
Today, the logistics industry is going through an ever-changing

environment, and companies will face difficulties if they cannot make
appropriate adjustments. Today's logistics industry can be described as
production based on customer demand, customized ordering, selecting major
businesses, outsourcing, globalization, strategic partnerships, and M&As.
Unlike the outdated push method which was initialized production before
customer orders, now the pull method undergoes production based on
customer demands, cutting inventory costs and meeting customer needs.
Such method allows for customized orders, raising the satisfaction of
individual customers and flexibility in production. Also, many businesses are
setting aside the old practice of expanding their business into other areas,
and instead are selecting major businesses to concentrate their efforts into.
In areas where they lack confidence or efficiency, companies outsource
these areas to other special subcontractors. Side-by-side with a rise in
international trade, globalization is becoming a trend that represents the
logistics industry. Also, a strategic partnership and M&A to maximize profit
and business efficiency are also becoming fundamental elements of survival
in today's competitive world.
<Figure 20> Today’s Logistics Industry
Source: www.sap.com

2015 - 16 KSP With Cambodia (English)

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

2015 - 16 KSP With Cambodia (English)

Uploaded by

Copyright:

Available Formats

Logistics System Development Strategies for

Execution of the Project (2) : External Expertise

Local Research Team in Cambodia

The Knowledge Sharing Program (KSP), launched to share the

Section 1. Background and Necessity of Study 3

Chapter 2. Current Status of Social Economy & Logistics

Chapter 3. Institution and Operation of Logistics in Korea

Section 1. Legal Institutions 78

4  2015 Knowledge Sharing Program III

Section 1. Basic Direction 120

Section 1. Comprehensive Suggestions on Policies 169

Appendix. Logistic Function and System 183

<Table 2-1> Economic Index of Cambodia ········································································ 16

6  2015 Knowledge Sharing Program III

<Figure 1-1> Study Strategies ······························································································ 8

8  2015 Knowledge Sharing Program III

<Figure 4-1> Direction for Development Strategies ························································· 120

<Figure 5-1> Proposal of Cambodia Logistics Improvement Measures ·························· 175

Implications and Expected Effects of Logistics

Kim Jonghak (KRIHS)

6 Major Domestic Logistics Complexes 5 Major International Logistics Complexes

According to Korea’s logistics experience, logistics infrastructure development

Implication and Expected Effect of Logistics System Development Strategies for

<Improvement of logistics infrastructure of Cambodia>

2  2015 Knowledge Sharing Program Ⅲ

Kim Jonghak, Oh Sungho (KRIHS)

Section 1. Background and Necessity of Study

Cambodia is a country with a population of 15.4 million (2015) and an

4  2015 Knowledge Sharing Program Ⅲ

The objective of this task is to develop a policy proposal suitable for

6  2015 Knowledge Sharing Program Ⅲ

Section 3. Study Scope and Method

Pertaining to the spatial range, all 24 provinces of Cambodia have been

8  2015 Knowledge Sharing Program Ⅲ

As for plans for implementation of this program, the Cambodian MPWT

<Figure 1-2> Procedures for Understanding Cambodian Logistics Related Conditions

In order to share the experience and knowledge of the Korean logistics

Chapter 2. Current Status of Social Economy &

Kim Jonghak, Hong Kyoungsun, Kim Jungi(KRIHS)

Chapter 2. Current Status of Social Economy & Logistics Infrastructure in Cambodia 11

The rectangular strategy was adopted in 2004 as the primary plan to

12  2015 Knowledge Sharing Program Ⅲ

Chapter 2. Current Status of Social Economy & Logistics Infrastructure in Cambodia 13

<Figure 2-3> Target Rice Export Volume of Cambodia

Source: Cambodia Rice Federation, http://www.crf.org.kh/

4. Logistics Development Plan of Neighboring States

The neighboring states of Cambodia have already recognized the

14  2015 Knowledge Sharing Program Ⅲ

<Figure 2-4> Logistics Plans of Adjacent Countries (Left – Thailand, Right –

Chapter 2. Current Status of Social Economy & Logistics Infrastructure in Cambodia 15

1. Economic and Industry Status

<Table 2-1> Economic Index of Cambodia

16  2015 Knowledge Sharing Program Ⅲ

Chapter 2. Current Status of Social Economy & Logistics Infrastructure in Cambodia 17

<Figure 2-6> Community Analysis, Population Size, and Distant Distribution

The average population of each of Cambodia's provinces is about 640,000

18  2015 Knowledge Sharing Program Ⅲ

1) National Spatial Features

Cambodia is located in the center of Southeast Asia and borders Thailand,

Chapter 2. Current Status of Social Economy & Logistics Infrastructure in Cambodia 19

Compared to Vietnam and Thailand, Cambodia is geographically closer to a

<Figure 2-9> Cambodian Land and Terrain Overview

Mountainous Terrain Phnom Penh