The challenges of parcel delivery in Latin America can be potentially daunting to retailers looking to expand their reach internationally. However, with the right logistics partners by your side and some careful planning, expanding into emerging markets like Latin America can be quite lucrative.
Online sales to Latin America are anticipated to increase by 19% within the next 5 years, especially in Colombia and Argentina, two of the three fastest-growing e-commerce markets in the world. The future of Latin America’s international e-commerce is bright. However, before you jump into the region, it’s important to understand how shipping works to the region.
Key considerations for international businesses conducting cross-border transactions in the LatAm region
There are many considerations for international businesses who plan to sell and deliver their goods in the LatAm region. Navigating the complex regulations and customs framework is one of them.
Depending on the product and the LatAm country, the primary import duty can typically be anywhere from 10%-35%. An industrialized product tax is also added at the customs clearance. Finally, there is a third type of tax – merchandise and service circulation tax. It is imposed by the government, and it is typically included in the final price of the products paid by the customer. The tax typically hovers anywhere between 7%-18%.
Apart from the tax on international shipping, there are many other procedures that logistics companies have to follow.
For example, in Brazil, most of the companies have to go through the process called “Manifestação do Destinatário” (the Recipient Acknowledgement process). The process consists of four stages:
- Emission Acknowledgement,
- Operation Confirmation,
- Operation Registration Unfulfilled
- Operation Declined or Ignored stage.
The primary goal of “Manifestação do Destinatário” is to ensure that purchase orders and goods sent and received match. To be able to track the goods all the way from warehouse to their final destination, Brazil is enforcing The National System of Identification also known as Brazil-ID.
Requirements for worldwide shipping varies from entity to entity. In Argentina, for example, a logistics company has to provide a Remito (shipping and fiscal document) to the local provincial government of each Argentinian province that the shipment travels through. Suppliers in Chile have to either provide the invoice that the goods will be traveling with, or have a signed in real time electronic bill of lading called Guia de Despacho.
For years international shipping and logistics issues have been the main obstacles for cross-border trade in Latin America. To find growth and to catch up with the fast-growing e-commerce market, local logistics in the LatAm region have to redefine themselves. And that’s exactly what is happening in the region now.
With more and more overseas titans like Walmart, DHL and Amazon building their facilities in Latin America and smaller logistics companies bringing down costs of shipments and accelerating deliveries, local logistics is poised to grow.
Companies that ship internationally
Partnering with the right exporters is key. When international markets can be complex and difficult to understand, logistics partners like EMS, USPS, AIRMAIL, FEDEX, UPS and DHL help exporters to get the best international shipping rates, along with more control over international shipment tracking.
When considering international shipping companies to work with, you can work with a whole host of options. With state run carriers you have reliability and standardized delivery.
However, with international players like FEDEX, UPS, and DHL you have more power, when it comes to communication and tracking. Depending on your international shipping needs, you can go with a partner that has exactly what you’re looking for.
For customers wanting to opt for faster delivery services and innovative customer solutions, FedEx is the leading player with its core services like:
- International Priority: 1 to 3 business days, with delivery by 10:30 a.m. or 12:00 noon;
- International Economy: 2 to 5 business days, delivery by the end of day;
- International MailService: 4 to 7 days (premium), or 7 to 11 days (standard);
- International Ground: 2 to 7 business days
Shipping prices range differently for package size, and distance travelled. It can go from about 6% of total cost of goods to almost 15% if you’re going for an international carrier.
While there are many companies offering different packaging and shipping costs, it is important to analyze all the costs involved. As an example, if we ship a 1lb package with the dimensions of 5 inches x 5 inches x 5 inches, there are multiple companies that can offer some competitive prices on shipping. The cheapest among them that ship from NYC to São Paulo Brazil are USA Address that charge $40. DHL and FedEx, on the other hand, cost considerably higher but provide more security for packages being delivered to Latin American countries.
Biggest logistic challenges that Latin America faces
When it comes to delivering the package in Latin America’s urban logistics, the last-mile delivery often takes up the most significant part of the shipping cost — locating an address on an unnamed street, reaching difficult to access rural areas and sitting in traffic does not come cheap to local logistic companies. To deliver the packages to those places more efficiently, big logistic companies often rely on smaller local logistic startups like Brazilian CargoX, or Mexican Rappi and Chazki.