Global logistics chains continue to be complicated by the multiple events that have affected them in recent years, such as Covid-19, the war in Ukraine or port congestion. Ana Maria Vallina, Ph.D. in Economics from the University of Miami, warns that Latin American economies still have a long way to go to take advantage of the opportunities that would be presenting themselves in this context.
On the port issue, the academic from the Pontifical Catholic University of Valparaíso highlights the capacity of Brazil, the investments of Peru and the geographical advantages of Colombia, without forgetting the problems of Chile, where she says that there are no plans to improve port infrastructure, at a time when the Outer Port of San Antonio has been delayed for several years, and Terminal 2 of Valparaíso is suspended.
Would disruptive elements strengthen the idea of changing production sites to areas closer to where consumers are?
Logistics disruption, which has created congestion in ports, shortage or abundance of containers, disruption of internal logistics, and increases in transportation costs, presents a situation that encourages the development of Nearshoring at all levels, therefore also between the United States. and Europe. Likewise, it can develop other modalities that began before the pandemic, of bringing trained labor to the country so as not to depend on international logistics. Likewise, it is an opportunity for relatively new technologies, such as 3D printing, to be developed on a larger scale. Considering the closeness that President Biden is cultivating in defense with Europe and other political allies, it would be an element that supports the rapprochement between the two economies and the abandonment or less participation of other geographical areas.
Do new opportunities open up for Latin America in this scenario?
It depends on what is asked of the Latin American countries, in terms of their relationship with Russia and China. Venezuela is already closer to the United States because it will provide them with oil, Argentina is an indisputable candidate to supply grain to Europe, replacing Russia. Then we can approach with our typical commodity products. But it will not necessarily mean an approach in more complex products that integrate innovation. Zelinski’s call to the Latin American countries is a warning, we could have to commit our self-determination and our decisions to NATO’s objectives, discreetly communicated through the approach of the Ukrainian president. This situation can mean an approach but not necessarily positive.
Are Latin American logistics networks ready for Nearshoring?
Logistics networks with the United States are prepared for Nearshoring in Latin America, which is why maquila has taken place between several Latin American countries and the United States. With Europe they might have to make some improvements, but they can be improved. I would consider that in Latin America it is necessary to improve the infrastructure and communication between the countries of the region in order to increase intra-zone trade. The dream of bi-oceanic runners must be at least 50 or 60 years old.
What countries in the area could stand out in this regard?
From a logistical point of view and geographical location, it would be Mexico, due to its proximity to the United States, Colombia, which has ports on both oceans, and Brazil, due to its size and availability of port infrastructure. Uruguay has developed a logistics network and free zones that could benefit from doing business with Brazil. Peru, to the extent that it develops Callao and the distribution centers in surrounding areas, could become an important player. Chile, although its geographical location is against it, its efficiency and opportunity in port logistics could have a good future, but for this it lacks integrated port improvement plans and, above all, internal transport networks, where it is very important to develop the railway.
Should trade between Latin American countries be promoted in this context?
Proximity to Latin American countries would allow for more trade, especially intra-industry trade, of more elaborate and complex products, as well as e-commerce between SMEs and consumers. However, it is necessary to improve the infrastructure, simplify processes and facilitate trade. During the government of President Lula, a series of alternatives were given, but not all of them could be realized. Brazil could be a motor for South America, but its institutional and political problems have deprived the entire region of opportunities.
Could Latin America gain a competitive advantage over Asia in matters of social and environmental protection?
First of all, I think that not all Asian countries have the same level of social and environmental protection, For example Japan, South Korea, Singapore among others are aware of these aspects. The other countries also have more protectionist policies in some sectors than Latin America, for example, they do not exploit their forests, even China follows this policy. Latin America has developed without necessarily considering these aspects, with a short-term mentality, with the exception of certain producers who long ago, at least since the 2000s, realized that they had to consider these aspects or they would be left without a market. So, companies in the region must convince, especially European consumers, that there really is a paradigm shift and not a “greenwashing”. The United States has sectors that are concerned with these aspects but they are not so numerous, it depends a lot on the state and its productive conditions. In any case, it is an opportunity for those companies, especially certified B companies, to reach the European market with new products.