By Ricardo J. Sánchez[1] and María Alejandra Gomez-Paz[2]
The lack of a satisfactory logistics infrastructure, along with certain institutional weaknesses, the arising of disruptions in logistics services, and not least of all, the onset of shortcomings regarding regional integration all coalesce to depict a development lag in key aspects of the Latin American region.
There is, nonetheless, a short-term opportunity scenario for the promotion, boosting, and sustaining of a transformation process towards new, sustainable, and powerful corridors. Three conditions are required to reach this goal: sustainability, connectivity, and resilience, a multi-criteria matrix will allow to maximise the scarce financing resources and prepare for climate change impacts, together with similarly urgent dynamics, at a regional scale.
Geography, infrastructure configuration and investments, as well as government regulations and institutional weakness, constitute the main barriers to the integration of the territory at not only the national level but internationally as well. Latin America and the Caribbean is a vast territory of enormous proportions, with a low absolute population density, albeit high in relative terms, due to a high concentration in large cities and small territorial occupation. In proportional terms, South America alone is twice the surface of Europe. In addition to the great geographical distances that link the central economically active nodes, geographical barriers exist such as the Andes Mountain range, expansive wildlife areas in the Amazon or Patagonia, as well as large maritime areas between the Caribbean islands.
The transport services and infrastructure configurations are traditionally more oriented to the exploitation, extraction, and export of natural resources than to the internal integration of regions and countries. This results in giant and remote areas with low economic activity, generating a transport dependency for their day-by-day life (food, health, and basic needs).
In the case of South America, the connections of exporting nodes are centripetal, basically north-to-south connections. The bi-national corridor of Hidrovía Paraguay Parana provides an efficient linkage for agricultural trade, allowing the connection between the hinterland and the Asian and other foreign markets. Large national inland waterways and maritime cabotage connections characterise Argentina, Bolivia, Brazil, Colombia, Ecuador, Paraguay, Peru, Uruguay and Venezuela. Likewise, Colombia is the only South American country that has access to two oceans.
In the case of Central America and Mexico, the interior regional corridors are primarily national since except for two, the rest of the countries are bi-oceanic. In this case, there is an old and active trans-national project to improve the surface connections along the entire “Mesoamerican” region. Mexico, for its part, is also re-boosting the old project of joining the Pacific with the Gulf based on ports on either side linked by a modern railroad. The railroads that connect Mexico with the United States have also been playing a growing role in international surface transportation, which is a bright sign compared to the few or no rail connections between countries that predominate in Latin America.
The typical lack of infrastructure in Latin America is determined by the notoriously low investment in infrastructure that provides physical connectivity in relation to its gross domestic product, at least over the last 40 years.
It is nonetheless relevant to note that the aforementioned backwardness (particularly regarding connectivity infrastructure) is not an obstacle to the planning of green corridors. Indeed, the awareness of tackling the effects of climate change and of complying with the sustainable development goals makes it possible to link both objectives: to have greater transversal corridors and to apply more advanced sustainability criteria, which would enable them to be termed “green”.
Established operational and commercial practices, led by diverse visions and regulations, have created additional barriers to the territory’s integration. There is a lack of adequate dialogue, open data, and a common notion of territorial configuration that allows for optimising existing resources. Additionally, multiple corporate pressures (unions, companies, social forces, etc.) of different degrees and origins limit the possibilities of more efficient logistics and infrastructure management. However, in this kind of issue, the main obstacle is found in the little or no statesmanship and vision that some political leaders in the region suffer from.
In brief, some features of present-day logistics in Latin America are problematic for sustainability purposes. The following chart highlights the main obstacles:
| Institutional weaknesses and difficulties in the goals and functioning of public-private partnerships. | Multiple corporate pressures of different degrees and origins, restrict the possibilities of more efficient logistics and infrastructure management. |
| Not enough devices for sectoral dialogue, whether at the national, subnational, or regional levels, hinder the design and good use of potential or current corridors. | The data science-based analysis of available routes and the improvements that could be applied in transport routing also remarkably contribute to green corridors. |
| There is no common notion of territory design that allows for optimizing the use of existing resources and planning for future ones. | The lack of logistics platform planning makes the operation inefficient in both ecological and financial terms. |
| There are weak control structures in place, which causes an accelerated wear and tear on land transport infrastructure. | Regional rail connections are limited by infrastructure problems or legal divergences, coupled with policy instability, in some cases. |
| The use of “green” twin-trains is limited by insufficient infrastructure and regulatory discrepancies between countries. | The use of the fleet, due to contradictory regulations, is often inefficient due to the large number of empty returns. |
| The average age of the land fleet in several countries is very high, making surface transport highly polluting (but hybrid trucks, based on a mix of vegetable diesel, ethanol or electricity can help solve the problem). | There is a lack of basic infrastructure for the supply of greener energy, for instance, electric trucks require a charging network that currently does not exist. |
| Restrictive flag rules (cabotage) and other associated regulations. The potential for vehicle production with green technologies is real in certain countries in the region with extensive experience in the automotive industry. There are also contradictory policies in countries that both set “green” goals and are fossil fuel producers. | The vessel fleet currently used on regional legs is often made up of older ships that use fossil fuels. Bunkering is relative to that reality and requires investments. There are controversies nonetheless, due to discrepancies in subsidies to industries in foreign countries that manufacture within Latin America, which generates obstacles to competition. |
Green corridors in Latin America?
