Chile – Resilient in the face of natural and global threats

An active volcano, earthquakes, forest fires and flooding have recently wreaked havoc on Chile. But this South American country has resilience, a trait proven by Chile’s response by the massive 2010 earthquake which severely impacted its economy. With many of its ports severely damaged, a building boom ensued after this disastrous event and the country’s economy was able to rebound. However, a slowdown began in mid-2013 due to declining copper prices and lower demand from China and has not yet lifted. Once more, the country finds itself in need of a resilient mind set as it faces global challenges in the midst of natural disasters.

Situated 500 miles south of Santiago, Villarrica volcano had been quiet since 1984 until early March of this year when it erupted. Now it threatens to erupt again, potentially impacting the country’s fish export industry, worth approximately $6.2bn. In preparation the National Fisheries and Aquaculture Service (SERNAPESCA) and about 21 farming centres have moved fish away from the area.

Chile’s fishing industry must battle with both natural hazards and economic forces. US-based Costco recently announced plans to increase imports of salmon purchases from Norway. Chile currently supplies the retailer with 90% of its farmed Atlantic salmon, but this announcement will result in Norway fulfilling about 60% of Costco’s needs and Chile the rest. Among the reasons for this shift is the strengthening US Dollar, resulting in cheaper Norwegian fish that is also antibiotic-free.

Meanwhile, unusual weather patterns have resulted in forest fires in the country’s south-central regions and flooding in the north. As a result, Chile’s leading export, copper, has been threatened and the world’s biggest copper producer and state run operator, Codelco, had to shut all of its Atacama mines.

However, an interesting result occurred because of mine closures, copper prices increased on the global market. According to an analyst at Shanghai Cifco Futures Company, “The market is entering a peak consumption season in the northern hemisphere.”

Despite the natural disasters Chile has endured and along with its dependence on mining, the country remains resilient. After all, companies operating in Chile have built their supply chains to adapt to such extremes, naturally and economically.

The opportunities of this country, much like the rest of the Latin America region, are great and there are signs of improving economic conditions. In the case of Chile its government has undertaken measures, some of which have proven controversial and unpopular, to improve its economic situation. Thanks to these signs of economic improvements one economist at Banco de Credito e Inversiones in Santiago forecasts economic growth of 2.9% in 2015.

Be sure to check out Ti’s latest report, Latin America Transport and Logistics 2015 which offers additional insight into this country along with the mining industry and much more.

About ‘Latin America Transport and Logistics 2015

Ti’s latest report provides research and analysis into Latin America’s key industries along with country and top logistics profiles. New to this report is a comparative analysis of leading logistics providers. In addition, the report includes Ti’s market sizing of the region’s contract logistics, e-commerce, express/small parcel and freight forwarding sectors.

To find out more about the report please contact Michael Clover.