As global trade dynamics continue to evolve, the inter-Americas supply chain landscape is emerging as a critical focus for companies strengthening resilience and diversification across their operations.
By focusing efforts on the United States, businesses are working to mitigate the vulnerabilities of long-distance supply chains as well as capitalize on the proximity and potential of Latin American markets to streamline operations, enhance efficiency and shift the imbalance of goods moving into the United States.
About 92% of survey respondents consider creation of dedicated inter-Americas supply chains to be important to their organization’s strategic planning, according to a study released by DP World, in collaboration with Journal of Commerce by S&P Global.
“Provided they functioned correctly and allowed access to needed markets, the specific geographies of their supply chains were of little importance to U.S. importers before 2020,” says Otto Bottger, SVP at DP World’s commercial operations in the Americas. “After witnessing the near-collapse of supply chains in the face of adversity, what became evident is that the dependency on a single, major route — usually in Asia, especially China — doesn’t work. You need to have redundancies. You need to have alternatives. So, China-plus-one and nearshoring took off. This has forced companies to consider where to develop new, alternative supply chains. Inter-Americas is the first logical choice (for U.S. businesses) because of the geographical proximity.”
Key takeaways:
- Nearly one-third (29%) noted a significant increase in the importance of creating dedicated interAmericas supply chains over the past three years.
- When it comes to the inter-Americas operational challenges facing respondents, fluctuating shipping costs (36%) and cargo transit delays (31%) lead in significance. For more than one-quarter of respondents, customs clearance (15%) and cargo visibility (13%) are significant hurdles for trade in this lane.
- Respondents also mentioned the limited number of suppliers, as well as capacity and communication constraints. In a similar question, 43% identified “logistical difficulties” as the most important challenge to expanding trade or activities in South America. This was followed by equal numbers concerned about economic instability in target markets; policymaking and legal or regulatory uncertainties; insufficient market information; and tariff and non-tariff barriers.
- Nearly half of respondents believe the primary benefit to having a more diversified supply chain is reducing the risk of disruption from various events such as natural disasters, political upheaval and industrial action. Greater flexibility – cited by 28% of participants – and a lowering of costs by encouraging competition among suppliers (24%) were other significant expected benefits.
- When it comes to implementing strategies to future-proof their supply chains, 34% of survey respondents are prioritizing their supplier relationships, while 29% are focused on expanding their geographical reach.
