November 2014 | Commentary | 3PL Line

3PL Partnerships Can Ease Burden on LATAM Manufacturers

Tags: 3PL, Latin America, Transportation Infrastructure, Mexico

Jose Luis Carrazco Velazquez is Director, Latin America, Menlo Logistics, 52 1 331 848 1758

Latin America is fast becoming the destination of choice for companies looking to expand their global footprint. The significant increase in companies establishing manufacturing facilities and distribution centers there over the past several years showcases the impact the region is having on the global economy.

Many Latin American governments have orchestrated multiple free trade agreements, and placed significant emphasis on improving education to encourage investments that result in societal stabilization, job creation, and reduced poverty levels. A vibrant economy is important, considering Latin America's proximity to the United States, the world's largest consumer market.

Local governments recognize the advantages of identifying the skills manufacturers are looking for. They are working with educational institutions to create programs that produce a large, eager, and well-trained workforce.

3PLs Help Carry the Load

Latin American expansion creates a growing need for service providers in areas such as warehousing and transportation. With third-party logistics (3PL) providers managing the supply chain, manufacturers can focus on production and sales.

In the wake of rapid economic development, existing Latin American manufacturers find themselves with a supply chain infrastructure that hasn't kept pace. A 3PL utilizing Lean principles can target continuous supply chain improvement, while constantly streamlining and expediting operations. Enhanced overall visibility of inbound parts creates outbound efficiencies, reducing inventory and costs while increasing productivity.

3PLs can also help with customs regulations compliance, which can vary from country to country. For example, Brazil's complex customs processes require in-depth expertise to manage. A seasoned 3PL can navigate these regulations, avoiding unnecessary delays and costs, or violations and penalties.

Highway Infrastructure And Security

Infrastructure improvements, especially in larger countries, continue at an unprecedented rate. Governments are investing in the needs of manufacturers. Even with some distance to go, the commitment by governments serves to reassure investors. 3PLs can contribute to this reassurance by supplying updated information and solutions based on continuous research and focused attention in the region.

Even areas where security is of concern can be attractive to businesses that want to expand into Latin America. Through established, effective security protocols, using up-to-date technology to track and monitor shipments for safety and security, 3PLs can also help manufacturers keep their shipments safe.

No Signs of Stopping

The interest in investing and manufacturing in Latin America will not be short-lived. Reforms, trade agreements, and improvements currently in progress are expected to pay sizeable dividends.

Led by governments such as Brazil, Mexico, Chile, and Peru, the region's tremendous economic potential is finally being recognized. Latin America's economic development will be the highest of all global regions for 2014, according to the U.N. Economic Commission on Latin America. 3PLs with knowledge and regional expertise will remain valuable partners as manufacturers continue driving the economic boom.