Dealing with Infrastructure

Infrastructure and logistics still represent serious challenges when doing business in South America. Only some urban and more developed rural areas are well served with good energy supply, modern telecommunications, and complete logistics infrastructure.

Waterways and ports

Although many rivers cut across the region, inland waterways are underutilized in South America. In terms of maritime logistics, the port infrastructure in South America has reached its capacity limit due to increased international trade. Additionally, port operations are generally inefficient, with outdated technology causing frequent delays. The lines of trucks waiting to be loaded or unloaded can extend for miles and take days to clear. Port labor strikes are also not infrequent and can be very disruptive. Expect long and variable lead times when shipping to and from South American ports.

Logistics infrastructure

• Roads

  Roads are by far the predominant mode of cargo transportation, but expect delays and traffic problems. The road network is mostly concentrated in Brazil and Argentina. On average, only 13 percent of the roads in the region are paved. The most efficient roads are privately-managed toll and secondary roads. Road cargo theft remains an issue in some areas.

• Rail

  Except for Paraguay, Bolivia, and parts of Brazil, the railroads do not play a significant role in South America for transportation. The Brazilian government has privatized some important segments of its railway system, resulting in a fast rate of improvement and consequent increase in demand and significance.

Energy and telecommunications

After large-scale privatization and increased market liberalization, the energy sector here is developing fast. The bulk of the energy generated is still hydroelectric, but future expansions will be based on large reserves of natural gas. Distribution remains a problem, but access to the energy grid has greatly improved in recent years, and most areas are now supplied with electricity. Similarly, the telecom sector has experienced a quantum leap in the availability and reliability of voice communication infrastructure, with good, extensive coverage for cellphone and landline networks. In terms of data communication, most urban areas are well served by broadband internet access, and virtually all countries have plans to improve access in rural and marginal urban areas.