For the last 30 years, Latin America has developed projects under public-private partnerships. However, institutional weaknesses and policy instability limit their performance and expectations.
The previous scenario establishes “connectivity” as one of the main challenges in the region for sustained territory integration. The IIRSA initiative and its successors, since the beginning of the millennium, included several transversal South American corridors. Little progress was made before the initiatives took varying political directions and suffered organizational ups and downs that hindered the completion of the projects. Indeed, progress was made in connecting southern Peru to the Atlantic, as the most notable event, among others, but minimum to no progress in other planned corridors. Currently, the most valuable case is the transversal corridor that links southern Brazil, central Paraguay, northern Argentina, and Chile, which is being developed at an acceptable pace.
A green corridor is defined as a transport system interconnected by services and infrastructures with a focus on sustainability, connectivity, and resilience. The tools now available to improve logistics, such as digitalization, new fuel technologies, and infrastructures under the “Work with Nature” criteria, are part of the transformation to green corridors. It is also relevant to think out of the box and support the integration of new modes of transport, such as airships (Hybrid or Lighter-Than-Air vehicles, which bring a transport solution for isolated, large, and remote areas). Currently, there exists an airship project under assessment for the Amazonas.
For Latin America, boosting and outlining a green corridor with sustainability, connectivity, and resilience is the next step, but primarily, in a “transformation process,” the assessment of the system is the key. Kavita Sethi, 2023, developed a comprehensive assessment tool using key maturity indicators addressing the themes of sustainability, connectivity, and resilience. This tool focuses on identifying and assessing potential challenges, solutions, and investments that would support the Caribbean region in advancing its Blue Port status within the Blue Economy, with the possibility of it being replicated on different regions.
Following the design step, transformation must find the means to be sustained. A tool that integrates and propitiates dialogue between decision-making stakeholders -private and public- is to be set with continuous improvements and adaptation in the context of a dynamic transport sector. Application methodologies such as Lean would improve the “transformation to green corridors.”
Could the “green corridor transformation” fulfil the “wish list” of different stakeholders? The challenge would be to align the development of transport systems, focusing on an integration vision involving public and private stakeholders with global social, environmental, and economic perspectives.
In global supply chains, the logistics cost is the key element for shippers; it is determined by operational and commercial behaviour practices -private and public-, not exclusively by oil prices. What carriers mostly wish is to sustain a reliable logistics chain that will stand despite transport sector dynamics and external shocks; while they remain able to maximize haulage in both directions, have a large volume of cargo that demands the transport service, there are fewer vehicle accidents and fewer system disruptions, and has the potential to reach new technology investment opportunities.
This wish list is aligned with the transformation to a green corridor. One of the worries is the price of new alternatives, but the price is only one element, and the price could be half if the haulage is complete on both sides (balances of flows), the system is planned with a logistics platform that optimizes the service, or the system can adapt rapidly due to technology reducing impacts from disruptions. Henceforth, new technology brings an opportunity that, if accompanied by sustainability, connectivity, and resilience criteria, will present an opportunity for countries with scarce resources to generate livelihood improvements.
Some steps have been made, following some initiatives on course that promote a transformation towards green corridors:
- Infrastructure improvement with a resilient focus. For example, the “Canal del Dique” waterway, in Colombia, is designed for preventing floods and other environmental issues, as well as for navigation.
- New initiatives. New fluvial corridors may take advantage of the great inland water network in South America, such as the Hidrovia Paraguay Parana, Amazonas, Orinoco, Magdalena, etc. For example, the new Brazil-Uruguay waterway will integrate both countries through the navigation across the lagoons Merin and Los Patos.
- The transversal corridor from south Brazil to northern Chile, via central Paraguay and north of Argentina, has ample room to turn “green” if it can overcome certain challenges such as green fuel provision along the road.
- Regulation changes. Proposals for modifying and liberalising norms that regulate navigation, especially regarding the restrictive flag rules and other associated ones. Peru made the first step, but other countries are currently analysing similar alternatives.
