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Colombia
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Table of Contents
Colombia
written by:
Section I. Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section II. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

A.
B.
Colombia: A Brief History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Country Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section III. Country Characteristics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Daniel L. Gardner, President, Trade A. Geography, Topography, and Climate. . . . . . . . . . . . . . . . . . . . . . . . . 7
Facilitators, Inc. B. Political and Regulatory Environment. . . . . . . . . . . . . . . . . . . . . . . . . 7
Humberto Serna Gómez, La C. Demographics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Universidad de Los Andes, Bogotá, Section IV. Key Industries and Trading Partners. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Colombia
Section V. The Globalization of the Colombian Economy. . . . . . . . . . . . . . . . . . 9
A. World Trade Organization Membership. . . . . . . . . . . . . . . . . . . . . . . 9
Each issue of Global Perspectives takes B. Trade Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
an easy-to-read, in-depth look at research
on a particular country or region to assist C. Foreign Direct Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
today’s supply chain professionals better Section VI. Logistics and Customs Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . 11
understand the business complexities of
A. Air. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
the global supply chain.
B. Ocean. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
• Is your business expanding into new
regions? C. Rivers and Canals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
• Are you seeking suppliers and supply D. Rail. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
chain partners in other countries?
• Are you aware of the realities of doing E. Roadways. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
business in these distant settings? F. Warehousing and Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
• Are you looking for a reliable, concen-
trated source of unbiased information
G. Colombian Customs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
on doing business in these settings? Section VII. Convergence in the 21st Century. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Examine a particular country’s supply A. The Impact of the Panama Canal Project . . . . . . . . . . . . . . . . . . . . . 15
chain management (SCM) and logistics B. The US-Colombia Trade Promotion Agreement . . . . . . . . . . . . . . . . 16
environments as well as general demo-
graphics and socioeconomic information. C. Government, Business, and Academic Collaboration . . . . . . . . . . . . 16
Each issue is a short booklet, similar to Section VIII. Colombia’s Competitive Response: A Strategy for World Class
sister publication CSCMP Explores.... Supply Chains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
A. The Platform for Colombian Logistics Systems. . . . . . . . . . . . . . . . . . 17
1. Foreign Trade Zones (FTZ) . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2. Dry Ports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3. Multimodal Logistics Parks . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Editor: Jessica D’Amico Section IX. Concluding Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Direct Line: +1 630.645.3460
E-Mail: jdamico@cscmp.org Sidebar: Due Diligence and Market Research: Sources of
Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
CSCMP Global Perspectives Section X. Source Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
is published by the:
Council of Supply Chain
A. Print Sources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Management Professionals B. Internet Sources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
333 East Butterfield Road, Suite 140
Lombard, Illinois 60148-5617 USA
C. Endnotes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Phone: +1 630.574.0985
Fax: +1 630.574.0989
Web Site: cscmp.org
List of Tables
Table 2.1: Colombia’s Ranking in Doing Business 2009 . . . . . . . . . . . . . . . . . . . 6
© 2009 Council of Supply Chain
Table 2.2: Regional Ranking: Logistics Performance Index 2007. . . . . . . . . . . . . 6
Management Professionals Table 3.1: Colombia: Cities with the Largest Populations. . . . . . . . . . . . . . . . . . . 7
Table 4.1: Balance of Trade. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Table 5.1: Trade Associations and Free Trade Agreements . . . . . . . . . . . . . . . . . . 9
Table 5.2: Foreign Direct Investment by Sector (1994-2007) . . . . . . . . . . . . . . . 10
Table 5.3: Multinational 3PLs in Colombia . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Table 6.1: Infrastructure Statistics (In Miles) . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Location: Northwest corner of South America Gross Domestic Product: $328 billion
Capital: Bogotá GDP real growth rate: 7.7%
Land boundaries: Brazil, Ecuador, Panama, Peru, and GDP per capita: $7,400
Venezuela Inflation: 5.5%
