People often think of Latin America as a single entity, but in reality, it’s a fragmented environment, with country-specific trends, challenges, and opportunities.
That was my main takeaway from a conversation I had recently on Talking Logistics with Ricardo Carrion, Senior Director, Operations and Business Development at DHL Latin America. “Here in the U.S. we are used to standardization — we’re in one country with one set of rules,” Ricardo said. “However, when you go into Latin America, you’re either a regional or global company doing business in multiple countries in the region, or you’re a smaller company doing business in your own country. In both cases, you have to deal with the absence of standardization and with ongoing change, especially changes in regulations and government.”
See the recent election results in Argentina and Venezuela, and the issues facing Brazil’s president and economy, as examples. Will these changes lead to fewer trade regulations and reduce trade protectionism in the near future? Maybe, maybe not.
Dealing with this mosaic of operating environments is one of the challenges that shippers and logistics service providers face in Latin America. Ricardo gave a simple example to illustrate this point:
If I am an importer in Chile — which is the best of importing worlds in Latin America, with import processes similar to those in the U.S. — once a shipment is received at the port, it clears customs there fairly quickly and the goods get transported directly to the customer’s distribution center or final destination.
However, if you import in Brazil or Peru, for example, when a shipment arrives at the port, it has to be moved first to a fiscal warehouse to clear customs, which adds lead time and cost to the end-to-end supply chain process. So importers and their customs brokers and 3PLs have to be extra focused and diligent to make sure goods are cleared and moved quickly from the fiscal warehouse to the final destination.
Ricardo highlighted other challenges companies face in the region, such as a lack of distribution infrastructure and IT capabilities, which complicates the implementation of advanced supply chain practices and models, such as fast fashion and e-commerce/omni-channel fulfillment in the retail industry.
So, what capabilities should companies look for in a logistics partner to assist them in Latin America? As Ricardo discusses in the episode, an important capability is having country-specific knowledge and expertise and being more than just a freight forwarder — that is, having end-to-end supply chain visibility and responsibility.
Technology also plays an important role, as Ricardo point out in the episode. DHL uses GT Nexus (a Talking Logistics sponsor) for visibility, landed-cost calculation, and connectivity.
I encourage you to watch the rest of my conversation with Ricardo for additional insights and advice on what’s happening in Latin America from a supply chain and logistics perspective, and what it takes to succeed there.
Ricardo’s parting advice: “The one predictable thing about the future in Latin America is change, especially in election years, so flexibility is important to succeed in the region.”