LatAm Logistics 2.0 Is Here

Free trade and economic reform in the 1990s brought billions of foreign direct investment to Latin America. International logistics providers followed their customers into the region. That was LatAm logistics 1.0.

For the last 20 years, international 3PL providers focused on cross-border traffic and serving the needs of multinational clients, growing at a healthy clip. Domestic transportation and logistics providers focused on Latin American clients, who valued the domestic 3PL supplier’s lean cost structures and turned a blind eye to their loose compliance standards. Outsourcing grew, benefiting both domestic and international 3PL providers.

But digital disruption promises to shake things up and herald a new era, LatAm logistics 2.0. Today, e-commerce is growing at 20% per year across the region, and may accelerate with the expansion of Amazon, Alibaba, MercadoLibre and others. As we have seen in China — where e-commerce captures 20% of retail — total logistics spend/GDP will grow in Latin America (where e-commerce is barely 3% of retail).

However, this is a growth opportunity that few legacy 3PLs are well-suited to address. Customers demand cheaper and faster fulfillment than asset-heavy legacy players are built to service. So nimble start-ups are filling the void with delivery in hours, not days, and at prices that are ¼ to ½ the rate of traditional couriers. Emerging e-commerce merchants are focused on marketing and sales and want to outsource their entire logistics function. Meanwhile, brick & mortar retailers want to leverage their POS into omni channels.

Logistics providers must convert themselves into consultants, ready to deliver an asset-light, rapidly scalable solution while also serving more traditional customers who demand an integrated asset heavy solution.

How We Can Help You

AMI consultants have conducted more than 200 studies of Latin America’s logistics sector since 1993 in the following segments: