With a relatively small internal market, Uruguay has set its stall out to become a gateway to the whole of South America, writes Neil Madden.
Sandwiched between Brazil and Argentina, Uruguay has introduced an attractive tax, legal and administrative framework to transform the country into a competitive point of entry for global shippers.
The results have been impressive. Montevideo (MVD) Free Airport (pictured) saw its pharma cargo in transit to other markets in the region like Brazil and Argentina grow 462 per cent last year compared with 2016 as a result of initiatives developed since mid-2015.
“We inaugurated phase 1 of our pharma hub with new cold chain facilities, our information systems were improved for better traceability, and we developed a new commercial approach to global players,” MVD Free Airport senior manager, global accounts, Hans Guiscardo tells Air Cargo Week.
Global pharma and high-tech businesses have already located distribution centres near the airport, displaying trust in the early stages of its development, Guiscardo continues.
“We are seeing strong interest in pharma, which is the vertical that we’ve approached more proactively,” he says. “Better traceability, temperature controls, state of the art infrastructure, GDP certification and easy access to large neighbouring markets are the main drivers behind the interest, given that these are widespread challenges faced by much of the industry.”
Global pharma players are currently distributing to larger markets across South America via MVD, including cargo that is not typically airfreight.
“Our multimodal capabilities help to adapt the solution to any distribution need, no matter whether the cargo arrives or leaves by sea, land or air,” adds Guiscardo.
“In addition, some pharma companies are starting to centralise purchase orders at MVD, allowing for smarter stock management and just-in-time replenishment based on having safety stocks for the region at the airport. The model definitely fits pharma supply chain management from a logistics as well as a quality assurance perspective.”
MVD is part of Argentinian company Corporacion America, which operates more than 50 airports and cargo terminals in Latin America and Europe. This network opens opportunities to explore tailored solutions for customers’ supply chains.
Currently, the MVD team is working on the creation of a freighter route to the Brazilian capital Brasilia. “We are always looking for synergies in order to find solutions to specific needs,” Guiscardo says. “This is something that clients value.”
Brazil, despite an economic slowdown in the past few years, is still a powerhouse in terms of potential growth. And the new government in Argentina has started reopening the country’s economy to the world, becoming an attractive market in itself. Together both markets serve over 200 million people.
But smaller markets like Colombia, Chile, Peru, Paraguay and Bolivia are also supplied from a distribution centre in Uruguay benefitting not just logistically, but also in terms of taxes and transfer prices management.
Having completed phase 1 of its pharma hub project, MVD expects this to operate at near full capacity during the peak season.
“We hope to start working on phase 2 very soon, and in parallel, we are working on some projects with strategic clients that have demanding requirements for pharmaceutical warehouses adapted for primary and secondary packaging activities,” adds Guiscardo.
“We have a developable area of more than 80,000 square metres inside the airport premises, just three minutes from the runway, so the potential is there.”
The biggest challenge for the air cargo industry is to work on reliability and traceability, Guiscardo says, so that forwarders and shippers can be sure that their cargo is always under control, being handled on certified and validated infrastructure, under adequate operational standards and according to their expected service level agreements, and, of course, cost-effectively.
While Latin America has considerably raised its levels of professionalism there is still work to do in terms of providing homogeneity, comments Guiscardo.
There are different regulations, cultures, human capital issues, costs, infrastructure, and information systems, all of which generate a highly complex scenario that is difficult to grasp for companies with distribution needs in the region.
He says it is important for global players to source and identify key partners that can help with region-specific know-how and integrated solutions.
“Handling variability in a ‘last mile environment’ is much easier with a local player with stakes across the region than doing so for a number of long hauls managed from a different time zone,” he comments.
“At MVD Free Airport we have addressed these complexities and set up specific plans to turn these challenges into new business opportunities.”