The document summarizes the evolution of supply chain management in Latin America. It discusses how Latin America has improved its attractiveness through initiatives like better infrastructure, trade policies, and addressing high labor costs. This has allowed the region to strengthen trade relationships and attract more global retailers and manufacturers. Key developments that improved supply chain operations included trade agreements like NAFTA, infrastructure projects like the Panama Canal expansion, and the growing middle class consumer market in Latin America.

1. SUPPLY CHAIN &
LOGISTICS
BASICS:
THE EVOLUTION
OF LATIN
AMERICAN SCM
BY: ANGELA CARVER

2. Improved Favorability of the LATAM
Market
• The supply chain and logistics industry historically faced many
issues when attempting to expand or operate in Latin American
regions. In an effort to attract new business the LATAM market has
implemented initiatives addressing some of the top supply chain
management concerns.
• Latin America has improved its favorability by:
1. More effectively marketing proximity to U.S. markets
2. Developing conciliatory trade policies
3. Improving lagging infrastructure
4. Increasing consumer standards & expectations
5. Offering more cost effective labor

3. Trade Agreements
• The United States and Latin America have developed improvedtrade
agreements that make moving inventory between the two regions
easier and more cost effective for international supply chains.
• Two significant trade agreements are the:
– North American Free Trade Agreement (NAFTA) impacting trade between the U.S.
and Mexico
– U.S. Free Trade Agreement
• LatinTrade.com journalist Joachim Bamrud noted some specific
LATAM regions that directly benefited from improved trade
agreements with US manufacturers including Chile, Mexico and the
DR-CAFTA countries.

4. Trade Agreements
• Other regions including Asia, the European Union and Canada have
pursued similar trade agreements with Latin American countries in
order to increase national competitiveness in global marketplaces.
• For Example: Agreements made between China and Latin America
led to a 25%+ increase in LATAM exports each year since 2004
according to LatinTrade.com. This helps to provide China with wider
product selection to meet consumer demands.

5. Infrastructure Improvements
• In the past Latin American countries were severely limited both
domestically and internationally by outdated infrastructure. This
prevented many businesses from expanding into these regions.
• In an effort to address this issue Latin American logistics businesses
have pushed legislators to complete some of history’s most notable
infrastructure improvement projects – the largest being the recently
completed Panama Canal Expansion.
• The Panama Canal Expansion cost a total $5.4 billion and tripled the
width of the existing canal. This created a direct all-water route from
Asia making it cheaper and easier to transport bulk shipments into
Latin America and North America.

6. Infrastructure Improvements
Source: Canal de Panamá officialwebpage

7. Infrastructure Improvements
• Port Everglades completed a similar improvement to simplify the
transport of goods from southern states into Latin America via
waterways further enticing U.S. businesses to expand their supply
chain internationally.
• The Freight Transportation Association (FTA) has also created
incentive programs for countries with poor infrastructure to make
improvements in order to allow trucking routes to be established.
• Improvements of this nature have increased the share of LATAM’s
global exports from 4.4% to 6.9% from 1986-2010 according to the
World Bank. Exports will continue to increase due to the newly
completed Panama Canal Expansion and other infrastructure
projects.

8. Closing the Supply Chain Gap
• With improvements in infrastructure and more conciliatory trade
agreements Latin America has benefited from its close proximityto
the United States.
• These advancements have allowed U.S. supply chains to moreeasily
expand into Latin American markets. Retailers are opening more
store locations and developing advanced wheel and hub style
distribution networks to serve LATAM consumers at the same level
as their U.S. counterparts.
• Without the infrastructure and trade policy improvements this would
not have been possible.

9. LATAM Consumer Standards
• Growth in Latin American markets is expected to continue. An
indicator of this was the estimate referenced by the International
Monetary Fund of an impressive 4.7% increase in GDP in 2011.
• Gross domestic product increases have given the LATAM middle
class more buying power than ever before. This has led to increased
consumer consumption and higher demand on the supply chain.
• There are now nearly 400 million consumers across Latin America,
many of which are demanding higher end goods at lower prices. In
order to make these products more affordable retailers have
searched for reshoring opportunities to bring products closer to
consumers and shorten the supply chain.

10. Reduce Labor Costs
• The Latin American supply chain has also seen significant growth
due to the rising labor costs in China.
• In order to keep product costs low manufacturers have begun
implementing reshoring initiatives to bring jobs closer to home.
Mexico and Brazil are two of the top cities manufacturers select due
to lower labor costs and proximity to both large LATAM and U.S.
markets.
$

11. Conclusion
• Supply chain management and logistics operations could not
function effectively in Latin American regions in the past due to a
variety of barriers to entry. This led to very weak or absent supply
chains and a lack of product diversity.
• Due to the recent advancements LATAM is a region with excellent
international relations, road and water-based infrastructure,
affordable workforce and a powerful consumer base. This has drawn
some of the largest retailers, manufacturers and logistics operations
into the region strengthening not only their global supply chain
presence, but the Latin American economic position.

12. Address Your Supply Chain Challenges
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Source: http://www.joc.com/special-topics/south-america-trade-logistics
http://www.inboundlogistics.com/cms/article/latin-american-logistics-keeping-up-with-the-latin-beat/
http://www.flchamber.com/wp-content/uploads/MadeForTrade-FINAL-Single-1.pdf
http://latintrade.com/trade-logistics-trade-growth-boosts-logistics/