Central America always has been a backwater for air cargo. But things are looking up in several areas.

The poverty endemic in the seven nations comprised by the region between North and South America (with a total population of about 34 million; about the same as California, its per capita income is less than one-tenth that of the Golden State), its overwhelmingly agricultural base, and small checkerboard of nations, Central America is hardly a vibrant market for air freight.

Pinning down volume for the North American-Central American air cargo market is notoriously difficult. Hard and fast statistics really don't exist. However, Chris Coppersmith, president & CEO of Target Logistics Services, a mid-sized international freight forwarder based in Compton, California, estimates that air freight generates about $250 million in volume annually.

Is the Central American air cargo market growing, declining, flat or going sideways? "It depends on whether you talk to shippers, airlines, or forwarders," says Coppersmith. "We at Target believe that cargo volume is growing, albeit slowly. Success in this market has more to do with what the service carriers are offering rather than with macro- or even micro-economic trends," he stated.

Because Central America is a relatively small market for passenger traffic; its handmaiden, air freight, gets relatively short shrift from the combination carriers serving Honduras, El Salvador, Nicaragua, Belize, Panama, Guatemala, and Costa Rica. Continental Airlines, the largest US carrier into Central America, flies only narrow-bodied 737s and MD-80s into that region, with very little space allotted to cargo. Indeed, Continental hands off much of its cargo destined for Central America to other carriers at Miami International Airport because of its lack of cargo lift to that region.

Central America also is served by a number of all-cargo aircraft including Aeromexpress, ATC (Aero Transcolombia DeCargo), Suramericanas, Lineas Aereas, Masair, Mexicargo, Staf Cargo, Tampa, and Amerijet. These airlines are small, often inadequately capitalized and use aircraft that, while meeting all FAA safety and noise regulations, are hardly the newest airplanes in the skies today. On the whole, however, they get the job done.

A serious difficulty in creating a more viable market for Central American air cargo is the lack of "back-haul," meaning there is little available freight moving northbound. Because Central America is overwhelmingly agricultural and air freight is a primary mover of industrial goods, aircraft returning to the US often fly almost empty. This creates a substantial cost imbalance, with southbound shippers having to pay for almost all of the aircraft's return flight, which naturally drives up rates.

Central American governments are making a concerted effort, however, to reduce the need to import basic manufactured articles, reports Coppersmith. Factories making paint, detergents, tires, paper and cardboard articles, fertilizers, and insecticides have been established in urban areas. These efforts are starting to bear fruit, and small shipments of factory-produced goods are beginning to move northward. "Also, a small but growing market in cut flowers is helping to reduce the imbalance between northbound and southbound shipments," avers the Target chief.

Procedures for customs clearances in most of the seven Central American nations generally have improved, but it will take time, money, and effort to bring customs facilities up to international standards and into the "paperless" age. Electronic transmission of documents, now commonplace in the US, Europe, and the "tiger" nations of Asia, is more of a dream than a reality in the countries between Mexico and Colombia, reports Coppersmith. Shipments that take less than three hours flying time from Miami may be held up as long as 48 hours in customs. Cumbersome paper documents still must be delivered by hand to customs houses. Customs officials are attempting to speed up the process, but the manana attitude dies hard.

Panama stands somewhat apart from the other six nations making up Central America. Principal reason: the Panama Canal. Marine parts and supplies often are required in a hurry for cruise ships and freighters traversing the canal. Coppersmith notes that Target's Miami office specializes in marine shipments, particularly for cruise liners. "It is not unusual for Target's Miami manager to receive a telephone call at two a.m. from the logistics director of a cruise line to make emergency deliveries to one of his company's ships that is passing through the canal. These shipments may consist of anything from a section of a propulsion gear to dishwasher detergent that is needed to clean 3,000 pieces of cutlery," Coppersmith says.

Coppersmith believes there is reason for some optimism when scrutinizing the Central American air freight market. Governments and currencies are more stable than in the past. While the seven nations remain desperately poor, there is a growing partnership between government and private interests to attempt to modernize their nations' infrastructure and to lessen their dependence on mono-agriculture such as only bananas or coffee.

"Central America never will play a major role as an international cargo destination because of its small size and lack of products suitable for air freight," said Coppersmith. "Shippers, airlines, and forwarders who are aware of both its advantages and pitfalls can do reasonable well as players in this market," the Target CEO concludes.

Sidebar: Rebuilding Honduras's Infrastructure
by Charles Wesley Orton

Hurricane Mitch left Honduras three years ago, but its effects are still evident, as they are in much of Central America. The United States, the IMF, and the World Bank have poured millions of dollars into helping the area rebuild its highways and railways and, although much has been accomplished, much more needs to be done.

Honduras is a good case in point for the entire region. The government invested $33 million in 1999 to rebuild ten districts in the country. Two million dollars has been used to create flood-control measures in the river basins throughout Honduras.

Lack of government funds has been the driving force behind Honduras privatizing its four main airports. The government has, however, put $800,000 into modernizing the air-traffic control system at Roatan and, finally, installing a lighting system on the runway for night flights.

According to Tomas Lozano Reyes, minister of public works, transportation, and housing, Honduras is improving inter-regional transportation links. Says Reyes, "We're investing in the road network between Honduras, El Salvador, and Nicaragua to improve the terrestrial relationship between these countries. Puerto Cortes is the present port, but the port of the future is Puerto Castilla, also a deep-water port. There, boats can dock in deep water even when close to the beach.

"Puerto Castilla has these favorable conditions and work is underway to furnish the port with docks so that various alternatives exist for different types of boats that arrive at the port.

"At the same time, we're designing highways that give access to the ports from the center of the country. This will give Puerto Cortes and Puerto Castilla the potential to be an alternative to Panama when Panama looks saturated, as I think it is at this time, with worldwide demand. So there would exist a way of passing a product from the Atlantic ocean to the Pacific Ocean or vice versa [through Honduras].