The Strategic Role of Sihanoukville Port in Cambodia’s Logistics Industry

In a historic milestone for Cambodia’s maritime and logistics industry, the Sihanoukville Autonomous Port (PAS) recently surpassed 1 million TEUs (Twenty-foot Equivalent Units) in annual container throughput. This achievement, reflecting a 29% year-on-year increase, has cemented the port’s position as a cornerstone of Cambodia’s economy and a key player in global trade. The port is now on track to reach a staggering 2.64 million TEUs by 2030, underscoring its strategic importance not just for Cambodia, but for the entire Southeast Asian region.

A Historical Overview of Sihanoukville Port

Established in 1956, Sihanoukville Port is located on the Bay of Kampong Saom and serves as Cambodia’s primary deep-sea port. Over the decades, it has evolved into a critical infrastructural asset, playing a pivotal role in the nation’s trade and economic development. Recognized as an autonomous institution in 1998, the port gained greater flexibility in financial operations and management, which further bolstered its efficiency and capacity.

By 2015, the port processed 391,000 TEUs annually, and its growth trajectory has since been remarkable. As of December 2023, Sihanoukville Port operates eight berths with modern cargo-handling equipment, accommodating vessels with up to 20,000 DWT (Deadweight Tonnage). Its expansion efforts aim to position it as one of the most competitive ports in the region, capable of handling a diverse range of services, including container shipping, oil logistics, and cruise operations.

Importance of Sihanoukville Port to Cambodia’s Logistics Industry

The significance of Sihanoukville Port in Cambodia’s logistics ecosystem cannot be overstated. Here’s how the port contributes to the sector:

1. A Vital Link in Global Trade

Sihanoukville Port is Cambodia’s gateway to international markets. It facilitates the import of essential goods and the export of key commodities, such as garments, agricultural products, and electronics. By streamlining cargo movement, the port reduces lead times and enhances the competitiveness of Cambodian exports.

2. Regional Integration

As Cambodia continues to integrate into ASEAN’s economic community, Sihanoukville Port plays a crucial role in connecting the country with regional hubs like Singapore, Thailand, and Vietnam. The port’s capacity to accommodate larger vessels will further strengthen these linkages.

3. Cost Efficiency

The expansion of Sihanoukville Port will enable larger container ships to dock directly, bypassing transshipment hubs. This reduction in logistical steps will lower costs for importers and exporters, making Cambodian goods more competitive in the global market.

4. Supporting Economic Growth

According to Hean Sahib, Secretary of State at the Ministry of Economy and Finance, the port is one of five key sectors driving Cambodia’s economic growth. The improved logistics capabilities attract foreign investment in manufacturing, agriculture, and other industries, further boosting the economy.

Expansion Plans and Future Prospects

Sihanoukville Port’s growth strategy is ambitious, with a phased expansion plan that involves significant investments and infrastructure upgrades.

Phase 1 (2023–2027)

The first phase of the expansion began in December 2023 with the construction of a 350-meter terminal at a depth of 14.5 meters. This project, funded by a $203 million loan from JICA (Japan International Cooperation Agency), is expected to increase the port’s annual capacity by 450,000 TEUs. Once completed in 2027, the port’s total capacity will reach 1.45 million TEUs.

Phase 2 (2027–2029)

Scheduled for completion by 2029, this phase includes building a 400-meter terminal at a depth of 16.5 meters. It will add 570,000 TEUs to the port’s annual capacity, bringing the total to 2 million TEUs.

Phase 3 (2029–2030)

The final phase involves the construction of a 430-meter terminal at a depth of 17.5 meters. This will enable the port to accommodate the largest container ships in the region, further increasing its capacity by 617,000 TEUs. By 2030, Sihanoukville Port’s total capacity will reach 2.64 million TEUs annually.

These developments position Sihanoukville Port as a global gateway, enhancing Cambodia’s role in the Indo-Pacific shipping network.

Technological and Operational Advancements

To support its growth, Sihanoukville Port is incorporating state-of-the-art technology and operational efficiencies:

• Automated Cargo Handling: Advanced equipment ensures faster and more efficient loading and unloading of goods.
• Digital Systems: The adoption of digital solutions for inventory and logistics management reduces delays and errors.
• Sustainable Practices: Efforts to reduce the port’s carbon footprint align with global sustainability goals, making it more attractive to international shipping lines.

Economic and Social Impact

The expansion of Sihanoukville Port is expected to have far-reaching implications for Cambodia’s economy and society:

1. Job Creation

The construction and operation of new terminals will create thousands of direct and indirect jobs, benefiting the local economy.

2. Boosting Exports

With increased capacity and reduced shipping times, Cambodian exporters will gain a competitive edge in international markets.

3. Enhancing Foreign Investment

Improved logistics infrastructure makes Cambodia an attractive destination for foreign investors, particularly in sectors like manufacturing and agriculture.

4. Reducing Regional Disparities

As the port develops, surrounding areas will benefit from improved infrastructure, such as roads and warehouses, reducing regional economic disparities.

Challenges and Opportunities

While the port’s growth is promising, it also faces challenges, including:

• Competition from Regional Ports: Ports in Singapore and Vietnam are well-established and offer similar advantages.
• Environmental Concerns: Expansion projects must address environmental sustainability to avoid long-term ecological damage.
• Regulatory Framework: Streamlining customs procedures and reducing bureaucratic hurdles will be crucial for efficient operations.

However, these challenges also present opportunities for innovation and collaboration with global partners.

