INTRODUCTION

Cambodia government official claimed that the Funan Techo Canal (FTC) is a less costly route for shipping containers comparing to the existing Vietnam Mekong River route.
Deputy PM Sun Chanthol said “the canal will reduce transportation costs by $181 for every container shipped from Phnom Penh Autonomous Port (PPAP) to Kampot Port, compared to the existing route through Vietnam’s Cai Mep Port. An estimated $155 will be saved for transporting a container to Sihanouk Autonomous Port, compared to the current Vietnamese route.”

This engineering economic assessment is an attempt to assess the tariff (toll or users fee)and freight fees (for shipping) of the two routes red and blue in Figure 1. The reason these routes are chosen because 60% of Cambodia trade volume are with countries in East Asia and North America via the purple route.  

Figure 1: Navigation routes navigation routes
AB: 340 km or 183 nautical miles AC: 180 km or 97 nautical miles CB: 559 km or 300 nautical miles.

• Vietnam route: The existing route is the red route from Point A, Phnom Penh Autonomy Port, using the Mekong River, to Cai Mep Port in Vietnam where cargos are transferred to large vessels and head to Point B and the South China Sea.


• FTC new route: The blue route from Point A, using the FTC to Point C, Kampot Port where cargos are transferred to larger vessels which will travel around Ca Mau peninsular of Vietnam to Point B. 

TARIFF and FREIGHT FEE ON EXISTING ROUTE THROUGH VIETNAM

Figure 2: the 2009 Agreement on no tariff

Since 2011, the 2009 Vietnam and Cambodia Agreement on Water Transport was enforced, there is no tariff for using the Mekong River for both countries.

The following is an excerpt of the Agreement, SUBCHAPTER C Article 23 Tariff

• No dues of any kind may be levied anywhere on the regulated waterways and in ports and terminals, other than proportional dues in the nature of payment for specific services effectively rendered to vessels. These dues shall be as low as possible.

The only charge left is the freight fee by shipping carriers; the tariff by New Way Lines for example, from Phnom Penh Autonomous Port to Cai Mep Port is 3,620,000 VND or $145/TEU, see Figure 3.

Figure 3: New Way Lines Tariff from Phnom Penh to Cai Mep

Therefore, the total fee for the Vietnam route is $145/TEU.

TARIFF ON FUNAN TECHO CANAL FROM POINT A TO POINT C AND TO POINT B.

Tariff on FTC Route from Point A to Kampot Port, Point C for using the Canal

Cambodia has disclosed the projected revenue but not the tariff for using the Canal.  We can use that projected revenue to estimate the tariff on cargo vessels using the FTC. Simply by dividing the projected revenue by the projected number of TEU’s traffic.

The projected revenues are $88 millions in year 1 and $570 millions in year 25. By trial and error, the annual escalation rate would be 8.1% over 25 years.

The projected traffic can be based on the current traffic at Phnom Penh Autonomous Port to Vietnam ports, or 400,000 TEU’s year. There will be cargos currently transported by trucks (on the Phnom Penh Sihanoukville expressway) be diverted to FTC but the gain for FTC will be at the expense of the expressway and for now, we assume they cancel each other out with no net saving or cost.

Freight fee for using the Canal

The future freight fee for shipping on the FTC is not available, we can project the freight fee for using the FTC based on the known freight per nautical miles calculated from the Vietnam route.

The freight for the 180 km on FTC can be estimated to be $100/TEU, by proration from the current $145/TEU tariff for the 260 km distance from Phnom Penh to Cai Mep.

Additional freight fee for the Ca Mau route Point C to Point B

The future additional freight fee for the blue Ca Mau route, 560 km (300 nautical miles) around Ca Mau is not available, we estimate that to be $240/TEU, based on the global average tariff of $0.80/TEU/n m (nautical mile).

Table 1 shows the calculations for above tariff and freight fee costs, on both routes over 25 years, the projected costs:

• Year 1, using the TFC route will cost Cambodia $550/TEU and using the Vietnam route $145/TEU.
• Year 25 using te FTC will cost Cambodia $1518/TEU and Vietnam $1050/TEU.

Comparing the Mekong route through Vietnam, Funan Techo Canal would cost Cambodia $400 more per TEU to ship cargo to their top five trading partners. The longer route will require an additional 15 hours at sea plus waiting at FTC plus waiting in lines at three ship locks.    

TRADING PARTNERS WITH CAMBODIA

Figure 5: Cambodia Trading Partners (2022)