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UPS Study: Latin American Shippers Seek Greater Logistical, Online Services

A new study of the Latin American market reveals that several areas of improvement are needed for exporters and importers to strengthen their business opportunities and drive cross-border transactions.

The 2018 UPS Business Monitor Export Index Latin America (BMEI) report released Monday provides insights and trends into the import and export behavior of small and medium enterprises (SMEs), a segment that generates 60 percent of employment in Latin America. The study, conducted in conjunction with the RGX Global Export Network, surveyed 2,082 SME exporters and importers in 11 Latin American countries and the United States from the industrial manufacturing, automotive and high-tech industries.

Ingrid Ritter, marketing director for the Americas Region at UPS, said, “As Latin America experiences a greater export and import growth among SMEs, we want to equip this sector with a deeper understanding of cross-border transactions to help them design a strategy that bridges gaps between exporters and importers.”

In addition, in-depth interviews were conducted with 16 government agency officials and industry leaders from private entities with expertise in foreign trade and e-commerce. The study revealed strategic insight into four areas of improvement for exporters and importers—logistics, online, payment and supplier relationships.

Exporters in the BMEI 2018 were asked to assess their competitive advantages, leaving aside price and product quality. They named shipping and logistics services as their main competitive advantage, with 26 percent choosing this response.

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The study also connected the effect of shipping and logistics services with online sales. Among exporters who said their online sales had increased, 41 percent cited shipping and logistics services offered to their clients as the top competitive advantage.

Meanwhile, a disparity between importers and exporters was present in the survey, with 73 percent of importers in Latin America saying they were making online purchases, but just 56 percent of exporters in the region noting they sold their products online. Seventy percent of all Latin American importers cited making purchases online through their suppliers’ websites.

Importers cited insufficient or incomplete product information, such as product description, photos and tech specs available on the supplier’s websites or third-party online marketplaces, as their biggest obstacle in making online transactions. The use of online channels for B-to-B transactions still lags behind traditional channels such as telephone, face to face and fax, respondents said, although importers showed a greater tendency than exporters to use online channels for such transactions.

In the increasingly critical area of digital payments, nearly four times as many U.S.-based exporters indicated a higher acceptance of credit cards and PayPal than their counterparts in Latin America, but penetration levels of digital payment methods overall remain low, even in the U.S.

Importing and exporting SMEs were fairly in accord when it came to identifying the main pain points in the supplier-buyer relationship. They agreed that the most critical aspects of cross-border transactions were shipping and logistics solutions, flexible payment terms and post-sales customer service.

A significant 88 percent of importers said they would consider switching suppliers if they were offered better terms and conditions. A smaller group cited “good price-quality ratio of supplier’s products” (44 percent) and “long-standing supplier-buyer relationship” (35 percent) as the two main reasons why they would not switch suppliers.

The BMEI study was conducted in 11 South American and Central American countries—Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Guatemala, Mexico, Nicaragua, Panama and Peru—and the United States. The selected exporters and importers had to have performed at least five import or export transactions in the 12 months.