Market Trends of south america freight and logistics Industry
South America is offering an investment of USD 4.5 trillion in infrastructure to improve the transportation sector
- The transport and storage sector steadily recovered in 2021, with a notable 18% YoY growth in its contribution to GDP. In 2022, the sector continued to expand and saw a 3% YoY growth, primarily attributed to the growth in maritime services. Moreover, Argentina's transportation and storage sector showed signs of recovery and grew by 33% YoY in 2021 and 38% YoY in 2022. However, it experienced a Q1 2023 drop in GDP to ARS 52,590.67 million (USD 297.543 million) from Q4 2022's ARS 53,539.95 million (USD 302.914 million), attributed to reduced transport usage, increased private vehicle reliance, and traffic congestion. Brazil's transportation industry encompasses cargo, ports, public transit, and urban mobility, with logistics being costlier at 12% of GDP due to inadequate infrastructure compared to the United States.
- Chile’s Public Works Ministry (MOP) announced a USD 4.7 billion concession plan in 2021, under which highway projects were said to cost approximately USD 11 billion over the next five years, while other notable projects included hospitals, airports, cable cars, trams, and re-tenders for groups of jails. According to the government, the 2021–2025 five-year plan includes various processes for concessions and tenders. For instance, the value of roadwork projects alone exceeds USD 11 billion.
- South America presents investment opportunities of USD 4.5 trillion over the next decade, with 22 initiatives in transportation and telecommunications amounting to USD 117.8 billion. The regional infrastructure integration plan includes 409 transportation, telecommunications, and energy projects, totaling USD 150.4 billion. By 2040, ports and airports are anticipated to necessitate investments of USD 55 billion and USD 53 billion, respectively.
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Crude oil prices in the region rose to USD 100 per barrel in 2022 owing to the impact of the Russia-Ukraine War on global crude oil
- In Brazil, in February 2024, diesel, gasoline, and cooking gas prices rose by around 12.5% due to adjustments of the Imposto sobre Circulação de Mercadorias e Serviços (ICMS) state goods and services tax. This increase was decided by the national committee of state finance secretaries in October 2023 and marks the first adjustment of ICMS on fuels since 2022. A law passed previously unified this tax across Brazil and set a minimum period of one year before the first rate change, with subsequent revisions permitted every six months.
- Colombia is Latin America's third-largest oil producer, followed by Brazil and Mexico. Colombia supplied 203,000 barrels per day on average (2.4% of total US crude oil imports) in 2021. South America pumped 442,789 barrels per day on average in 2022, which was 13% lower than in 2021. Brazil has the region's second-largest oil reserves, accounting for a volume of 12.7 billion barrels. In 2022, Latin America's largest oil producer pumped slightly more than 3 million barrels per day, witnessing a 5.6% increase from 2021.
- The main factor leading to fluctuations in diesel prices is the international demand for distillate fuel. However, Argentina's diesel oil and liquified gas shortages are affecting the mobility of private cars, passenger and cargo transportation, and economic activities. Due to sanctions against Russia, there has been an impact on the price of fuels. The price of oil in the region rose to USD 100 per barrel in 2022, compared to USD 68 in 2021. Argentina's state-owned oil company purchased diesel from the spot market due to extremely high demand and the national government's electricity and gas subsidies.
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- South American population growth driven by migration, which is expected to peak at 751.9 million in 2056
- The oil & gas, mining, and quarrying sector is influencing GDP growth in South America with a focus on increasing domestic production
- The penetration rate of e-commerce users in the region is expected to rise to 63.7% by 2027 from 51.1% in 2021
- South American economies striving toward expanding fuel exports led by government initiatives
- South American countries witnessed a rise in commercial vehicle production and sales, with brands like Scania and Mercedes Benz coming out as leaders
- Truck makers in South America are exploring gas-powered and electric trucks, such as Volkswagen e-delivery and Fuso's eCanter
- Fleet capacity is witnessing growth due to increasing oil production and capacity expansion projects in the region
- Lack of transparency in regulatory procedures and weaknesses in long-term planning are affecting port efficiency in the region
- Investments in capacity expansion across various modes of transportation are driving growth in the region
- Brazil and Argentina are among the frontrunners in driving manufacturing-led growth in South America
- South American countries witness major increases in WPI and CPI due to cost increases in mining, electricity, gas, and financial and social crises in the region
- The governments are launching programs like "Productive Argentina Plan 2030" and “Chilean Technology Working Group” to boost manufacturing
- South American economies are striving toward reduction in fertilizer and fuel imports backed by government-led initiatives
- Chile is investing around USD 34 billion for infrastructure and transportation expansion
- Increasing foreign trade and economic and political situations are significantly affecting freight transport
- South American ports need major reforms to boost connectivity through public and private investments
- Protests, low water levels, and increases in the prices of vehicles, parts, and pieces have significantly led to the rise in freight transportation prices
- Chile accelerates infrastructure overhaul with USD 11 billion roadwork investment
