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PHNOM PENH – The Cambodia Logistics Association (CLA) has raised concerns over the impact of the conflict in the Red Sea on shipping costs, warning that prices have doubled for transporting goods to the US, Canada, and Europe. Additionally, the transportation expenses within Asia are expected to increase in the near future.

Sin Chanthy, the president of the CLA, disclosed that members of the association began reporting price hikes in December last year when the Houthi rebels in Yemen started targeting cargo vessels passing through the Red Sea on their way to the Suez Canal.

As a result, many shipping companies have chosen to reroute their ships through the Southern tip of Africa.

Chanthy explained, “The diversion adds 8 to 10 days and 6,000km to the journey of most cargo ships. According to one shipping company, this longer route significantly increases the costs of each voyage. Consequently, transport costs from Asia to Europe and the US, as well as vice versa, have doubled.”

He further elaborated, “Previously, a typical shipment to the US or Canada might have cost around $3,000 to $4,000. However, due to the disruption caused by the Houthi rebels, the fees have now escalated to $8,000 or $9,000. These rising costs have impacted exports and imports between Cambodia and Europe, as well as North America.”

Chanthy cautioned that there is no clear timeline for when the costs will decrease, as the conflict in the Red Sea continues without resolution. He also predicted that shipping fees within Asia might increase by 10 to 20 percent in the near future as an indirect consequence of the Middle East tumult.

Lun Yeng, the secretary-general of the Cambodia Rice Federation (CRF), acknowledged the impact of the conflict on rice exports to Europe. He stated, “While there are alternative routes to Europe, the Red Sea, which connects to the Suez Canal, is the shortest. The transportation fees have certainly been affected by the attacks by the Houthi rebels.”

Expressing concerns about rising transport costs, Chan Pich, the general manager of Signature of Asia, a rice exporting company, highlighted the dramatic increase in shipping expenses. He revealed that the cost of a shipment rose from $700 in November to almost $3,000 in December and was currently close to $5,000.

He said, “This situation has two implications for us. Firstly, some exporters are hesitant to send out their goods, hoping for a reduction in costs in the near future. Secondly, import orders from overseas buyers have declined.”

This conflict-induced increase in shipping costs calls for strategic adjustments within the industry, both globally and within Asia. The situation demands innovative solutions and collaboration to alleviate the financial burden caused by the longer routes and higher transport fees.

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