Supply Chain Frontiers issue #57
If Colombia is to realize its vast economic potential, the country must improve the efficiency of its freight transportation systems. But the national and regional government agencies responsible for infrastructure planning and construction lack the knowledge required to achieve the required improvements. The Center for Latin American Logistics Innovation (CLI) is part of an effort to raise the profile of logistics and help the country to create and implement a strategic multimodal transportation master plan.
Hundreds of miles of difficult terrain separate Colombia’s ports from the country’s main centers of production and consumption. The primary ports are Buenaventura and Tumaco on the Pacific Coast, and Barranquilla, Santa Marta, and Cartagena on the Atlantic Coast. Buenaventura moves about half of Colombia’s international trade volumes, but has poor landside connections. Colombia exports are mainly commodities, and the imports are mainly manufacture.
Although there are some 18,000 km of navigable rivers in Colombia, these waterways do not link urban centers and carry little cargo. Rail transportation suffers similar limitations. Of the 3,300 km of tracks only about 800 km are used, owing mainly to the lack of a compatible gauge, inadequate connectivity and maintenance, and wide imbalances between inbound and outbound trade routes.
The country’s fragmented trucking industry carries about 73% of domestic cargo. Dominated by single owner/driver operators, carriers must compete in a 17,000 km-long primary road system that is mostly single lane and in relatively poor condition. These arterial routes cut through many cities, which slow traffic flows.
Colombia’s President Juan Manuel Santos, who was re-elected last year, has identified infrastructure development as one if his government’s top priorities. Colombia is an emerging economy that is seeking economic diversification and is in the midst of a peace process. Logistics can be a catalyst in this transition. However, the Santos Administration has a slim majority and it is not easy to push through the required reforms, particularly in today’s challenging economic environment.
These difficulties, coupled with the urgent need to improve the freight transportation systems that underpin economic growth, make it all the more important to raise the status of logistics and use logistics expertise to plan for the future. This is the aim of the initiatives that CLI is helping to drive.
“We want to strengthen logistics in public policy at the national, state and local levels,” says CLI Researcher Andrés Archila. “We’re establishing a multi-disciplinary think tank that includes industry, academia, the public sector, trade unions, and local communities, to think about logistics and come up with new approaches.”
There are two focal points for the think tank. The first is a new national master plan for infrastructure that is now being formulated. The initial draft is due to be completed this November. “Few people think about logistics as part of the transportation agenda,” says Archila, and incorporating the needs of the freight community in the master plan will help to change this mind set.
The plan is identifying high-priority infrastructural investments, as well as the regulatory, planning and institutional initiatives needed to support these projects. For example, what legal requirements are needed to enable urban planning authorities to consider how freight moves through their jurisdictions? Access to ports is another important issue, particularly in relation to Colombia’s primary facilities.
The second area of focus is a plan being put together by the Senior Presidential Advisor on Competitiveness, Jaime Bueno, on how to make Colombia more competitive. This project complements the infrastructure master plan. Here, the think tank is helping to select initiatives that will have the most impact. An example is modernizing the country’s customs processes, which are outdated and hampered by a lack of coordination between government agencies. Technology, such as the installation of cargo scanners at ports, is another important element of the strategy.
In addition, the think tank is actively trying to educate government officials about logistics, and the specific demands of freight transportation. Local officials have a difficult job, Archila says, and although receptive to the think tank’s suggestions, face a tough challenge when they try to translate advice into policy. “There tends to be a lot of diagnostics but few prescriptions,” says Archila.
One of the aims is to show how blanket regulations that involve freight can be counter-productive. For example, requiring companies to make store deliveries at night might seem like a reasonable measure to ease daytime traffic congestion. However, large cities are typically served by small, mom and pop retail outlets that are often unable to receive deliveries during night hours.
Archila is hopeful that over the next several years there will be a reorganization of transportation governance in Colombia. “This is a window of opportunity because logistics is on the national agenda. Now is the time to do it,” he says.
For more information contact Andres Archila at aarchila@logyca.org.