Declaration of Independence: July 20, 1810 (from Labor force: 20.5 million
Spain)
Unemployment rate: 11.2%
Liberator: Simón Bolívar
Corporate income tax: 33%
Current President: Alvaro Uribe
Logistics cost: 18.6% of gross sales
Total area: 1.14 million square kilometers (440,000
Principal airports: Bogotá, Cali, Medellín, Cartagena,
square miles)
Barranquilla, and Santa Marta
Comparative size: Slightly less than twice the size of
Total number of airports with paved runways: 103
the US state of Texas
Ocean ports: Buenaventura, Cartagena, Barranquilla,
Population: 42 million
Santa Marta, and Turbo
Ethnic groups: Mestizo 58%, white 20%, mulatto
Terrain: Flat coastal lowlands, central highlands, high
14%, black 4%, mixed black-Amerindian 3%,
Andes Mountains, and eastern lowland plains
Amerindian 1%
Natural resources: Petroleum, natural gas, coal, iron
Departments (States): 32
ore, nickel, gold, copper, emeralds, and hydropower
Currency: Colombian Peso
Imports: $30.186 billion (f.o.b. value)
Median age: 26.8 years
Import commodities: Industrial equipment,
Population growth rate: 1.4% (2008 estimate) transportation equipment, consumer goods, chemicals,
Language: Spanish paper products, fuels, and electricity
Religion: Roman Catholic (90%) Import partners: United States 27.2%, Brazil 8.5%,
Literacy: 93% Mexico 8.5%, China 7.2%, Venezuela 4.5%, Japan
4.2%
Government: Republic
Exports: $29.991 billion (FOB value)
Legal system: Based on Spanish law, with a new
criminal code modeled after US procedures enacted Export commodities: Petroleum, coffee, coal, nickel,
into law in 2004 and fully implemented in January emeralds, apparel, bananas, and cut flowers
2008 Export partners: US 28.5%, Venezuela 17.7%,
Customs entity: La Dirección de Impuestos y Aduanas Ecuador 5.3%
Nacionales (DIAN)
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Section I. Executive Summary
Colombia’s emergence as a member of the global trade community
is closely linked to its commitment to developing multi-level supply
chain capabilities. Blessed with an abundance of natural resources
and a favorable geographic location, the country is equally chal-
lenged by its topography and the long distances between metro-
politan areas and coastal ports. The future prosperity of this South
American nation will depend a great deal on the comparative advan-
tage it builds through its logistics infrastructure.
Colombia’s journey towards globalization began in 1991 with an
amended Constitution that reorganized the banking sector, mod-
ernized Customs activities, and facilitated foreign direct invest-
ment. Known collectively as the “Apertura Económica” (Economic
Opening), these watershed events paved the way for Colombia’s
ascension in 1995 to membership in The World Trade Organization
and compliance with its mandates on tariff/non-tariff barriers to
trade, labor relations, and environmental responsibility.
The Colombian government has acknowledged its many supply
chain challenges, and continues to work with academia and the busi-
ness community to build the links necessary for sustained economic
growth. In spite of a historically entrenched bureaucracy and daunt-
ing social challenges, this collaborative effort has resulted in the
nationwide privatization of ocean ports, modernization of airport
facilities, the establishment of an international trade banking net-
work, and double-digit growth in foreign investment. These efforts
have made it possible for Colombia to reduce its overall logistics
costs to roughly 18% of sales.¹
While a great deal of progress has been made over the last two
decades, much remains to be done. The paucity of rail links hobbles
multimodal capabilities in the principal ocean ports, while unregu-
lated truck congestion in several cities negatively impacts the overall
distribution network. Although Colombia has a well developed
national highway system, growth in commercial and private traffic
demands a widening of what are predominantly two- or four-lane
roads. It is these types of improvements in basic infrastructure that
will allow the country to keep pace with proliferating domestic and
international trade.
The impact of events outside of Colombia also create a need for
ongoing investments in the country’s supply chain. The possibility
of a ratified Trade Promotion Agreement with the United States
will augment cargo flows between the two partners, resulting in
increased pressure on the entire logistics system. Additionally, the
widening of the Panama Canal implies that Colombia will have to
broaden its Atlantic and Pacific coast capabilities in order to attract
larger vessels to the ports of Cartagena, Barranquilla, Santa Marta,
and Buenaventura.
Section II. Introduction
A. Colombia: A Brief History B. Country Overview
The country of Colombia is as rich in history From both an economic and supply chain perspective, Colombia stands in stark
as it is in resources and eco-diversity. Although contrast to most of its neighbors in the region. Made up of 32 departments or
not studied much outside of Latin America, the states, the country boasts a broad agricultural and industrial base, has interna-
evolution of what is now the world’s 26th largest tional airports in five cities, and is the only country in South America with ports
