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The countries of the isthmus aim to collaborate to develop a world-class logistics hub of the Americas to increase its foreign trade with the United States and among themselves.
Trade between Central America and the United States currently amounts to approximately US $4.5 billion annually. This figure represents 4% of the region’s total GDP.
The country that is most active in moving goods to North America is Honduras. The Caribbean Port of Cortés is perhaps the most important one. Other vital ports on the isthmus that make Central America a natural logistics hub include the ports of Acajutla and La Union in El Salvador and The ports of Moin and Limón in Costa Rica.
Mariano Turnes, general director of the Operadora Portuaria Centroamericana (OPC), recently stated that “We are optimistic and believe that the plans for Central America to be a major logistics hub of the Americas do not depend on the region’s governments. “
Central America is home to almost 43 million inhabitants (0.6% of the world population), and 0.25% of the world GDP is generated among its nations. The United States is the primary recipient of agricultural, textile, and manufactured products from Central America, receiving 32% of exported items. This figure is from data compiled by the World Bank.
In a recent interview, Leo Castellón, general director of the National Port Company (ENP) of Honduras, declared that “The regional growth that is expected in the coming years will consist of a greater volume of cargo in Central American ports.”
The five main final destinations for Central American merchandise are the United States (48.5% of exports), the European Union (23.3%), Mexico (3.8%), the Dominican Republic (2.8%), and Canada (2.3%). These figures are from estimates provided by the Secretariat of Central American Economic Integration (Sieca).
In general, the region’s foreign trade presents many opportunities for entrepreneurs to make Central America the logistics hub of the Americas. Among the top products exported from Central America are coffee (16.6%); bananas and plantains (12.1%); medical, surgical, dental, and veterinary instruments (9.1%); sugar (8.3%), and dates, figs, pineapples, avocados, guavas, mangoes (4.9%).
Operadora Portuaria Centroamericana (OPC) is an administrative advisory company that provides cargo loading services at the docks. “We are making investments, improving processes, and training personnel so that ours (Puerto Cortés) is the most competitive port in Central America,” says Mariano Turnes.
OPC obtained the tender to operate Puerto Cortés in 2013. It is a public-private partnership that moves over 350,000 containers per year. Between 60 and 70% of its volume goes directly to the United States.
The capital investment that has been committed for the coming ten years is $ 624 million. In 2017 and 2018, OPC built a new terminal and developed a pier of 350 meters in length. This is in addition to the existing 800 meters. In other words, large vessels are now able to operate freely. In addition to this, port infrastructure has experienced an increase from five to seven cranes.
Also, in 2017, ENP built a new liquids terminal in Puerto Cortés with a total investment of US $14 million. This included a dock and dredging (cleaning of rocks and sediments in waterways) of the entire area so that large draft ships could dock.
Clear horizon as a logistics hub of the Americas
Free access for agricultural products, the consolidation of the benefits of ports located in the Caribbean Basin and the Atlantic, the advantage of free trade zones, and, above all, the opening of borders to the movement of a variety of goods are factors that further drive trade between Central America and the United States.
In addition to the above, one of the most critical markets for Central American nations is the region itself, with 26.2% of exports. The strength of this regional integration has resulted in Central America ranking fourth among trading blocs. Central America holds a position above Mercosur and the Andean Community of Nations (CAN). This is determined in terms of an intra-regional share of exports.
“Within that geographic location that Central America occupies, the objective of Honduras and the other nations of the region is to be a leading logistics hub of the Americas. Furthermore, the airports that are in both the concession and operational stages, as well as the further construction of roads, consolidate the logistics environment,” asserts Leo Castellón.
Another opportunity for the region is the development of an agricultural corridor that will connect the Pacific (San Lorenzo) with Puerto Castilla (Atlantic) in the extreme East of Honduras., and, finally, there is the tourist channel that connects Puerto Castilla with Puerto Cortés.
“All these corridors form a logistics triangle that provides connectivity and puts us at a competitive advantage as a country that is developing infrastructure and looking towards becoming a logistics hub of the Americas that includes a consolidated regional cargo area,” says Castellón.
The recent access gained by the countries that negotiated the Comprehensive and Progressive Agreement for Trans-Pacific Partnership could result in a marked increase in Central America’s trade. The nations that are signatories to this accord make up 38% of world GDP and offer inroads to make sales to a market of 800 million inhabitants. Additionally, this group of countries accounts for 28% of global foreign investment and 25% of world trade. Increasing trade with this bloc would further secure the region’s position as a logistics hub of the Americas.
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