As part of our commitment to provide you with the most up-to-date and relevant information on the logistics industry, we share our Market Update on the Latin American market.
You will find information and interesting data on the update of the state of the ports, the most important transport routes and relevant news.
We hope you'll find the following information helpful, as well as inspiring to boost your business and keep your cargo moving.
Topic of the Month: Nearshoring in Latin America
In this topic of the month, we will talk about nearshoring in Latin America, but for that, it is important to explain the term and how it has started to sound more popular nowadays. In the face of global disruptions such as the pandemic, geopolitical conflicts, and escalating international tensions, the vulnerabilities within supply chains have been very clear. As supply chain leaders deal with challenges, the quest for resilience has prompted a closer examination of sourcing strategies. The concepts of nearshoring, reshoring, and offshoring have emerged as strategic responses to build more robust and adaptable supply chains. In this article, we will explain the evolving landscape of nearshoring in Latin America and its role in addressing the supply chain weaknesses intensified by recent global events.
Nearshoring refers to the practice of outsourcing manufacturing business processes to a nearby country, most of the time within the same geographical region or continent. One key characteristic of nearshoring is the geographical proximity between the outsourcing company and the service provider or manufacturer. This proximity offers advantages in transportation costs, agility because of time zones, and cultural affinity, contributing to improved collaboration and communication.
Reshoring is also called “onshoring,” and it is the process of bringing back business operations, manufacturing, or services to the company´s home country. This strategy is employed to reverse the previous offshoring decisions, often driven by changes in economic conditions, evolving market dynamics, or desire to get more control over the production process. Reshoring seeks to capitalize on the benefits of domestic production, including quality control, lead times, and proximity to end markets.
Offshoring is outsourcing business processes, services, or manufacturing to a foreign country. companies use offshoring to maximize cost savings, access specialized skills, or benefit from favorable economic conditions in the chosen offshore location. While it can lead to reduced production costs, offshoring may also reduce challenges such as longer supply chain distances, potential communication issues, and dependency on global economic and political factors.
As explained, nearshoring involves outsourcing to nearby countries, reshoring brings operations back to the home country, and offshoring entails outsourcing to foreign countries, often seeking cost advantages. Each strategy has its own set of considerations and is influenced by factors such as cost, quality, and strategic objectives of the businesses involved.
Nearshoring in Latin America
As the dynamics of international trade undergo profound changes influenced by the pandemic, changing supply and demand patterns, and geopolitical conditions, companies are reviewing their global footprints. The window of opportunity for Latin America to benefit from this reshuffle is open. It is a great moment to explore the advantages of bringing production to LAM, from its geographical proximity and trade agreements to economic stability and collaborative regional efforts. Latin America offers a multifaceted appeal for businesses looking to enhance their operational resilience and capitalize on the region's strengths in the nearshoring landscape.
According to Deloitte´s study, the nearshoring market will experience a compound annual growth rate (CAGR) of 10.3% from 2021 to 2025. Additionally, estimates from the Inter-American Development Bank (IDB) say that nearshoring can potentially enhance global exports from Latin America and the Caribbean by $78 billion annually. A recent IDC study affirms that Latin America presents the North American market with a unique combination of geographical proximity and adept partners with the maturity necessary for delivering high-quality services. Countries in this regard include Guatemala, El Salvador, and Mexico. Currently, a diverse range of industries, including automotive, textile, pharmaceutical, renewable energy, and IT sectors, stand to benefit from the growing demand for these services.
While Central America has a strategic location, other countries also stand to experience export growth through nearshoring. Projections from the IDB indicate that Argentina could see an additional $3.91 billion in exports, Brazil $7.84 billion, Colombia $2.57 billion, and collectively, Chile, Costa Rica, and the Dominican Republic could surpass $1.5 billion annually. The consolidation of nearshoring is anticipated to yield substantial benefits across the region, contributing to economic recovery and a slowdown in inflation by redirecting investments regaining between $30 billion and $50 billion that were previously directed towards Asia.
Advantages of bringing Production to Latin America for Nearshoring:
As discussed previously,
- Proximity and geographic advantage: Latin America´s strategic geographic location and its proximity to the United States provide a competitive edge for nearshoring. Reduced transportation times and costs contribute to more efficient supply chains and faster response to market demands.
- Agreements and Incentives: Trades and agreements offer significant incentives for companies in Latin America. These agreements provide favorable conditions, subsidies, and support for industries.