nation can be traced from pre-Columbian indig- on both the Atlantic and Pacific oceans. With its people driving geo-economic
enous tribes, through the Spanish colonial era, diversity, Colombia is the second largest country on the continent by population
to a vibrant 21st century republic. As an active and has seven cities with more than 500,000 inhabitants. Noting the exception
participant in global trade, Colombia ranks as of Brazil, Colombia’s neighbors are characterized by a high concentration of
the fourth largest economy in South America, has population and industry around their capital cities, have one major ocean port,
the 29th largest center of population in the world, and in most cases, only one or two international airports.
and is the third largest Spanish-speaking country
The endowments of location, agriculture, industry, and workforce are accom-
after Spain and Mexico.²
panied by an important supply chain paradox. Even though Colombia has
While its first inhabitants date back to 10,000 hundreds of miles of coast (on two oceans), a considerable percentage of its
years before the common era, the region that economic activity is spread across the highland regions in the southwestern
now hosts Colombia, Venezuela, Ecuador, and part of the country. With production triangulated across Bogotá, Cali, and
Panama burst onto the “global scene” in 1499 Medellín, cultivated and manufactured goods have to travel hundreds of miles
with the arrival of the Spanish Conquistadors. over extremely challenging terrain to get to and from ocean ports. Because
Collectively known as the “Viceroyalty of Colombia’s foreign trade depends a great deal on maritime transport, the com-
New Granada,” it wasn’t long before the area bination of extended lead times, high inland freight costs, and inventory shrink-
that now comprises central Colombia and its age often puts Colombian companies at a competitive disadvantage.
northern coast became vital to the Spaniards’
Until the 1990s, the topographical challenges inherent to the Colombian sup-
dual policy of conquest and colonization. With
ply chain were exacerbated by man-made, institutional obstacles. Like many
settlements throughout the region and a massive
emerging economies, Colombia has been plagued by infrastructure challenges
fort complex guarding the port of Cartagena,
and cumbersome Customs procedures. Over the course of the last twenty years
Colombia was the all-important node in Spain’s
the Colombian government—in conjunction with the business and academic
supply chain for gold and silver. This supply
communities—has endeavored to modernize all facets of the of country’s super-
chain extended from Mexico to South America,
structure in an effort to bring it up to par with those of its trading partners.
through the islands of the Caribbean and back
to Europe. Ironically, it is the same commit- Colombia began the process of government and business reform in 1991 with
ment to supply chain excellence displayed by the ratification of a new Constitution. From that point, changes were carried
the Spaniards that earned modern-day Colom- out in all areas of government—including banking and customs administra-
bia a place among the top trading nations of tion. In 1993 a new customs entity emerged as La Dirección de Impuestos y
the world. Aduanas Nacionales, or what is more commonly known as “la DIAN.” This
integration of formerly disparate entities forged the way for the modernization
After many years of colonial rule, an uprising
of customs processes and the electronic filing of Customs entries. In the wake
led by Simón Bolívar resulted in the Viceroyalty
of the 1991 reforms, the Central Bank (Banco de la República) was reorganized
of New Granada’s independence from Spain
and a Foreign Commerce Bank (BANCOLDEX) was instituted in 1993, with
in 1819. Although the region was renamed
the explicit mission of financing export activity by small- and medium-sized
“Gran Colombia” and a capital was established
businesses. Today, these institutions are supported by other entities such as the
in Bogotá, Venezuela and Ecuador eventually
Ministry of Commerce, Industry, and Tourism and PROEXPORT COLOMBIA.
seceded. Panama and Colombia continued as The
Republic of Colombia until 1903 when Panama With its internal reorganization complete, Colombia joined the World Trade
finally seceded. It is important to note that 1903 Organization in 1995. The country took a big step towards fair trade through
was the same year that United States President, the reduction of tariff and non-tariff barriers, as well as the implementation of
Theodore Roosevelt, oversaw the completion of global standards for both labor relations and environmental safety. In addition
the Panama Canal Project. A number of pivotal to the benefits and responsibilities inherent to offering Normal Trade Relations
supply chain developments have played a major status to sister countries of the WTO, Colombia is also a participant in eleven
role in Colombia’s development. bilateral and multilateral trade agreements.
Table 2.1: C
olombia’s Ranking in Doing Business 2009 (from 181
total countries)
Ease of Doing Business 53

