BANGKOK/HANOI -- After a 45-year hiatus, Thailand and Cambodia reopened their cross-border railway service with a ceremony Monday in a move expected to provide trucking-dependent manufacturers with a cheaper, high-volume logistics option.
With the rail service connecting the Thai border town of Aranyaprathet with Poipet in Cambodia, train passengers can now travel between the capitals of Bangkok and Phnom Penh.
The rail service had been shut down since 1974 due to tensions between the two neighboring countries over the border and other issues. The long suspension was lifted after a 2015 agreement between Thai Prime Minister Prayuth Chan-ocha and his Cambodian counterpart Hun Sen to relink the countries by rail to promote economic activities in the region and improve relations.
The reconnection is expected to boost businesses in Thailand -- a hub of automakers, electric machinery builders and other manufacturers -- which are struggling with surging wages. Seeking cheaper workers, these companies are increasingly shifting labor-intensive production processes to Cambodia, including an industry park in Poipet, and bringing semi-finished products back to Thailand for final assembly. The problem has been the high cost of logistics because trucking was the only option.
Now the rail reopening will offer a choice of high-volume, on-time transport, which will also help bring down costs. It is also expected to further drive the trend of moving labor-intensive production phases to Cambodia.
The rail service will "give us a logistics choice," said an official at a Japanese shipping company operating in the region.