TT Club Sees Latin American Trade Growth Creating Infrastructure Challenges

October 25, 2013

Speaking at the recent TOC Americas Conference in Miami, TT Club’s Senior Underwriter, Dan Negron, outlined his views on future Latin American trade growth and the pressures that this will create on the region’s transport infrastructure.

TT Club’s bulletin noted that “while the growth rates of national economies in Latin America have slowed in recent years, the two largest economies, Brazil and Mexico are still forecast to increase by over 3 percent annually, while significant growth is predicted in Colombia (4.7 percent), Chile (5.1 percent) and Peru (6.3 percent).”

This growth is one of four factors identified by the freight transport insurance specialist in its current country-by-country market analysis of the region, Transport and Logistics Market Opportunities.

Negron presented the findings at the transport industry forum at the beginning of the month. “Two examples of robust economies are Colombia and Peru,” he said. “The latter has grown its export trade by a multiple of five over the last decade, while Colombia has a sustained GDP growth rate in the region of 5 percent in recent years. Both have burgeoning middle classes, a significant driver of international trade.”

Such economic growth is one of four factors pin-pointed in TT’s analysis; “the other three being government policies, improved connectivity and distribution channels. It is clear that a number of government policies, particularly the privatization of ports and free trade agreements are significant in terms of increasing trade.”

Negron reported, however, that the need for greater investment in domestic infrastructure to improve transport connectivity within the region, and a need for logistics supply chain services to be more organized, were in danger of frustrating trade growth in reaching its full potential.

While Latin American ports are themselves becoming increasingly better organized, the infrastructure used to move goods to and from the inland production and consumption locations have not been modernized at an equivalent pace.

“In addition to this need for capital investment to improve connectivity,” Negron said; “very often the functions of warehousing, trucking, cargo consolidation and other related services are performed by individual operators or by shippers themselves. Systems therefore tend not to be fully-integrated and the efficiencies of a cohesive supply chain can’t be realized.”

TT Club is committed to improving trade opportunities in Latin America and aiding transport operators in their development.

Source: TT Club

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