- Sustainable mobility. Pilot projects for small electric vessels that allow people to move along rivers at the local level, which is a starting point for a future expansion of this type of vessel to the rest of the region are underway, led by the Universidad de Andes in Colombia.
- Fleet renewal. For example, there is a subsequent step in the fluvial corridor that connects Buenos Aires, Argentina, with Uruguay, in which an electric-powered ferry with a transport capacity of over 2,000 pax and vehicles will soon begin to be used.
- Port investment and equipment improvement. Many ports in the region are turning to electricity big equipment traditionally using fossil fuels. However, ports show little or no development in cold ironing.
- New fuels. Green hydrogen is a more advanced solution that, although requiring an infrastructure that is not currently existent, has the enormous advantage that Latin America is a highly conducive region for hydrogen production, which is also making progress in improving electric solutions. Green hydrogen technology is in its nascent stages of development and signals a big step forward in changing the type of energy used. The installation of hydrogen plants in ports is still under study in several countries. Although in many cases they are planned for export, it is feasible to make a more balanced use of them.
In summary, we may highlight some thoughts regarding the pros and cons as regards the future of green corridors in Latin America, with a sustainable, connectivity and resilient vision.
Connectivity is one of the main challenges in the region for sustained territory integration. Another relevant constraint is in the lack of a satisfactory logistics infrastructure, along with certain institutional weaknesses. For example, current governance lacks elements that allow for dialogues between the different decision-makers to align a regional configuration of the territory. Consequently, this scenario leads to less attraction of financing.
However, this region has a huge advantage to take into consideration towards the future: long distances and the availability of coastal waters and ports, as well as the extensive navigable river network of South America.
A long coastline also links the countries of Central America and Mexico, which promotes its usability for short-sea shipping, even though some attempts made to date have not been entirely successful.
As regards the Caribbean and its multitude of islands with less connectivity, new SSS alternatives are currently under study in the form of multipurpose ferries that require regulatory observation and public-private multinational partnerships to accumulate economies of scale and scope.
In addition, there is a focus on projects associated with the employment of sustainable energies, such as green hydrogen, which positions Latin America among the alternatives to locate its production and transport, in addition to its use as fuels. In this sense, it is worth noting the higher proportion that several countries in the region have in sustainable energy generation with respect to total electricity generation.
The agri-food and industrial production capacity, capable of veering more sharply towards “green”, which is of enormous interest in foreign markets, is a driving force in logistics towards increasingly sustainable services.
Electrification or the use of alternative, greener technologies is still nascent in Latin America, which is lagging behind other regions of the world. However, the industrial capacity for the assembly and production of vehicles in the region together with the presence of large international firms that are feasible to partner with Latin American companies, operates in a similar favourable direction to the previous one.
Efforts to improve the action of logistics in terms of sustainability, including the creation of national and international “green” corridors, also require an important reflection: it is a national effort, which can only be perfected in coordination and cooperation with other countries. This raises the urgent need to update and improve regulations (both national and international). Economic measures, such as technical and economic regulations (including tax instruments -such as a carbon tax and design of incentives), must be accompanied by industry and science efforts to identify “clean” technologies that are the most effective for achieving decarbonization.
Moreover, the international commitments assumed by governments of the region should operate proactively towards the sustainability of logistics and “green” corridors. This aspect is primarily related to the fulfilment of the SDGs but extends significantly as well to the decarbonisation commitments that the international community is currently outlining. In this sense, those that discuss the reduction goals in transport by 2030 as well as the goal of zero emissions by around 2050 are particularly relevant.
At the same time, the electrification of the last-mile fleet is a goal that many countries in the region can face more comfortably.
Finally, the creation and maintenance of green corridors in Latin America involves a profound cultural change, in the conception of public policies and in the participation of companies, workers and society. We are facing a profound change, in which traditional ways of doing business in the logistics and production sector require innovative approaches to policymaking. Once again, the need to take a comprehensive approach to the design and execution of policies is reaffirmed, since the condition of sustainability requires bringing together differential aspects such as the use of the territory, logistics, energy and communications.
In addition, the depth of the change has financial and fiscal implications, which usually do not take due account of sustainability objectives and the tools for action tend to remain in old schemes. However, the concept of green corridors optimises available resources, in some cases achieving comprehensive solutions with lower long-term investments and maintenance.
The cross-border part of the corridors requires countries to make modern commitments on the application of technology, on data protection (focusing on cybersecurity and cyber-immunity) and especially on collaboration and cooperation among government agencies and among countries. The engagement of civil society would be key in this regard since sustainability commitments go beyond the interests of both the logistics sector and the present generation.
[1] Co-director, Kühne Professorial Chair in Logistics, School of Management, Universidad de los Andes, Colombia
[2] Member of the Kühne Professorial Chair in Logistics, School of Management, Universidad de los Andes, Colombia
