Trade between the United States and the seven nations of Central America is showing a slight uptick coinciding with the fourth anniversary of the Central American Free Trade Agreement (CAFTA). While CAFTA has helped foster trade to a limited extent between the United States and its neighbors to the south, the recent improvement in the American economy has played a far more important role in generating.
Both northbound and southbound traffic.
These are the conclusions of Mat Silver, Director of the Latin American Trade Division of DGX-Dependable Global Express, with active cargo operations in Central an South America. DGX, based in Rancho Dominguez, CA., is an international freight fortwarder with air and sea capabilities.
Silver notes that while trade with the seven nations of Central America is small compared to traffic between the U.S. and South America, “it is not insignificant. Trade volume is about $25 billion annually and growing,” he said. “Central America traditionally has been an excellent trading partner with the U.S.,” Silver added.
The DGX executive reports that while the region’s exports remain overwhelmingly agricultural, all of the Central American governments, whatever their political views, are making a concerted effort to attract primarily light, non-pollutant industries to their countries. “Factories making paint, inexpensive apparel, detergents, tires. paper, fertilizer and insecticides have been established in urban areas. While current volume is not huge, shipments of locally produced industrial goods are flowing northward in increasing volume,” said Silver. “DGX is sharing in this growth with the sending of raw material exports to support the increased manufacturing capabilities of Central America. Holding back greater growth in trade, however, between the U.S. and Central America is the endemic poverty existing among the seven nations down there. Countries comprising Central America total some 34 million people,” he continued. “Its population is about the same as California’s with income per capita no more than 1/10th of the Golden State.”
U.S.-Central American trade can be successful despite its small size
For those who are experienced and knowledgeable in Latin American traffic. Mat Silver and his associate, Antonio Bellido, with their specialized background in Central & South American sea and air freight, were brought into DGX in 2009 by President Brad Dechter, to strengthen its Latin American operations.
Most of the growth generated by Central American trade is by sea, with air freight volume generally flat. Costa Rica’s largest port, Limon, and an outlet for many of Central America’s exports, has become quite actived uring the past few months as the U.S. economy improves. Because Central America is a relatively small market for passenger traffic, air cargo lift is limited serving the nations of Honduras, El Salvador, Nicaragua, Belize, Guatemala and Costa Rica. Panama, which is not a signatory to CAFTA, is somewhat of a special case because of the Canal. “A great deal of cargo traffic is generated by parts and equipment needed for cargo and cruise vessels transiting the Canal,” he averred. “Panama also has a great deal of freight that is transshipped from Europe, Asia, South America and the U.S. for other destinations in the Caribbean and northern South America,” he added.
The Latin American trade expert noted that air freight traffic is hindered by “the lack of lift to and from Central America. All of the passenger flights are narrow bodied with limited belly capacity. There is a number of all-freighters serving Central America including flights to Guatemala via Mexicana Airlines,” Silver commented. “However, there often is more cargo stowed in the passenger bins of the aircraft than in the cargo holds. People from Central America returning from the U.S. bring back enormous amounts of consumer goods ranging from toothpaste to TV sets.”
While CAFTA seems to be generating more attention in political circles than on the loading d