Trading Across Borders 96

Protecting Investors 24

Employing Workers 80
Source: Doing Business 2009: Country Profile for Colombia, The World Bank and International Finance Corporation,
2008.
Recent statistics indicate that Colombia has made progress in its efforts to modernize business practices and supply chain
capabilities. According to a 2008 report featuring 181 countries, Doing Business 2009: Country Profile for Colombia,
co-published by The World Bank and The International Finance Corporation, the nation advanced in several key areas
(See Table 2.1). The World Bank’s 2007 report Connecting to Compete: Trade Logistics in the Global Economy, ranked
Colombia 82nd out of 150 countries that were categorized in a Logistics Performance Index. With an overall score of 2.5
out of a possible 5, this global ranking is based on an analysis of key logistics factors that include customs procedures,
transportation costs, infrastructure quality, and documentation complexity. While acknowledging the advances that have
been achieved, the regional comparison provided in Table 2.2 indicates that there are still logistics challenges that must
be overcome in order for Colombia to truly achieve world-class supply chain status.
Table 2.2: Regional Ranking:* Logistics Performance Index 2007
Ranking Score

Chile 32 3.25

Argentina 45 2.98

Panama 54 2.89

Mexico 56 2.87

Peru 59 2.77

Brazil 61 2.75

Venezuela 69 2.62

Colombia 82 2.50

*Rank is based on 150 countries, Score is on a 1-5 scale
Source: Connecting to Compete: Trade Logistics in the Global Economy, The World Bank, 2007
Section III. Country Characteristics
A. Geography, Topography,
and Climate B. Political and Regulatory Environment
Still bearing the name of Christopher Columbus, The Republic of Colombia is one of the oldest democracies in the
Colombia’s geography and topography challenged Western Hemisphere, having been under civil (not military) rule since
its inhabitants long before European explorers 1850. The government features a multi-party political system and a
came upon her shores. As the dominant north- framework of checks and balances exercised between the Executive,
western land mass of South America and the Congressional, and Judiciary Branches. The highest office is that of the
world’s number two exporter of coffee, it touches President, which is supported by a Vice President, several ministries, and
Brazil, Ecuador, Peru, and Venezuela. It is also the the directors of administrative offices. Prior to 2005 the President of
only country in South America to share a border Colombia was elected to a single, four-year term. However, the Congress
with Panama. As such, the Colombian ports of amended the Constitution allowing two-term presidencies. In response
Cartagena, Barranquilla, and Santa Marta are to that amendment the Colombian people elected their first dual-term
first or second calls for many vessels passing President, Alvaro Uribe, in 2006.
through the Panama Canal from Asia and the
West Coast of the United States. Because it is the Colombia has a bicameral Congress with a Senate and a House of
only country in South America with coasts on Representatives. Officials of both houses are elected to four-year terms
two oceans, the Pacific port of Buenaventura is by popular vote. The country’s 32 departments (states) have a governor,
also well positioned for import and export activ- and are divided into municipalities. There are over 1,119 municipality
ity with Asia and the entire west coast of North, mayors chosen by popular election.
Central, and South America. The judiciary branch of government is made up of municipal and supe-
While Colombia’s location offers comparative rior courts, the Constitutional Court, the Supreme Court of Justice, and
advantages for global trade, the topography the Higher Judiciary Council. The Supreme Court is chaired by 24 mag-
creates an equally daunting supply chain chal- istrates that are selected for lifetime terms by standing justices.³
lenge. With an area that is almost twice the size
of the US state of Texas (440,000 square miles), C. Demographics
Colombia is composed of flat coastal areas, three
parallel mountain ranges (reaching heights of Colombia’s demographic profile showcases a mix of descendants
12,000 feet), dense jungles, and a vast eastern from indigenous peoples, Spanish settlers, and the African slave trade.
llano (grassland). Complex civil engineering proj- Colombia’s population has also been influenced by a wave of post WWII
ects connect the country via an extensive highway immigrants of Middle Eastern descent that today comprise influential
network, while the canal-enhanced Magdalena Jewish, Turkish, and Lebanese communities.
River tributary system offers navigable inland
waterways much of the year. Table 3.1: Colombia: Cities with the Largest
As the topography of Colombia changes from Populations
area to area, so does its weather. Ranked among
the top twenty most diverse climates in the world, Bogotá 6,840,116
Colombia is home to a snow-capped Sierra
Nevada that rapidly descends into the northern Medellín 2,214,494
coastal plains. Here, temperatures top ninety
degrees Fahrenheit year-round. Conversely, the Cali 2,119,908

cool climates in the highland areas around Bogotá
Barranquilla 1,146,359
(ideal for growing roses), make Colombia the
world’s number two exporter of fresh-cut flow-
Cartagena 892,545
ers. The country’s multiple climates create condi-
tions that are perfect for agricultural products as Cúcuta 587,676
diverse as rice, corn, bananas, aloe, mango, and
papaya. Climate and topography also offer favor- Bucaramanga 516,512
able conditions for the cattle and poultry industry,
positioning Colombia as a global player in the Source: DANE 2005 Census
export of beef, leather, and chicken products.
As noted in Table 3.1, the largest cities in Colombia are off-shore citizens wire funds back to their families, creat-
Bogotá, Medellín, Cali, Barranquilla, and Cartagena. ing an important source of foreign currency. Also, a sig-
Several cities boast a population in excess of one million nificant number of people attend universities outside the
people and there are nineteen additional metropolitan country, later returning to Colombia to work in education,
areas with between 200,000 and 500,000 inhabitants. medicine, technology, and commerce. This important char-
A geographic dispersion of people has contributed to acteristic of the country’s demography is demonstrated
Colombia’s industrial and agricultural diversity, creating a by the fact that more than three million residents speak
significant market for goods and services of both domestic English and over two million Colombians have post-grad-
and foreign origin. uate credentials in a variety of fields.4
Not only has the large domestic population contributed Finally, many Colombians that live abroad either own or
to the country’s growth, but the Colombian community work in businesses that have links to their native coun-
living abroad has also had a considerable influence on cul- try. These small-, medium-, and large-sized firms have
ture, education, and trade. According to the 2005 Census, established significant commercial contacts in Canada,
there are now close to four million Colombian citizens liv- Germany, and Japan with a considerable impact on
ing outside their home country: 35% reside in the United trade flows to and from these countries and Colombia.
States, 23% in Spain, and 18% in Venezuela. Analogous to the overall commercial expertise gained in
foreign countries, many of Colombia’s supply chain infra-
The emigration of approximately eight percent of the total
structure improvements have been influenced by academic
population has had important ramifications for both the
and professional expertise from around the world.
Colombian economy and society as a whole. First, many
Section IV. Key Industries and Trading Partners

