The Inter-American Development Bank (IDB) published a review of the deficiencies that exist in the logistics process in Latin America for the cross-border e-commerce, and concludes with recommendations for improve delivery times and costs, to boost this exchange and facilitate the creation of a regional electronic market.
The report entitled “Removing barriers to digital trade: logistics challenges” finds that the main bottleneck are identified in going through customs (export and internalization) and in the last Mille (the transportation of the package from the last point in the distribution network to the final destination). He emphasizes that the former delays delivery by ten days on average, while the latter (although not exclusive to cross-border trade) has a significant impact on both time and cost.
For this reason, the analysis indicates that in order to promote electronic commerce between countries, it is necessary Changes in import processes that allow merchandise to cross borders more quickly. This implies improving customs infrastructure, reducing requirements and simplifying processes. It is also essential to facilitate access to information (market, agents, regulation, requirements, restrictions, etc.) to enter into this activity; the existing information “is scarce and heterogeneous,” which adds enormous uncertainty to the process, says the IDB.
Recommendations are grouped into three categoriesOn the one hand, there are the actions in which International organizations can play a leadership role, mainly in generating and systematizing information relevant to participants. Also, recommendations are made that necessarily require the cooperation between countries (bilateral or multilateral) to harmonize the processes of entry and exit of the merchandise, as well as to promote the implementation of an efficient reverse logistics process. Finally, actions are suggested whose implementation depends solely on each of the countries of the region, with the aim of modernizing customs infrastructure, rethinking the role of postal companies and promoting the growth of local delivery platforms.
The report encourages harnessing the potential of e-commerce and remove “barriers that continue to function as a straitjacket.” Many of them are structural (GDP, demographics, transport and communications infrastructure), others are the result of inadequate regulations (obsolete, protectionist or designed to achieve other objectives), others are linked to the appropriation of new technologies (use of the Internet and payment methods) and others are the result of deficiencies in logistics networks, the report details.
The IDB maintains that cross-border e-commerce significantly increases opportunities to make transactions beneficial for both buyers and sellers. For consumers, the number of options in terms of quantity, quality and price increases. For sellers, it allows exporting companies, even small ones, to access a significantly larger potential market and join global value chains (GVCs).
It is worth noting that the main difference between domestic and cross-border e-commerce is the need for goods to cross borders, which implies having more sophisticated logistics networks that include a greater number of actors.
Advantages for Latin America
The publication highlights the importance of e-commerce in all the world's economies. In Latin America, it has been growing at an annual rate of 14,9% since 2014; since 2020, as a result of the COVID-19 pandemic, substantially higher growth has been observed. However, says the IDB, the share of this type of trade in the regional GDP is one of the lowest globally, reaching just 0,77%, compared to 3,11% worldwide.
However, three countries (Argentina, Brazil and Mexico) account for more than 70% of the region's e-commerce. The IDB clarifies that while most of this trade corresponds to flows traded within a country, Cross-border sales in 2021 should reach around 37% of the total, equivalent to approximately 78 billion dollars, which implies a sustained growth rate of 42% for five years.
The publication highlights that two of those countries are among the ten whose e-commerce had one of the largest growth rates worldwide in 2018. Argentina ranked 10th among countries with the highest growth in e-commerce, and Mexico ranked 2nd, just behind Indonesia. Colombia is also on this list, with a growth of 45%, placing it in fourth position.
It also identifies that E-commerce makes it possible to increase the number of countries with which a business relationship is establishedIn this regard, ECLAC reports that in the region, 49% of companies that sell online have relations with three or more countries; in contrast, only 12% of companies that do not sell online have ties with more than three countries.
For this reason, the report considers that Latin America may gain from larger-scale incorporation into cross-border e-commercelarvae, nymphs, and adults, so It is necessary to recommend eight policies to eliminate the barriers that countries may face so that a greater proportion of companies participate in national, regional and international recovery efforts via this form of electronic commerce.
The Inter-American Development Bank carried out this work based mainly on the study of previous publications, on the detailed analysis of the issues, on the search and examination of information from secondary sources and on interviews with people with extensive or specific knowledge of the subject.Removing barriers to digital trade: logistics challenges)
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