The Latin American supply chain and logistics industry has posed a problem for many businesses looking to grow internationally in the past. This severely limited the economic potential of the region. In an effort to attract more manufacturers, retailers and supply chain operations some initiatives were developed and implemented. The first step the region took in order to gain favorability was to develop improved trade agreements that simplify moving inventory between the US and LATAM. The two most notable trade agreements were NAFTA and the U.S. Free Trade Agreement. Regions including Chile, Mexico and DR-CAFTA saw the greatest benefit. While this increased opportunity for trade logistics operations were still limited by lagging infrastructure. The $5.4 billion Panama Canal Expansion is the most notable infrastructure improvement. Organizations such as the Freight Transportation Association also offered fantastic incentive programs for countries with poor infrastructure to make improvements. This allowed for trucking routes to be established and make the region more accessible to businesses operating both domestically and internationally. Closing the supply chain gap between Latin American and the US has provided LATAM consumers with more product differentiation. This is critical due to the increased buying power and rising expectations. Bringing inventory closer and shortening the supply chain has allowed retailers operating in the market to bring higher end goods to buyers at a lower price. In addition to shortening the supply chain, manufacturers have also benefitted from the reduced labor costs available in many LATAM regions. This is more important now than ever due to increasing labor costs in Asian countries where historically production has occurred. Reshoring to capture additional labor savings has also helped to close the supply chain gap further due to the proximity to U.S. markets. These advancements have helped to draw some of the largest retailers, manufacturers and logistics operations into Latin America strengthening both the company’s global presence, but also the LATAM economic position.
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