Over the last several years Colombia has enjoyed a period of sustained economic growth. With a 2007 Gross Domestic
Product of $328 billion dollars, Colombia’s adjusted growth rate for the year was 7.7%. At the same time, the govern-
ment’s efforts to battle inflation resulted in an inflation rate of 5.5%. Of its 20.5 million strong workforce, 11.2% were
unemployed. It is within this framework of overall growth that Colombia’s foreign trade has also proliferated.
Table 4-1: Balance of Trade (FOB Value, Billions of USD)
Year Exports Imports Balance

2006 24,391 24,534 -143

2007 29,991 30,816 -824.3

2008* 26,141 24,155 1,897
*Figures from January-August 2008

Source: DANE
In 2006, Colombia’s economy registered a trade deficit of 4.5% of international purchases, respectively. Trade with
$143 million based on the difference between an (FOB- Mexico continued growing with a value representing
based) import figure of $24.534 billion and an export 8.5% of the total. As part of an important trend, Asian-
performance of $24.391 billion. While the deficit increased origin purchases represent a significant portion of overall
to $824 million in 2007, Table 4.1 shows a January- imports, with China accounting for 7.2% and Japan
August 2008 trade surplus of $2 billion. Characteristic another 4.2%.
of many emerging economies, Colombia’s import figures
Although the Colombian peso continued to increase in
are composed of finished and capital goods for use in the
value throughout 2007, export activity was high across
consumer, industrial, and agricultural sectors. Conversely,
global locations. The textile, apparel, and footwear
Colombia’s exports are dominated by agricultural products
industries helped increase the export of agricultural, min-
and unprocessed natural resources—with the exception of
eral, and hydrocarbon products, maintaining a reason-
the export-oriented textile, apparel, and footwear sectors.
able balance of trade throughout the year. During 2007,
In terms of trading partners, shipments of US origin Colombian exports to the US accounted for 28.5% of
represented 27% of the 2007 total. Usual trading part- the total value of goods, Venezuela received 17.7%, and
ners like Brazil and Venezuela accounted for 8.5% and Ecuador 5.3%.5
Section V. The Globalization of the Colombian Economy
A. World Trade Organization Membership

Prior to the 1991, ratification of a new Constitution and sub- become globally competitive, without the protection of exces-
sequent membership in the World Trade Organization in 1995, sively high import taxes. From a tariff perspective, the decrease in
international trade in Colombia was hobbled by protectionist landed costs emerging from these reductions improved the market
policies and uncompetitive industries. Adherence to structural and price of a broad range of products, making them accessible to
administrative reforms born of the Constitution, and adherence to many more consumers. Because the granting of Normal Trade
the WTO membership mandates—such as the reduction of both Relations to WTO member countries is reciprocal by definition,
tariff and non-tariff barriers to trade—have poised Colombia for Colombian products sold in foreign markets have enjoyed the
increased global commerce. same benefits of reduced tariffs—increasing their appeal to foreign
buyers.
For Colombia, the most important aspect of WTO member-
ship was the implementation of a tariff phase-out program and Although more difficult to quantify, Colombia’s WTO-driven
the removal of cumbersome logistic processes which previously removal of non-tariff barriers to trade have contributed to its
challenged supply chain operations. Currently, import duties in overall global competitiveness. The elimination of time-consuming
Colombia range from 5% to 20% of the cost, insurance, and import license applications, multi-agency approvals, and dysfunc-
freight (CIF) value of merchandise. Duties are now in compliance tional processes have eased the pressure on an already challenged
with the WTO’s program for the gradual phasing out of develop- supply chain. The operational results of these policies are reflected
ing country duties—averaging a 24% reduction over a ten year in improved cumulative lead times to/from the country, enhanced
period. While some sectors have suffered, the over-arching affect landed cost controls, and reductions in inventory levels.
of WTO membership has been to force Colombian industries to
B. Trade Agreements
In addition to the Normal Trade Relations status afforded by WTO membership, Colombia has also undertaken an international growth
strategy through trade associations and free trade agreements. With a total of eleven associations and agreements to its credit, Colombia
has either finalized or is in negotiations with accords that include the Colombia/Canada Free Trade Agreement, the Colombia/European
Union Free Trade Agreement, the Latin American Integration Association (ALADI), and the Group of Three (Colombia, Mexico, and
Venezuela). Although yet to be ratified by the US Congress, Colombia has also signed a Trade Promotion Agreement with the United
States. A listing of Colombia’s trade associations and agreements are listed in Table 5.1.
Table 5.1: Trade Associations and Free Trade Agreements
The Latin American Integration Association (ALADI)
Colombia-Mercosur Agreement
The Andean Community