- Economic Stability and Growth: despite the occasional challenges, certain Latin American countries have demonstrated economic stability and growth due to nearshoring. The region's GDP expectations exceeding 2% for 2023, according to analysts, present an attractive environment for businesses seeking long-term investments.
- Regional Collaboration: The call for regionalization in Latin America has the potential to create economies of scale and foster collaboration. Initiatives may offer financing and support for cross-border industrial and commercial clusters, enhancing the overall attractiveness of the region for nearshoring.
- Diversification of Global Supply Chains: while the ongoing supply chain reshuffle, Latin America presents an opportunity for businesses to diversify their global supply chains. Diversification can enhance resilience, reduce dependence on a single region, and mitigate risks associated with geopolitical disruptions.
Latin America challenges to be considered:
While the prospect of geographic proximity, cost efficiency, and cultural affinity make Latin America an attractive nearshoring destination, it also has some challenges in unlocking its full potential. Here are some key challenges that demand attention:
- Infrastructure Complexities: While certain countries exhibit well-established industrial parks and logistical capabilities, others encounter challenges related to transportation networks, communication systems, and overall infrastructure resilience. These disparities can lead to operational inefficiencies, increased costs, and supply chain disruptions. Addressing this infrastructural gap becomes imperative for creating a seamless and reliable nearshoring ecosystem.
- Policy Dynamics and Regulatory Ambiguities: a diverse array of regulations, trade policies, and potential fluctuations in political climates. These uncertainties demand a full understanding of each country’s legal landscape and a proactive approach to adapt to changes. A harmonized and transparent regulatory environment is essential to ensure stability.
- Talent: the skills gap and aligning talent with the industry needs is another challenge Latin America faces. The region faces difficulties in finding specialized expertise required for certain sectors. These countries invest in education, professional training programs, and collaboration between businesses and educational institutions. Closing the skills gap not only enhances the attractiveness of Latin America as a nearshoring hub but also propels the region toward becoming a center for innovation and technological advancement.
Regarding nearshoring and reshoring, Latin America stands at the crossroads of a big potential but with notable challenges. The geographic proximity, cultural alignment, and cost advantages can make it a good choice for businesses seeking to diversify their supply chains. However, to fully realize this potential, stakeholders must confront multifaceted challenges. Additionally, considerations surrounding security and workforce skills are paramount demanding strategic investments in education, training, and innovative solutions. By fostering collaborative efforts and implementing robust policies, and investing in the region's infrastructure and human capital, Latin America has the capacity not only to face these challenges but also to emerge in nearshoring and succeed in the global logistics sector. The journey ahead may be starting and with many obstacles. Still, it promises a future where Latin America stands as a strategic cornerstone in the evolving landscape of global supply chains. If you want to know more, click here to read an article on nearshoring.
Ocean updates
| Trade lane | Comments |
|---|---|
|
Trade lane
North America to Intra-Americas
|
Comments
Please note that the South Atlantic Express (SAE) service will no longer call Puerto Moin, Costa Rica, as of March 2024. As an alternative from the US East Coast, customers may continue to book on the North Atlantic Express (NAE) or AGAS service, which has a fast connection to our Panama hub with further access to our global network.
|
|
Trade lane
West Coast to North America
|
Comments
Please note that our Atacama service is ending the Coquimbo season; we are hoping to be back for the upcoming citrus season.
|
|
Trade lane
Intra-America to Caribbean
|
Comments
The new Bonita service now offers weekly direct service from Cartagena, Colombia, to Puerto Cortes, Honduras (2-day transit time) and Santo Tomas de Castilla, Guatemala (4-day transit time).
New weekly call to La Guaira, Venezuela, on the La Guaira Feeder service effective April 8, 2024. The weekly rotation of the La Guaira Feeder will be: Manzanillo, PA – Cartagena, CO – La Guaira, VE – Puerto Cabello, PA – Manzanillo, PA |
|
Trade lane
Central America to North America
|
Comments
Two weekly sailings are now available from Central America to Port Everglades. With the new Bonita service, Maersk now offers Puerto Cortes, Honduras (4-day transit time) and Santo Tomas de
Castilla, Guatemala (3-day transit time) to Port Everglades, FL
|
Main port status
ECSA and CARPAC Terminals are operating under control, albeit with some exceptions. Itapoa and Paranagua are experiencing a tight lineup situation; any delay could significantly impact their yard and lineup. BTP will only have two piers operational until July due to an incident. Additionally, Navegantes is berthing one vessel at a time.
