Central America: Disruption of the Logistics Chain

Although the region's markets are not yet facing a scenario of shortage of raw materials or products, the restrictions imposed on freight transport are destroying the regional logistics chain.

Friday, May 29, 2020

Given this scenario of health crisis, the free transit of goods in Central America has been interrupted in recent weeks. The difficulties began when Costa Rica, arguing that it was trying to mitigate the outbreak of covid-19, unilaterally decided that from May 18 only carriers would enter Costa Rican territory that made direct transit from border to border, whose units would have to be subject to police surveillance.

See the "System for Monitoring Markets and the Economic Situation in Central American Countries", prepared by CentralAmericaData.

The Honduran government has decreed that Costa Rican pilots who drive heavy transport units will only be able to stay in the country for 72 hours.

Panama was another country to react. In this case, the National Customs Authority Executed Resolution No. 136 dated May 25, 2020, which establishes temporary reciprocal measures for Costa Rican land cargo carriers. The resolution decrees that heavy transport vehicles from the neighboring country will only be allowed to remain in Panamanian territory for up to 72 hours.

The situation has become even more complicated after the Nicaraguan government ordered weeks ago the closure of the Penas Blancas border post. This was in response to Costa Rica's restrictions.

As a result of the closure implemented by Nicaragua, the cargo was stranded since May 18, which prompted the authorities in Guatemala and El Salvador to authorize the trucks to return to their respective countries and to cancel the export documents.

Mario Montero, executive vice-president of the Costa Rican Food Industry Chamber (Cacia), told Nacion.com that they are facing "... a disruption of the logistics chain, which is expected to be temporary. Logically, if the problem continues for a long time, the shortage may start to be felt, especially of packaging materials, and some products would have to be stopped in the distribution chain."

Montero added that "... companies affiliated to Cacia said that some lines that are not for daily and permanent consumption could be taken out of production."

To overcome the difficulties, it was announced that the Council of Ministers of Economic Integration (Comieco) and the Council of Ministers of Health (Comisca) approved the "Biosafety Guidelines for Land Transport in Central America", however, this would come into effect until June 7.

See the article from Nacion.com "Governments of Guatemala and El Salvador authorize return of goods stranded in Nicaragua" and from Prensalibre.com "Coronavirus: Central America approves new biosecurity measures for transport crisis" (both in Spanish).

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Freight Transport at Borders: Endless Problem

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After the difficulties generated by the restrictions imposed by Costa Rica on the entry of cargo from neighboring countries were overcome, the Costa Rican pilots denounce that the authorities of the region, far from applying reciprocal measures, have established "repressive measures."

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Cargo Transport: Requirements to Enter Costa Rica

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Given the conflict resulting from the restrictions on the time that cargo transport units can remain in the countries of the region due to the health crisis, the deadlines for carrying out the procedures were modified.

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