Latin America has long been a reliable source of trade for the U.S. and as the North America Free Trade Agreement (NAFTA) celebrates its 20th year and the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) enters year ten, companies are seeing a continuance and perhaps even surge of support for the region which offers beneficial near sourcing opportunities to the U.S. As the Wal-Mart business model and a year-round produce season has grown to dominate consumer expectations, it has become essential to have weekly restocking cycles and easy, quick, access to fresh produce, the latest goods and seasonal merchandise.   As the world has relied on China and the Far East for reduced cost merchandise and for the globalization of their supply chain, issues have continued to arise surrounding the ability of getting goods to market quickly without incurring additional transportation costs.  In addition to faster transit times and lower transportation costs, Latin America is also offering more competitive labor rates as China’s rates are on the rise, a similar time zone, and a regionally standardized language are also making the region attractive. Caribbean Kick Start The Caribbean nations are a logical solution for near sourcing. For example, the Dominican Republic has a nascent footwear and textile industry with tremendous potential as the alternative to China, Vietnam or Indonesia that currently supply a vast majority of the US footwear and apparel. Although near-sourcing in the Caribbean is becoming a hot topic at industry meetings, the concept has been around for quite awhile. Caribbean Basin Initiative (CBI) was originally launched in 1983 and was substantially expanded in 2000 through the US-Caribbean Basin Trade Partnership Act (CBTPA). The CBI currently provides beneficiary countries with duty free access to the US market for most goods.  In particular, the CBTPA extended preferential tariff treatment to textile and apparel products assembled from U.S. fabrics that were previously excluded from the program. The goal of the program was to promote U.S. exports of cotton and yarn and U.S. investment in the region, thereby improving the global competitive position of the U.S. textile industry vis a vis China and the Far East. The CBTPA was also intended to encourage the diversification of CBI countries’ economies, which are heavily dependent on the service sector (it’s estimated that the Caribbean economies are 70% in the service sector).  Central America  Additionally, infrastructure improvements are being made in many Latin American countries like Mexico, Colombia and Brazil which make it more viable for shipping companies in turn to invest their assets – build it and they will come. As a living example, according to the AAPA (American Association of Port Authorities), Brazil expects tonnage at its coastal ports to more than double to 1.7-billion tons by 2022 and has committed $17-billion for port improvements.   The ITA (US International Trade Administration) calculates that there are 40-million potential buyers in Central America and 50% of the region’s imports come from the US. Mexico ranks third in terms of exports and second in terms of imports with the US moving over 105-million metric tons in the waterborne trade in 2012.  Mexico is followed by Venezuela in fifth, Brazil in sixth and Colombia in eighth position.  Steve Flowers, President of Global Freight Forwarding for UPS, has spent much of his career watching the shipping giant build and perfect its infrastructure throughout Latin America in support of its US customers.    “UPS has been bullish in the market since we started operations in the 1980s,” said Flowers.  “Mexico is definitely a large market for us as is Brazil, Argentina, Chile, Colombia and countries throughout Central America.” When asked what he would attribute the resurgence of nearshoring in Latin America to, Flowers drew a direct correlation to the rising price of oil and to a balancing of labor rates between Mexico and China.   “In order I would say labor, fuel, transportation costs and natural disaster,” said Flowers.  He also mentioned that US retailers and manufacturers look closer to home for sourcing in order to have better control of goods closer to the marketplace.   To foster this again growing market, UPS has put several new programs in place to position themselves as a complete supply chain provider.  In addition to their traditional small parcel service which almost everyone, everywhere recognizes, the company is well positioned to handle LCL and FCL cargo with numerous full service distribution centers, complete intermodal transportation options both within country and between the U.S. and Latin America and one of the top ranked air cargo services in the world – all of this is in addition to traditional ocean transportation, brokerage – perhaps the largest in the world, specialized perishables handling and the list continues. The company is so confident in its position in Latin America that it even offers a unique program to some of its customers through its capital division in which the company will finance equipment and offer insurance services for customers wanting to start or expand operations.  A recent example is the company’s financing of printing press equipment for a customer in Mexico.   The company also offers what it calls CrossBorder Connect - a fast (even 40% faster than air), reliable and economical alternative to conventional ground or air freight.  This as Flowers explained, is of interest to the auto industry among others as it bundles the necessary transportation components north and south of the U.S.-Mexico border with UPS’ brokerage capabilities and allows for faster cross border trade.  CrossBorder Connect also streamlines pricing, gives the customer a single point of contact and full visibility throughout the shipment’s journey.   Likewise, CaroTrans International is expanding its position in the region in which CEO Greg Howard says the company “has historically had as part of its DNA.” In fact, Howard explains that the company has been in the Latin America region for 35-years but has seen expansive growth in the last five to six years.  His explanation for greater nearshoring includes many of those explained by Flowers but also includes a more personal side to the trade. “In Latin America, large communities have immigrated to the U.S.,” explained Howard.  “Trade has increased in part with the region because people have maintained commercial and personal ties.  A similar time zone also allows for better trade and commerce.  It allows for live, real time.” To cut transit times even further for some of its customers, as well as reduce handling and costs, CaroTrans launched a new weekly, direct, all-water LCL service from the U.S. West Coast to all points in Central America including Belize, Costa Rica, Guatemala, Honduras, Nicaragua, El Salvador and Panama.  This comprehensive distribution network delivers full coverage of Central American locations via secure, bonded, on-forwarding.  CaroTrans sees a range of goods moving northbound and southbound as part of its total NVOCC services.  Anything from raw materials, finished products, high value luxury items, oil and gas, food products, fitness products, perishables like tomatoes and cheese, agricultural harvesting equipment and much more are transiting the supply chain but Howard explains that at this point they are seeing more southbound moves than northbound especially in Brazil where “the appetite for American goods is growing.” CaroTrans has an established U.S. infrastructure including 24 local container freight stations (CFS) to provide ease and convenience for customers on the U.S. side.  On the west coast these include centers in Seattle, Portland and San Francisco all in support of its new West Coast service offering.   “We are a decentralized business,” said Howard.  “Our goal is to get the most direct route from origin to destination for our customers.”  It is undeniable that Latin America continues to be a valid source of trade for the U.S. and regardless of the many reasons why, there seems to be resurgence in sourcing closer to home.  The facts remain that the area is consistently growing and so are those carriers and supply chain providers that covet it.