Association of Caribbean States
The Andean Community of Nations & The European Community
Colombia-Chile Free Trade Agreement (signed 2007)
Colombia-El Salvador, Guatemala, and Honduras Free Trade Agreement (signed 2007)
Colombia-European Union (in negotiation)
Colombia-Canada Free Trade Agreement (in negotiation)
Colombia, Mexico, and Venezuela Free Trade Agreement
Colombia-US Trade Promotion Agreement (signed 2007)
Source: Ministry of Commerce, Industry, and Tourism

C. Foreign Direct Investment
An important measure of any country’s integration into the global economy is its ability to attract foreign investment.
While there are many factors that determine the willingness of foreign entities to invest in a particular country, Colombia
began the FDI growth process in 1991 when an “Equal Treatment” clause was incorporated in the Constitution.
Supported by a guarantee that affords off-shore investors the same legal rights as national companies, foreign direct invest-
ment in Colombia has seen substantial growth over the last seventeen years. In the period 1994-2007 there has been a
total investment of $41.4 billion and from 2000 forward, the annual compound growth rate for FDI in Colombia has been
16.3%. Table 5.2 provides a breakdown of the industry sectors that have attracted the majority of FDI since 1994.
Table 5.2: Foreign Direct Investment by Sector (1994-2007)
Other 6%
Retail, Hotels, and Restaurants 6%
Electricity, Gas, and Water 9%
Transport 11%
Oil 12%
Financial Sector 14%
Mining 20%
Manufacturing 25%
0% 5% 10% 15% 20% 25% 30%
Total USD 41.4 Billion

!
Source: Central Bank (Banco de la República)
There are several tax incentives that support FDI growth in Colombia. A 7% earnings remittance tax was abolished and
a 40% tax credit on fixed asset investments was implemented. In the tourism sector, a foreign investment in the remodel-
ing or construction of new hotels is afforded a twenty-year grace period on the payment of corporate income tax.
It is important to note that the FDI climate in Colombia particularly affected the logistics industry. Ever since foreign
entities were allowed to invest in real estate, there has been considerable growth in the warehousing and distribution sec-
tor. As reflected in the logistics sector’s 12.5% share of total FDI in 2007, multi-national third party logistics service pro-
viders (3PLs) are present throughout the country and feature fully-integrated service portfolios (see Table 5.3). From an
infrastructure perspective, the government is open to foreign investment for port management and highway concessions.
10 This document is available from our site and provided for your personal use only and may not be retransmitted or redistributed without written permission
Table 5.3: Multinational 3PLs in Colombia
CEVA Logistics Kuehne + Nagel
DHL Global Forwarding Maersk Logistics
Expeditors International of Washington, Inc. Panalpina
JAS Forwarding Worldwide UPS Supply Chain Solutions
*Partial listing
Source: Source: Individual company web-sites
One area where foreign investment enjoys considerable benefits is in the operation of Foreign Trade Zones. While Colombian Customs
regulations offer foreign zone benefits similar to other countries, the federal government has added an additional enticement in the form
of a 15% corporate income tax for FTZ-based operations. Specifically, any foreign or domestic company that opens a foreign trade zone
operation is not only entitled to deferred duty payments, value added tax (VAT) exemptions, and the like, but they operate well below
the domestic corporate income tax of 33%.6
Section VI. Logistics and Customs Infrastructure

Table 6.1: Infrastructure A. Air
Statistics (in miles)
Although the majority of Colombia’s foreign trade moves by ocean freight,
the country operates important domestic and international aviation net-
Roadways: 98,555
works. Driven primarily by the export of fresh cut flowers, Colombia is the
Rail: 1,982 number one Latin American market for air exports to the United States.
Volumes are estimated at over 200,000 tons per year. El Dorado Airport
Waterways: 10,800 in Bogotá serves as the country’s global hub and has multi-carrier serv-
ice to Atlanta, Dallas, Frankfurt, Houston, Los Angeles, Madrid, Mexico
Pipelines: City, Miami, Paris, Santiago, and Sao Paulo. International cargo and pas-
Gas 3,000 senger airlines serving Colombia include Air France, American, Avianca,
Oil 3,684 Continental, Delta, Iberia, LAN Chile, Lufthansa, and Tampa Airlines.
Cargo flights are conducted mainly via Bogotá, but there is also freight service from the US into Barranquilla, Cali, Cartagena, Medellín,
and Santa Marta. In support of the oversized cargo needs of the energy and mining sectors, El Dorado services the air charter business
with a runway capable of handling 747 freight planes and a variety of large cargo aircraft.
B. Ocean
Colombia’s vast natural resources, strong industrial base, and burgeoning cruise industry require multi-functional ports.
Although Buenaventura serves the Pacific coast and southwest region, most maritime activity is concentrated on the north
coast via the ports of Cartagena, Barranquilla, and Santa Marta. Cartagena is the country’s largest container port, han-
dling over 1,000,000 twenty-foot equivalent units (TEUs) in 2008. Founded by the Spanish in 1533, Cartagena is now an
important trans-loading location for global steamship lines and is a scheduled port of call for major shipping lines (such
as Maersk Lines, APL, Hapag-Lloyd, and NYK) and cruise ship operators (including Disney and Royal Caribbean).
A major driver of Colombia’s port activities is the export of bulk cargo. As one of the world’s largest producers of coal,
Colombia relies on the ports of Barranquilla and Santa Marta as the principal loading points for coal-laden vessels to
destinations around the world. The country’s exports of coffee, bananas, and tropical fruit also demand ports capable of
handling large volumes of non-containerized cargo.
Colombia’s major ports are operated through long-term concessions granted by the government. Known as “Sociedades
Portuarias,” the combination of business-friendly government and private ownership has fostered investment in the
expansion of terminals, development of new facilities, and implementation of world-class operational software and cargo
handling equipment. As Colombia’s maritime trade continues to grow, its biggest challenge will be the availability of
additional acreage in and around existing port complexes.
C. Rivers and Canals