For NAM: Vessels might be impacted by Winter or FOG season on their ports with more than 1 day of waiting time.
For APA: Terminals are being impacted by port congestion.
For NEU and SEU, no waiting time was reported.
Port Status
| Less than 1 Day | 1-3 Days | 4 - 7 days | More than 7 days | |
|---|---|---|---|---|
|
Latin America
|
Less than 1 Day
ECSA: Santos 01, Salvador, Buenos Aires, Montevideo, Manaus, Suape, Pecem, Rio Janeiro, Imbituba, Sepetiba, Itajai, Rio Grande, Zarate, Rosario, Mar del plata, S Antonio Este, P Madryn, P Deseado, Ushuaia, Vitoria, VILA DO CONDE CARPAC: Balboa, Manzanillo-PA, Rail NB (BLB TO MIT), Rail SB (MIT TO BLB), CCT, Cristobal, PSA Rodman, Cartagena, Canal, Buenaventura, Moin, Caldera, Big Creek, Turbo, Santa Marta, La Guaira, Puerto Cabello, Manzanillo,Mx, Lazaro Cardenas,Mx, Veracruz, Altamira, Progreso, ""Guayaquil/ Contecon"", ""Guayaquil/ TPG"", Puerto Bolivar, Posorja, Callao/ APMT, Callao/ DPW, Paita, Pisco, Arica, Iquique - ITI, Mejillones-PAG, Antofagasta-ATI, Coquimbo-TPC, Valparaiso-TPS, San Antonio - STI, San Vicente - SVTI. |
1-3 Days
CARPAC: Veracruz ECSA: Santos BTP, Paranagua, Itapoa, Bahia Blanca, Ushuaia |
4 - 7 days
ECSA: Paranagua, Itapoa
|
More than 7 days
ECSA: Santos BTP
|
|
Rest of World
|
Less than 1 Day
NAM: Wilmington, Jacksonville, Port Everglades, Freeport, Charleston, North Charleston, Savannah, Miami - POMTOC, New Orleans, Mobile, Tampa, Long Beach, Los Angeles, Oakland, Seattle, Vancouver, Prince Rupert, Dutch Harbor, Kodiak. APA: (New Zeland) Tauranga, Napier, Nelson, Lyttelton, Timaru, (Australia) Freemantle, Melbourne, Malasya Tanjung Pelepas |
1-3 Days
NAM: Baltimore, Newark PNCT, Newark APMT, Norfolk, Philadelphia, Houston, New Orleans, Mobile, Savannah, Halifax, Montreal
APA: (New Zeland) Auckland, Port Chalmers, (Australia) Sydney ,Singapore |
4 - 7 days
APA: (Australia) Brisbane
|
More than 7 days
|
(*) - cargo connections can be impacted considering the delays reported
Landside updates
Central America, Andina and the Caribbean Sea Area
Inland transportation in Colombia continues to be a critical component of the country's logistics infrastructure and nowadays severely affected by conditions caused by climate change. Gradually, inland transportation in the country will be moving to a more sustainable path towards 2035 in compliance with the Euro VI standard, and trucks compliant with the type of engine needed will be required in the country to ensure that emissions of CO2 can be reduced.
Air updates
Central America, Andina and the Caribbean Sea Area
Colombia just finished Valentine's season and performed mainly in the US. Major congestion is from Colombia to Europe & Middle East routings due to Women's Day. Colombia is starting preparations for the Mother's Day season, where, again, flowers are the protagonist.
Highlights
Chilean cherries take to the skies with Maersk Air Freight
As the seasons change, vibrant anticipation fills the air – it's that time of year when cherries fill our markets and tables. While some see it as the onset of summer and others as the start of a new year, our collective love for these ruby-red gems is truly universal.
5 key points to transform your logistics in Latin America
What do Latin American businesses like yours stand to gain from connected supply chains? Can they support your growth plans? Can they be a gamechanger and a force-multiplier in the region’s unique logistics space?
Learn more from the global Maersk team
Learn what’s happening in our regions by reading our Market Updates by region.
Europe
North America
Asia Pacific
Be sure to visit our “Insights” pages where we explore the latest trends in supply chain digitization, sustainability, growth, resilience, and integrated logistics.
Anything you need, we’re here to help
Logistics solutions
Contact us
Ready to ship?
By submitting this form, I agree to receive logistics related news and marketing updates from A. P. Moller-Maersk and its affiliated companies via e-mail. I understand that I can opt out of such Maersk communications at any time. To see how we process your personal data, please see our Privacy Notification.