Keen on Colombia
Latin America has been a strategic focus of the Maersk Group for some time and it has many investments in a region that has significant long-term potential, despite the current global macroeconomic challenge affecting most countries.
In the second half of 2015, APM Terminals added four terminals in Latin America to its portfolio – including Buenaventura on Colombia’s west coast, featured in this story – as part of its acquisition of Barcelona-based Grup Maritim TCB.
APM Terminals has also entered into a joint-venture multi-purpose terminal in Cartagena, on Colombia’s east coast. This gives it two terminals in one of Latin America’s largest markets, with a population of 48 million and one of the faster growth rates in the region, according to the World Bank.
Automakers gain significant efficiencies from producing closer to demand, and with roughly 2,000 parts to a single vehicle and lean inventories a permanent fixture, the importance of a steady and consistent flow through the supply chain cannot be overstated.
GM Colombia is one of the customers that is benefiting. It imports about 10,000 containers through Buenaventura – the country’s main port on the Pacific – for the production of 70,000 automobiles at its Bogotá factory.
“It is important to us that global suppliers, such as Maersk, continue working to improve the service in this way,” says Carlos Francisco Cortes, GM Colombia’s Logistics Manager.
After automobile sales tumbled in recent years in growth markets, including in South America, one might wonder if the added capacity is really needed. Has the decade-long boom during the new millennium’s first decade been replaced by a new normal with sales levelling out?
The World Bank estimates Colombian GDP growth in 2016 at 3%, compared with 0% for Latin America and the Caribbean as a whole, and Maersk Line Colombia’s Vasquez sees plenty of potential.
While the outlook for Colombian automobile sales is sluggish for 2016, the vehicle penetration is 100 per 1,000 inhabitants and the average age of cars in the current fleet is 17 years. As a result, there is room for more in a country where Maersk Line already handles one out of every five containers.
“We have an industry that is quite diverse. Our middle class is also growing and we are demanding more products and services, so this is a land of opportunity for international trade,” says Vazquez.
Production closer to demand
In recent years, a lot of automobile production has moved to Asia, Eastern Europe and South America, mirroring the shift in global sales by moving closer to the demand. Roughly 40% of all automobiles are now made in emerging economies, according to forecasting and analysis company the Economist Intelligence Unit.