Moving goods in and out of Latin America (LATAM) has never been easy. Recent economic growth and significant infrastructure improvements in the region have tempted more global shippers to test the water in this market, but some core challenges remain—especially at the border.
LATAM’s lack of unified free trade agreements has made this region particularly difficult for shippers to conquer, forcing them to adhere to complex processes to ensure regulatory compliance. Here’s what shippers need to know to navigate issues at the border effectively—and avoid losing control.
Political tensions, red tape, and corruption run rampant, sending wait times soaring
For shippers first entering the LATAM market, friction at the border can be jarring. Bureaucracy, outdated clearance practices, and red tape often result in lengthy customs delays. This has led to rampant corruption, with many customs officials known to request bribes in order to expedite the clearance of goods.
Political tensions have also exacerbated problems at the U.S.-Mexico border—increasing wait times fivefold in some cases. With checkpoints clogged and trucks often waiting in line for hours on end, backlogs and supply chain interruptions are becoming the norm, so it’s essential that shippers anticipate them and plan accordingly.
Taxes and complexity are high, leaving shippers in a tangle
Getting goods across borders in LATAM is one thing. But shippers often run into more problems still when it comes to paying customs taxes.
Depending on the type of goods the shipper is importing and where they’re importing it to, LATAM import duties can range from 10% to a whopping 35%. That’s on top of the industrialized product tax (IPI) and the government-imposed merchandise and service circulation tax (ICMS), which tends to be between 7-18%, as well as a range of smaller taxes and fees. Throw in a variety of non-transparent non-tariff measures, and clearing customs becomes even more complicated and costly.
To make matters worse, the tax recovery process can be extremely challenging. This is particularly true in Brazil, which has one of the most notoriously complex tax systems in the world—to the extent that other countries frequently visit to see how they can integrate it into their processes. Having an experienced and knowledgeable partner is one of the best ways to overcome this complexity and put money back in the bottom line.
Reclaiming control at the border
To penetrate the LATAM region effectively, shippers need to know what they’re getting into. Anticipating potential delays, knowing what needs to be paid, and having a plan in place to recover costs is essential if they want to gain a foothold in this growing market—and avoid a customs crisis.
At CTSI-Global, we have a wealth of hands-on experience navigating customs issues in Latin America—and we know what it takes to make the cumbersome process smooth and efficient. And since we have staff fluent in Portuguese and Spanish in our North American offices, we can help streamline communications and keep things on track.
Don’t get stuck at the border. Regain control of the customs clearance process by contacting us for supply chain consulting today.