Latin America's Booming International Logistics Market By John Price, InfoAmericas

In 2004, demand for international logistics services in Latin America will grow by 10% to 12% on a regional basis. Return of growth in both foreign direct investment and trade is fuelling this double-digit expansion of the sector. Global logistics companies make up an increasingly consolidated industry with fewer than 20 players with world wide sales of $1 billion or more. They continue to expand their service offering in Latin America, generating new demand by educating Latin American companies in the benefits of outsourcing.

Demand for Latin American logistics services -- both international and domestic -- has been driven, above all, by FDI. Along with their investments, multinationals bring a global network of suppliers and customers and a scale of operations that demands significant logistics spending. Moreover, large FDI inflows to individual countries like Mexico, Argentina, Brazil, and Chile changes the competitive landscape, forcing large domestic companies to begin to use outsourced logistics in an effort regain lost market share.

International logistics business is also driven by increased trade in manufactured products and hazardous cargo, both of which require more sophisticated logistics planning and handling. Nations with trade volumes disproportionate to their size, like Puerto Rico and Chile, are also important customers for international logistics services. Panama, with its canal as a strategic re-distribution point, also generates logistics demand beyond its small size. In a region known for its commodity exports and finished good imports, the in-bound logistics market is significantly larger than its out-bound equivalent.