Market liberalization and trade liberalization are the keys to future of Latin America logistics market

This week in Bogota, Colombia the InterAmericas Development Bank is hosting a conference entitled ‘Latin America 2030: Building supply chains of the future’ at which Ti’s Chief Executive, Prof John Manners-Bell will be a keynote speaker. Ahead of the event, he provides his thoughts on prospects for the region.

This conference comes at a critical time for the region. Whilst showing great potential, not least due to a wealth of natural resources, many Latin American economies have been held back by years of political instability, corruption and security issues. Many countries in the region also struggle from a lack of investment in transport infrastructure. There are some notable exceptions (such as Panama) but inefficiency, bottlenecks and the inability of exporters to reach global markets is a considerable barrier to economic development for most. Weak infrastructure and regulations are also holding back the development of the e-commerce market. With long delivery times and patchy service coverage outside of the main cities, there is a long way to go before networks are in place to enable e-commerce benefits to take hold.

However, this characterisation masks a ‘grass roots’ revolution which is transforming domestic transport and logistics markets. e-commerce demands are changing customer expectations and hence there has been a drive by logistics companies to improve their levels of service. Disrupting the traditional express parcels market, a number of Uber-like e-platform providers are also developing. These include Loggi in Brazil, Transfast in Mexico and, right here in Bogota, Tappsi Envios providing on demand last mile services. Other improvements are ongoing, such as developing comprehensive zipcode systems.

Still, despite efforts by the market to embrace new ‘Industry 4.0’ business models, governments in Latin America have a crucial role to play if they are to create an environment in which international e-commerce will thrive. As the World Trade Organization has recently recognized, reform of international trade regulations is essential if micro-, small and medium-sized enterprises from Emerging Markets are to be integrated into the global trading economy. It is worthwhile pointing out that Colombia, alongside Chile, is one of the most open markets in the region and international trade growth has been supported by FTAs with the US.

In Latin America, at least, it is my view that the future of the logistics and supply chain industry is not so much about electric vehicles, drones and Blockchain. It is about getting the fundamental building blocks in place – investment in transport infrastructure and an international trading system which facilitates the frictionless import and export of e-commerce shipments.

Source: Transport Intelligence, February 13, 2019

Author: John Manners-Bell



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