How to Size Logistics Markets in Latin America with Almost No Available Data

Diego Rodríguez Paez
Director of Logistics and Industry Practice
AMI

One of the constant challenges with market sizing studies of Latin America is the lack of public information from governmental sources, associations, research firms, and other entities. And if there IS information to be found, it’s often outdated. Recently, we encountered this challenge while conducting market sizing for the logistics sector in Central America. However, through our experience and the application of creative solutions, we were able to overcome this challenge. Here’s a look at how we achieved this.

How to Size Logistics Markets in Latin America with Almost No Available Data

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The Goal of this Latin America-Focused Market Sizing Research

We sought to size cross-border logistics markets in key Spanish-speaking countries in Central America. To do this, we had to:

• Determine the cargo volumes moving by truck across trade corridors between different countries
• Determine how much of this cargo was moved with a full truckload, as opposed to less than a truckload.

The truckload was crucial. Larger companies will have the volumes to transport full truckloads, whereas smaller companies may not. In such cases, smaller companies will use a freight forwarder to consolidate their smaller loads into a single truck serving multiple shippers. There is one rate for a full truckload (FTL) and a different one for less-than-truckload (LTL) shipments—and both types of loads have different customs requirements in various countries.

First Steps: Reviewing Available Data and Asking Key Questions

We began our research by reviewing trade databases to estimate volumes across multiple categories.

Our initial focus was on understanding the movement of key product categories, so our client could prioritize sectors.

We already knew that in countries like Panama, there are foreign trade zones where companies store products imported from China, free of taxes, and then redistribute them across the region. This led us to analyze the volumes of high-tech products moving from Panama to Costa Rica and other parts of Central America. And, of course, we examined product flows for FCMGs and auto parts as well, so we could identify the key cross-border corridors.

But we didn’t just focus on volume.

We wanted to know about prices and services. And not just basic transportation services, but also value-added services. This led us to explore several important questions as we sized the markets for cross-border trucking for FMCGs, auto parts, and high-tech products:

• Who are the key competitors, and what are their pricing strategies?
• What is their transportation pricing?
• What is their pricing for value-added services?
• What are they doing for customs clearance?
• Are they also offering warehousing services?
• What other value-added solutions are these companies offering to customers across the region?

Going Beyond the Usual Sources

While we begin by accessing data through providers like Panjiva or the UN Comtrade database, the key lies in the analysis. That’s why we also examined the harmonized system (HS) codes. Our goal was to match some of the product categories from the country that reports the importer or exporter of record with those countries that do not report that information. Based on this, our team begins to create hypotheses.

Once we have the hypotheses, we validate them. We do this because we have built an extensive list of expert sources throughout Latin America across various verticals. Our team then reaches out to experts from trucking companies, customs brokers, freight forwarders, and other relevant industries.

In Central America, this is essential because the available data may be outdated or incomplete. As part of the expert consultations we conduct, we also include the iteration process. Essentially, our research team begins iterating the numbers, which involves asking about growth rates and the growth drivers in specific trade corridors. This is how we start calculating very accurate numbers. Unlike what other companies do with off-the-shelf reports or so-called “field research,” we don’t have an analyst located elsewhere in the world who reviews trade databases and extrapolates figures that may or may not be accurate.¹ Instead, we obtain concrete data from real sources on the ground, including freight forwarders, trucking companies, and customs brokers, among others.²

More Than Market Sizing

As we validate the numbers, our team also seeks to understand the market conditions and operational issues that are behind the numbers. For example, in this case, our research uncovered that the Panama-Costa Rica trade corridor faces both customs issues and difficulties with trucking carrier permits for movement between the two countries.

Additionally, we found that Panamanian trucking companies are unable to pick up cargo in Costa Rica. The same is true for Costa Rican trucking companies: they cannot pick up cargo in Panama. This means that a Panamanian company could drop off cargo in Costa Rica but would return empty, yet trucking companies need the backhaul to be profitable.

In contrast, we found that the Guatemala-Mexico trade corridor was well-integrated in terms of customs, and there were no issues with trucking companies making pickups.

Beyond these issues, we also learned how smaller trucking companies prefer to operate with very short payment terms, rather than the typical 45-day or 60-day terms. And that local trucking providers that do not have coverage all over Central America, but instead in just one trade corridor.

What Does This Mean?

For a company looking to size the Central American cross-border trucking market, these additional insights help shape its approach. For example:

• It may want to partner with local trucking providers to expand its coverage while also expanding its footprint in the region
• To encourage them to join forces, more flexible, faster payment options could be a good idea
• Specific corridors may be a better focus because they have fewer operational challenges and red tape.
• Utilize the accurate pricing data we uncovered through mystery shopping to determine a precise US dollar market value, which will in turn inform investment decisions and real revenue goals for the sales teams based on the study’s findings.

Ultimately, this combination of desk research, field research, incisive analysis, and consideration of critical questions is what allowed us to provide the client with more than market sizing: we added the critical value of context and conditions that are directly related to the operational considerations of entering these markets successfully.

Footnotes:

1. In certain instances, analysts located outside the region will simply look at the trade databases and use the harmonized system (HS) codes, which is enough for an educated guess but far from accurate data reflecting the on-the-ground reality. ↩︎
2. Utilizing on-the-ground sources is crucial. Customs data, for example, can be manipulated by governments, so working with the professionals in these areas allow to cross-check official data and get real data. In some cases, we actually remove categories. If the goal is information on auto parts but databases contain mostly information on used vehicles, we eliminate the category in our research. ↩︎

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Diego Rodríguez Paez Senior Director of the Logistics Practice

Diego Rodríguez is the Director of the logistics and industrial practice at Americas Market Intelligence, handling dozens of market analysis and competitive intelligence studies throughout Latin America. He has also served as a consultant to more than 20 multinational companies.

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