Global and Regional Significance

The development of Sihanoukville Port has implications beyond Cambodia:

• ASEAN Trade: By improving logistics capabilities, the port supports ASEAN’s goal of becoming a highly integrated economic region.
• Indo-Pacific Strategy: The port aligns with global efforts to enhance trade routes within the Indo-Pacific region, promoting economic stability and growth.
• Supply Chain Resilience: The port’s ability to handle larger ships and volumes contributes to more resilient global supply chains.

A Gateway to Prosperity

Sihanoukville Port’s expansion is more than just an infrastructure upgrade; it represents Cambodia’s aspirations to become a regional logistics powerhouse. By 2030, the port will not only meet the demands of growing trade volumes but also drive economic growth, create jobs, and strengthen Cambodia’s position in global supply chains.

As Prime Minister Hun Manet aptly noted, the port’s achievements reflect Cambodia’s evolving role in the global economy. With continued support from international partners like Japan and a clear vision for the future, Sihanoukville Port is poised to become a model for sustainable and competitive maritime logistics in Southeast Asia.

What do you think about Sihanoukville Port’s role in transforming Cambodia’s logistics industry? Share your thoughts in the comments below!

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This is the second part of two articles that attempt to forecast the political, economic and international environment that Cambodia may face in 2025, in a thematic arrangement.

Security concerns caused by neighbouring countries

The political situation in neighboring countries can pose security concerns for Cambodia.

The case of Thailand presents the case in which extreme nationalism can be instigated based on the unsettled border issues.

Thai domestic political actors who provoked violent conflicts between Cambodia and Thailand in the past have recently intensified their activities.

Many Cambodians have noticed that anytime there is a significant internal conflict in Thai politics, there is a noticeable pattern of political complexity spilling over to Cambodia.

Thai politicians often use border disputes and other conflicting issues with neighbors as leverage in their internal political battles.

Eventually, this pattern frequently uses Cambodia as a scapegoat in their power struggle, which leads to anti-Cambodia propaganda.

The case of Vietnam illustrates a growing anti-Cambodia sentiment that is connected to anti-China sentiment.

Vietnam’s domestic situation is also unstable due to several leadership changes and extensive reforms, and trust in Cambodia is eroding because many Vietnamese new generation leaders are less knowledgeable about Cambodia and strongly want to view relations with Cambodia through the prism of China-Vietnam relations. Many Vietnamese leaders view Cambodia as their “little brother.”

Vietnam has been seen attempting to obstruct any development projects linked to China, from the Funan Techo Canal to the modernization of the Ream naval base and even the construction of the Phnom Penh-Bavet expressway.

Such adversarial politics by both Thai and Vietnamese politicians will continue to pose challenges to Cambodia’s domestic politics and national development.

As in any other country, there are hard-line and moderate politicians and academics.

Some try to destabilize relationships, while others try to find stabilizing factors to ensure the sustainability of traditional friendships.

Some warmongering individuals profit politically from sensitive issues such as unresolved borders and ultra-nationalism.

There are concerns about the extent to which the Thai and Vietnamese leaders have the political will and strong intentions to combat such extremist ideas and activities.

Cambodia is fighting hard against these extremists, some of whom live comfortably abroad, posting and spreading fake maps and news about unresolved borders with impunity.

Unfortunately, these political hardliners who want countries to fight each other over unresolved border issues also receive funding, media support, and political support from foreign entities.

These foreign entities are in fact funding and supporting the spread of fake news and destabilization of domestic politics of countries in the region.

The extremist politicians even have human rights organizations behind them. Human rights organizations have never condemned extremist politicians and their daily production of fake news that fosters hatred, misunderstanding, racism, and violence.

What Cambodia can do is identify and build trust with moderate-leaning foreign politicians in neighboring countries and put guardrails against the possibility of violent conflict between countries that would harm the interests of people in the region.

Conducting more robust exchanges of young politicians and researchers is a must to reduce misunderstanding between neighboring countries.

Will Myanmar become the next Ukraine?

The war and security situation in Myanmar are of serious concern to the entire region. Rather than slowing down, the war is escalating.

Violence continues. There are no talks in place.

As the next chair of ASEAN, Malaysia faces an extremely difficult task of ensuring that no country in the Southeast Asian region becomes the next Ukraine, a site of war machines and weapons testing, a site of ideological struggle, or a site of proxy wars, that will have devastating impact on regional peace, stability and development.

Is China taking a break or catching its breath?

The superpower rivalry between the United States and China will obviously intensify. The fight against Russia becomes like a prelude to the final battle with China.

For the West, the fight against the rise of China is a long marathon, sometimes they lose, sometimes they win, but those who last until the end will win.

Currently, the battles between China and the West are on the fronts of trade, technology, supply chain, diplomatic influence and global governance.

On some issues we can see that China is responding very harshly, but on others we can see that it remains silent.

For example, on trade issues, China often retaliates against unilateral restrictive measures from the West. China is working hard to find alternatives for the dominance of dollar.

But technologically, China is moving forward quietly and it seems that it is winning in the race for electric vehicles. China is also quietly developing its semiconductors to support smart devices despite export restrictions from the West and its allies.

So, in the current situation, it is difficult to say whether China is “taking a break” or “catching its breath” amid growing pressure for competition from the West.

If China finds itself in a winning situation, then it can take a break whenever it wants, it does not need to fight back very hard, it can just focuse on its internal development.

If China is catching its breath, it means that it is struggling hard to fight back, its economy is in decline, its consumption is struggling, employment is reduced, and all economic activities and technological progress are de-accelerated.

At the moment, the current situation is still blurred to reach any conclusion.

The article is firstly published on Khmer Times

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