More advice for U.S. shippers seeking opportunity in Latin America
August 27, 2013
Editor’s Note: In our August print edition feature – Global Logistics: Focus on South America – trade experts advise logistics managers to conduct a careful examination of the region’s transportation and regulatory infrastructure. In this exclusive interview with Steve Flowers, President of UPS Global Freight Forwarding, readers are provided with additional insights.
LM: Can you tell our readers where the greatest opportunities are in Latin America today?
Flowers: From a UPS perspective, Latin America is a very important market. Since the early 1980s we’ve made significant investments in our infrastructure in this region. For example, the acquisition of Comlasa and purchase of Challenge Air Cargo in the early 2000s resulted in the flight rights to many of the countries in Latin America. In addition, from 2001 to 2004, UPS acquired two worldwide Freight Forwarders, Menlo and Fritz, which broadened and deepened our product portfolio to include Air Freight, Ocean and Brokerage capabilities.
When you look at the populations of key markets in Latin America, such as Mexico, Brazil, and Columbia, these countries are in a very strong economic position. Additionally, countries like Chile and Costa Rica are in a great position due to their free trade agreements with the U.S. We even see opportunities in Panama, where they are currently trying to improve their U.S. free trade. A number of Latin American countries have a lot going for them.
Overall, Latin America presents opportunities for customers looking to near-shore or re-locate their manufacturing closer to the U.S. Many of the companies that previously utilized Maquiladoras in Mexico, but moved their manufacturing operations to China to lower costs, are looking at Mexico again due to the cost of fuel and increasing cost of labor in the Chinese market.
UPS is addressing these opportunities from a small package and even freight forwarding perspective. We provide domestic, import and export services as well as air and ocean freight solutions in most of the Latin American markets.
In 2012, UPS launched the UPS CrossBorder Connect service, a ground freight solution that expedites the movements of goods between the U.S.-Mexico border, with speeds that offer a potential alternative to air freight.
UPS provides guaranteed next business day small package service between Mexico and the U.S. via UPS Worldwide Express®. We offer one and two business day delivery between Latin America and the U.S. and Ground service between the US and Mexico.
We’re seeing a lot of opportunities in the healthcare and high-tech industries in Latin America. UPS currently operates 3 dedicated healthcare facilities located in Puerto Rico, Colombia and Brazil. Also there are a number of high-tech manufacturers in Costa Rica, Paraguay and Uruguay.
Additionally, UPS is seeing opportunities for the industrial manufacturing, automotive, retail, oil and gas, and perishables markets in Latin America. When you look at our airline, we are moving a number of perishable goods from Latin America to the U.S.; including flowers, produce and seafood.
LM: What are the biggest challenges?
Flowers: The biggest challenges in Latin America stem from the different regulations in each country as well as the different currencies. The free trade agreements certainly have helped to unify some of these requirements, but to me, this is still the greatest challenge.
Varying regulations make services like UPS Trade Direct particularly critical in these regions. This service consolidates international freight prior to shipping and only deconsolidates it after entering the country. This allows for a more efficient customs clearance.
UPS also provides brokerage services in most of these countries, utilizing technologies that can expedite the flow of goods. We also offer UPS Trade Management services to our customers where we apply our brokerage expertise in a consulting effort. This can help them to enter new or unfamiliar markets with the necessary expertise to address these regulations.
Faster growing countries like Brazil and Colombia are investing in the development of their infrastructure, looking at ways to better connect their countries to the global market. We’re seeing Mexico investing in ports such as Veracruz to better compete and receive goods from the Americas and Asia.
LM: How does your company prevail over weak points in the transportation infrastructure? Any examples?
Flowers: UPS maintains relationships with many of the governments in Latin America, investing in time and effort to explain our trade products and how our capabilities and risk assessment software can enhance trade to and from their countries. We’re also members of CLADEC, the Latin America Conference of Express Companies.
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