By Carlos Enrique Avalos, President, Sandhill Ecuador and
Daniel Rodrigues, Managing Director, AIM Brazil
CMMB Members, Central & South America & Caribbean
Latin America, a region of vibrant cultures and diverse landscapes, has long grappled with the intricate relationship between logistics and politics. The interplay between government policies, regulations, and constant shifts in leadership profoundly influences the logistics scenarios, dictating trade flows, infrastructure development, economic stability, and security.
Political changes, whether through elections, policy reforms, or geopolitical shifts, often serve as catalyst for adjustment in the logistics sector. The ramifications can be far-reaching, impacting everything from transportation networks to supply chain dynamics. For example, security has been a big game changer in Ecuador. Currently, companies need to take extra security measures to guarantee the protection of containers, from satellite locks to escort vehicles to traveling only during the day, increasing the moving costs and creating delays.
Shifts in ideology or leadership have led to regional changes in trade agreements, tariffs, and regulations where countries opt to forge different international alliances, opening markets or closing previously accessible ones. Countries like Ecuador, Colombia, Argentina, Bolivia, Peru, and Brazil have been experiencing political unrest. This may be beneficial in the short term as there are immediate changes, people moving around, politicians moving in and out, and companies moving people. However, such instability has created uncertainty and is not a comfortable scenario for investors, potentially shrinking the moving market or slowing down the expat exchange.
We are still in constant movement, such as what happens in Chile—a country that stands out for being one of the most developed in South America, but faces an economic crisis with rising inflation. Also, Venezuela revoking an old treaty with its neighboring country Guyana makes the entire continent apprehensive. This all reduces the commercial interest for large companies to invest in South America, causing a huge impact on our moving market.
On the other hand, reflecting on what we saw in 2022 and the beginning of 2023, some foreign companies still want to invest in South America, motivated by the distance from the war in Ukraine and recently the war in Israel. Recent global studies about the risks show that the Russian invasion has benefited Latin America in general—by being at a distance from the conflict in geographical and also diplomatic terms. Sectors such as energy and the agri-food industry have had a positive impact by becoming supply chains of sectors that have been disrupted due to the war.
We hope that in the future, possible developments in the political and social spheres of the countries of the region will assess the real risks that will come. This social instability and economic immaturity of Latin American countries can further isolate our nations, thereby bringing a great direct impact on the moving industry. We hope that specific issues in some countries are solved and that our industry does not suffer significant impacts beyond those brought about by the world’s natural culture.
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