Transportation and logistics: finding efficient solutions to today's challenges.

By any measure, companies doing business in Latin America face a multitude of transportation and logistics challenges, from security issues and documentation and tariff requirements to a regional lack of highways due to difficult terrain.

While many Latin American governments have privatized their airports and seaports, or invested in more modern infrastructure, overall transportation costs remain relatively high compared to North America and Europe.

In recent years, Latin American ports, especially those on the Pacific coast, have been faced with the need to upgrade their infrastructure to handle the steadily increasing outbound flow of commodity shipments to Asia, as well as inbound shipments of industrial and consumer goods.

And this fall, sharply rising fuel costs are affecting shippers who rely on airfreight and ocean cargo services. And Hurricane Katrina's devastating impact on New Orleans and other ports has disrupted normal transportation patterns in the Gulf of Mexico.

In such a challenging market, logistics experts say it is increasingly important for Latin American manufacturers, distributors and retailers to focus on efficiency in seeking out solutions that meet their specific transportation requirements. In many cases this means carefully selecting the most appropriate ocean or air carrier, or working closely with a third-party logistics provider (3PL) to manage the entire process.

With either approach, investing in transportation, logistics and distribution solutions can lead to positive financial returns, according to the Latin America Logistics Center (LALC), a private regional center for research and education. LALC studies have shown a clear correlation between the advancement of logistic practices and processes and economic competitiveness.

By applying sophisticated logistics tools and utilizing the services of efficient carriers, Latin American companies can accelerate the flows of raw materials, assembly operations and the delivery of finished products. This process can reduce operating costs, improve customer service and provide significant competitive advantages in the marketplace.

To take just one cost-saving example, an efficient supply chain management (SCM) solution allows a manufacturer to reduce material inventory levels, and consider implementing a just-in-time (JIT) assembly process. UPS, for instance, offers a "synchronized commerce" program designed to assure on-time deliveries.

On the customer service side, an online or catalog retailer who can fulfill orders more quickly and reliably than the competition can expect to gain market share. With the region's overall political and economic stability, growth is occurring in the middle- and upper-class consumer markets, creating a host of new opportunities.

Rapid transportation solutions are also vital for sending apparel and textiles, coffee, flowers and other perishables to North American and European destinations. That flow of goods is expected to increase due to regional trade pacts, such as the recent U.S. passage of the CAFTA-DR agreement with Central American and the Dominican Republic.

Latin America is also an increasingly important location on the global shipping map. Ocean transport companies like Hamburg SLid offer quick transit times and frequent sailings from major Latin ports to destinations around the world. For shippers with heavy industrial or construction cargos, companies like Intermarine will arrange specialized ocean transport.

Throughout the region, multinational and regional companies that have deployed sophisticated logistics systems are able to seek out new market opportunities, such as catering to retailers or manufacturers in smaller Latin American cities.

Today, logistics is more important than ever for Latin American companies of all sizes. Training key personnel, using benchmarking tools to measure performance and investing in state-of-the-art solutions are fundamental steps for assuring competitiveness in a global marketplace.

UPS--TRANSPORTATION AND LOGISTICS SOLUTIONS FOR INCREASED PRODUCTIVITY AND EFFICIENCY

UPS is the world's largest package delivery company, leading the transformation from supply chain management to "synchronized commerce". In Latin America, UPS is the largest air express and cargo carrier, offering more guaranteed services to and from the United States than any other provider in the industry. If ratified, the FTAA would be the world's largest free market, with a combined GDP of nearly US$13 trillion in 34 countries, and nearly 800 million consumers from Alaska to Tierra del Fuego, the tip of South America. We strongly believe in the region's potential for doing business worldwide, and that is why we have invested over $300 million in the Americas to develop new technologies to provide top quality, reliable service and best time-in-transit with a wide-range service portfolio that includes express transportation, cargo and supply chain logistics.

We currently have 27 jet aircraft servicing the region via and through Miami, with 10 of them being dedicated UPS aircraft and 17 charter aircraft. We have also added 11 new logistics centers in Argentina, Brazil, Chile, Puerto Rico, Venezuela, Ecuador, Mexico (Mexico City, Monterrey and Guadalajara), Costa Rica and the Virgin Islands, bringing the total to 335 for the region.

Recent technology highlights include the introduction in May 2005 of two web-based applications, UPS Quantum ViewSM Manage and UPS TradeAbilityTM to our customers in Latin America. These two new trade management tools will help users better manage their customs clearance process and simplify the monitoring of package movements worldwide.

Whether an individual consumer, a multinational corporation or a home-based business, UPS offers customers in the Americas the most comprehensive range of services in the industry.

HAMBURG SUD 

Despite such continuing challenges as port congestion and labor actions, Hamburg Sud and our Brazilian-flag subsidiary Alianca, are setting the standard for schedule reliability on our East Coast Inter-America rotation. Linking Venezuela, Brazil and Argentina with East Coast North America, our stand-alone fleet of identically designed Cap San-series containerships (3,800 TEU), launched in 2001, provides customers with the size and the speed to achieve outstanding schedule integrity. Alianca cabotage services extend our services to additional Mercosur-region ports.

Hamburg Sud Latin American services also link: North and East Coast South America and Mexico with the U.S. Gulf; Western South America with West Coast North America and Asia; and Asia with East Coast South America, via South Africa.

We began South American service well over a century ago. Today we maintain offices throughout Latin America, linked by our global information technology network. Our volume has enbled us to negotiate berthing guarantees at key ports as a further hedge against potential delays.

This year, Hamburg SLid set new records with the introduction of six new, identically designed Monte-class containerships, custom-built for the trade between East Coast South America and Europe. They are the largest (5,500 TEU) and fastest (23.3 knots) ever on this route and have the world's largest boxship reefer capacity (1,365 reefer plugs).

As part of Germany's highly diversified Oetker Group, we have the size, the experience, and the resources to weather the economic cycles of our industry, and continually invest in the vessels, equipment, information systems, and on-site experienced staff vital to our success ... and to yours.

INTERMARINE--PEOPLE WHO MAKE CARGO MOVE

Since its founding in 1990, Intermarine has provided customized ocean transport for heavy industry construction projects, power generation plants, oil field and mining developments, and other cargoes needing specialized transport, including those requiring U.S. flagged vessels. What further distinguishes the company is its skilled professional team, which arranges door-to-door transport service for entire projects, including super heavy-lifts, oversized modules and all accessories.

Intermarine's scope includes the inland and coastal shipments of virtually any size piece with services tailored to customers' needs. Intermarine is also one of the largest charterers of heavy lift and multipurpose vessels for customized service.

Intermarine operates one of the most modern fleets of multipurpose vessels, including seven 8,000 DWT "Century" Class vessels with 2 x 200 metric ton cranes combinable for 400-ton lifts. With their extended crane reach, box holds and open hatch design, all cargo is drop-stowed directly into place--maximizing efficiency and minimizing damage potential.

In third quarter 2006, the company will begin taking delivery of four new vessels with 2 x 250 ton cranes to accommodate the increasing weights of industrial plant components. "We have found this versatile, midsized project/heavy-lift cargo ship to be ideal for customized voyage construction," said Roger Kavanagh, president.

Today, Intermarine sails more than 250 voyages each year, with each voyage uniquely constructed to handle specific cargoes. Intermarine offers weekly services between the U.S. Gulf and the North Coast of South America and Caribbean; fortnightly services to the East and West Coast of South America; and constructs customized voyages between the United States and Asia, Europe, West Africa, and Australia. The company also offers U.S. flag services worldwide.