With 28 major rivers and waterways that flow for a total of 10,800 miles, Colombia’s hydrographic profile is one of the
richest in the world. Colombia’s many rivers (including the Amazon and Orinoco) can trace their sources to Colombia’s
three mountain ranges and as far as Brazil, Venezuela, and Peru.
From a commercial perspective, the country’s most important river is the Magdalena, which flows nearly 1,000 miles
from the southern mountains to the northern coastal plain. Not only does the Magdalena traverse the western half of the
country, but upon reaching the coast, it veers east for sixty additional miles. It is an important link for canal systems in
Cartagena and Barranquilla. Although the country is subject to both a rainy and dry season, the Magdalena is navigable
most of the year and plays an important role in Colombia’s logistics infrastructure.
During the last two decades, the development of canal systems along the northern coast has allowed ports like Cartagena
and Barranquilla to expand beyond their original boundaries. “El Canal de Acceso” or Access Canal in Barranquilla is
the primary point of entry into the port. “El Canal del Dique” in Cartagena offers a direct link to the Magdalena River.
In both instances, integrated logistics infrastructures support the canal systems with on-port Customs operations, con-
tainer patios, and foreign trade zones. The newly developed Canal del Dique Free Zone and Logistics Park is one of the
largest projects (over 1,600 acres of available land) of its kind in the Western Hemisphere.
D. Rail
Colombia’s size and landscape have made the use of rail transport difficult for most regions and types of products. An
aging 2,000 mile-long rail system has been eclipsed by the expansion of the road network. The corresponding growth in
domestic trucking has solidified that industry’s dominance over inland transportation. It is important to note, however,
that there are existing railheads in ports like Santa Marta, and the possibility of revitalizing the rail industry is always
under review.
Of the entire rail system, one third of the total mileage can be found on route from Santa Marta to Bogotá. This line
was once the primary method of inland transport for coffee destined to the United States and Europe. Over time, cyclical
changes in the price of coffee dried up funds for the rail line’s maintenance. The emergence of Buenaventura as a closer
alternative for ocean exports, all but eliminated the long-haul use of the rail system. Currently, the Santa Marta rail link
is dedicated to the short-haul movement of coal from the northeastern departments (states) of La Guajira and César.
A rail feasibility study was completed for a project known as “Bogotá Sí Tiene Puerto!” (Bogotá Does Have a Port!).
This project supports the revitalization of the Santa Marta-Bogotá rail line, as well as the development of a dry port
for containers and truck transfer activities just outside of the capital city. With over seven hundred miles of track,
this project has the dual objectives of providing multimodal service to/from Bogotá, and passenger train service
to the coastal resorts.
E. Roadways
Colombia’s combination of challenging terrain
and long distances between large cities and the
coasts have made its road system the most impor-
tant component of the logistics infrastructure.
Some of the world’s most challenging civil engi-
neering projects have helped connect Colombians
via 100,000 miles of highways and paved roads.
Most roads support the movement of ocean con-
tainers and truck cargo north to south along (and
in many cases, over) the mountain ranges, and
from the Pacific coast port of Buenaventura to
Cali, Medellín, and Bogotá.
Although the highways that connect the ports
to inland cities are good, domestic transit times
continue to challenge global supply chains.
Depending on the weight of the cargo and rain-
fall levels, a forty foot container from Cartagena
to Bogotá could take longer than the five-day
ocean transit time from Miami to Cartagena.
Historically, companies operating in Colombia
have met this challenge by building additional
days into their lead time calculations.
For all of its natural challenges, perhaps
Colombia’s biggest road transport problem has
been the presence of guerilla and paramilitary
groups in different parts of the country. As recent-
ly as 2005, some roads could only be used during
the day, or in extreme cases, not at all. Truck driv-
ers have often been forced to find longer routes
that circumvent these obstacles, increasing trans-
portation and insurance costs. During the dual-
term presidency of Alvaro Uribe, great progress
has been made towards eradicating these groups,
limiting their presence to isolated jungle areas far
removed from roadways and major metropolitan
areas. As a result, inland freight costs and insur-
ance premiums have dropped, and inland freight
transit times from the coast to interior cities has
improved by an average of 1.5 days.
Globalization demands can strain any country’s
infrastructure. The Colombian government has
responded to this challenge by opening both high-
way and rail operations to private and foreign
direct investment. One major project open to
bids is the four-lane highway to be constructed
between Santa Marta and Bogotá. Known as “La
