The focus on the powerhouse east-west container shipping lanes has often obscured the fact that north-south lanes are showing the most growth.
But global logistics providers and liner carriers are taking notice, with new services being offered and branch offices opening to take advantage of opportunities in South America.
One of those eyeing the region’s potential is Hong Kong-based Trans Global Logistics, which recently opened a new Atlanta office specifically to tap into growth in the Americas.
“Asia direct to Latin America is the lane to watch,” Tom Spellman, Trans Global’s route development director for Latin America, told American Shipper. “Brazil’s leading trading partner is now China and Brazil is the largest exporter in Latin America providing China with agricultural products, raw materials and natural resources used in manufacturing. I would also keep an eye on the countries in Latin America that are rich in natural resources – Mexico, Peru, Argentina and Chile.”
Spellman said Asian investors are purchasing natural resources and investing in manufacturing, raw materials and mining.
“Some Latin American countries see that as a threat, and countries like Brazil have lifted their import tariffs to protect their own manufacturing industry from international competition,” he said.
Spellman also noted that the north-south trade between the United States and Colombia will get a boost now that a long-mooted free trade agreement between the two countries went into effect May 15.
“I just returned from a trip to Colombia and all the companies I visited have been anxiously waiting for this ever since President Obama signed the agreement in October 2011,” he said.
When asked whether Latin America can ever develop into a trade on par with the more developed consumption regions like North America and Europe, Spellman said that’s unlikely in the foreseeable future.
“There is too much inequality among all Latin American countries with regard to GDP, income levels, infrastructure, political stability, and poverty levels,” he said.
But the region does benefit from greater balance in trade flows to North America, Europe, and Asia than seen in the east-west trades, where a strong headhaul lane is rarely balanced volume or revenue wise by the backhaul.
“Diverse economic levels, market complexities among countries, and regional and sub-regional trade agreements influence the balance of trade flows among Latin American countries,” Spellman said. “Regional trade agreements will foster greater balance of trade flows in the region, although the U.S. will continue to play a dominant role, and China will become a bigger player as it continues to secure access to raw materials.”
If anything, the strength in North/South America trade lies southbound for U.S. exports.
“There is more growth from North America to South America,” he said. “The economic growth in Latin American countries represents opportunities for U.S. companies to extend their markets.”
Trans Global’s new Atlanta office will handle inbound and outbound air and ocean shipments along with customs brokerage services, with a warehouse facility for customers requiring distribution services. The company sees nearby Miami as its gateway to the competitive Latin American market, with plans to open an office there this year as well.
“A physical presence in the Southeast U.S. marketplace is needed to be successful in the region and we have taken that step with our new Atlanta office,” Spellman said. “Being successful is also tied to our global network. Trans Global will combine its expertise in Asian logistics – with our owned network — with a strong Latin American network and skilled Atlanta-based staff to provide customers with a highly personalized service that navigates the complexities of moving goods in and out of the region. Latin America is firmly part of our growth plan.” – Eric Johnson
Latin America growth lures Asia 3PL
