Latin America presents interesting problems and solutions to shippers if only because the region is not homogeneous and transportation considerations are inextricable from economic and political situations.

As Thomas Rittscher, managing director of BDP South America (www.bdpinternational.com), in Sao Paulo, Brazil, tells WORLD TRADE, "It is important to understand that when we talk about South America, the economical figures and political situation of the different countries varies greatly."

Infrastructure Improved

In Rittscher's view, the privatization, foreign investment, mergers and acquisitions, and other economic trends of the past 10 to 15 years have changed not only the economic climate of the region but the transportation environment, as well.

Supporting this, Rittscher says, "Most of the Brazilian ports, railroads, and roads have been privatized and, as a result, attracted large amounts of foreign investment for improvement and expansion of the local infrastructure."

Although he readily concedes continuing problems in Brazil concerning long-delayed tax reform, the highest interest rates in the world, and high internal logistics costs, Rittscher says, "We foresee a substantial decrease in all such costs as the result of current investments in railroads, roads, and ports, and as new investors, most of them international organizations, enter the market."

To illustrate, Rittscher says, "Hub ports are now being created and big vessels carrying up to approximately 4,000 TEUs are already scheduled to call at Brazilian ports in 2001."

Rebuilding after Mitch

Rinus Schepen, Crowley Liner Services senior vice president and general manager for Latin America, agrees that sub-regions of Latin America have their own circumstances. "We don't see an increase in business in Colombia and Venezuela, because of internal situations," he says.. But, in general, he says, Crowley expects to see a 7% to 8% rise in volume in 2001.

Although Hurricane Mitch devastated much of Central America's transportation infrastructure, rebuilding has gone apace in most areas, Schepen says.

The port facilities in Honduras, Costa Rica, and Panama have been enhanced and, "Some big changes have taken place or are very close to being finalized very soon," in all areas including those hit by Hurricane Mitch, he explains.

"The road connections are mainly rebuilt in Nicaragua, although not as much so in Honduras," he adds. On the positive side, he says, about Guatemala, "A railroad that existed but was never operational is now working between Guatemala City and the Port of Santo Tomas."

Ocean Transport Rates Stable

With the increase in volumes expected this year, going both to and from Latin America, shippers will be unlikely to find any reduction in rates. The good news is that the rates shouldn't go up much, if any.

The one sticking point in shipping cost will remain the fuel surcharges brought on by the higher cost of fuel over the past year. This recoupment of fuel costs will apply to intermodal aspects, as well, says Schepen. "The inland transportation costs are higher because of fuel costs, also," he says. Ocean carriers such as Crowley, which often are more involved in intermodal arrangements than before, must take such higher costs into account and pass them on to their customers.

"We do not see large increases in ocean freight rates," he emphasizes. "But we hope to get reimbursed for the higher inland transportation costs," he says.

Air Cargo on Rise, Rates Stable

Air freight to and from Latin America in the recent past has risen. So much so, says Mark Najarian, vice president of sales and marketing for American Airlines in Dallas that, "We're going to be adding a lot of capacity," in both directions.

The business environment in Latin America is "very healthy," he says. "The volume coming out of South America is very strong," says Najarian, as is the volume going to the area.

Najarian also says that American's air freight rates have stabilized, and he doesn't foresee any change in them.

According to Samuel Israel, president and CEO of Danzas Management, Latin America, his company's traffic is also up.

Getting There and Cutting Red Tape

Two remaining big problems for shippers are infrastructure and red tape.

Says Israel, "The highway infrastructure is still poor in many areas. Ports are overcrowded and in many cases inefficient. Railways offer poor connections."

Customs in many Latin American countries still impose heavy fines for minor errors. In Argentina, for example, a simple documentation error results in a "misdeclaration," which incurs a fine that could be double the value of the goods.

Israel points to Chile and Costa Rica as models for cutting the red tape. In Costa Rica, for example, he says, "Customs facilities in San Jose are modern, manned around-the-clock, and are free from most bureaucratic red tape."

Altogether, however, both men agree that Latin America is doing what it can to alleviate problems. It may take time, but the growing domestic markets in the area will demand changes that facilitate the movement of goods. wt