Ruta del Sol” (The Route of the Sun) this com-
bination of highways, bridges, and tunnels will
increase traffic capacity and cargo flows through-
out the central region of the country.
F. Warehousing and Distribution G. Colombian Customs
Many factors have influenced the accelerated growth of Colombia’s The facilitation of trade vis–a-vis Customs
warehousing and distribution network. Historically, the country’s reform has played a very important role in
broad retail distribution capabilities were required due to its highly Colombia’s integration into the global com-
dispersed population and the presence of thousands of family- munity. Membership in the World Trade
owned shops that cater to local (foodstuff, consumer goods, hard- Organization mandates continuous improve-
ware, and construction) markets. Conversely, Colombian-owned ment in the removal of both tariff and non-tar-
supermarket chains (like Carulla) have achieved national coverage iff barriers to trade. The adoption of the new
over the last twenty years. Foreign superstores (including Carrefour Constitution in 1991 facilitated the eventual
and Makro) are establishing themselves around the country. The implementation of world-class software appli-
juxtaposition of these entities’ large scale distribution requirements cations, and the re-engineering of operational
on the existing infrastructure has created a multi-node network of processes. Currently, all Colombian Customs
facilities that range from 2,000 to 100,000 square feet. As these trade activity is conducted electronically, with
megastores proliferate, the distribution network is increasingly access available for the shipping community,
characterized by larger facilities and a commensurate decrease in forwarders, and brokers.
local warehousing and distribution firms.
It is important to note that DIAN is directly
Because the Colombian economy was originally agricultural in involved in monitoring all import/export activ-
nature, there is a vast warehousing and distribution (W&D) net- ity on a transactional level. Like many coun-
work to support both the domestic and international movement tries around the world (and especially in all
of bulk goods. Not only are there silo-based operations around Latin America), Colombian law requires a for-
the country, but every port is supported by both on- and off-dock mal entry process for both import and export
operations for the receipt, preparation, and packaging (sacking) of activities. Electronic or print copies of entries
bulk products such as coffee, corn, and rice. have to be submitted and approved by DIAN
before any merchandise can be exported. This
One of the most interesting aspects of the agriculture sector’s W&D
requirement contrasts with US regulations,
network is that it was originally owned and operated by the bank-
where under most conditions, the electronic
ing industry. As farmers and cooperatives used crop inventories as
presentation of a shipper’s Export Declaration
collateral for loans to finance future harvests, the bankers found
suffices for export purposes. Once a source of
themselves in the unusual position of developing storage facilities
lead time delays, the modernization of DIAN
for these products. Over time, and with the development of differ-
processes now allows for same day clearance of
ent financing programs, some banks have successfully divested from
exports and, in most cases, approval is granted
this activity. There are some companies that continue to invest in
in a matter of hours.
this area, expanding their operations to include sophisticated physi-
cal plant, software, and integrated service offerings. One customs-related challenge that most
countries don’t have to deal with is the inspec-
The biggest change brought on Colombia’s W&D sector was
tion of export shipments for illegal narcotics
a result of its membership in the WTO. As foreign companies
control. Operating along with other govern-
continue to operate and invest in the market, there is increasing
ment agencies, DIAN monitors the movement
demand for more advanced operations. The increase in the imports
of outbound shipments regardless of mode of
of processed and ready-to-eat goods, for example, has spawned a
transport. Not only does this requirement have
network of food-grade facilities around the country. The arrival of
important social ramifications, there are com-
multi-national pharmaceutical firms has precipitated the continued
mercial and supply chain consequences as well.
development of cold-chain capabilities. Currently, Colombian-
owned third party logistics companies (like Almacenar, Almagrario, Because of the intrusive nature of export cus-
and Servientrega) offer a complete portfolio of warehousing and toms inspections, there is an inevitable amount
distribution services across several industry verticals. of inventory shrinkage. Especially true for per-
ishable products, the losses due to inspections
Investments by multinational 3PLs in facilities, software, and per-
have been known to erode agricultural sector
sonnel have elevated the quality of operations in the warehousing
margins from 0.5% to 1.0% points. In addi-
and distribution industry. Foreign know-how has complemented
tion to shrinkage considerations, risk-based
domestic expertise, creating a highly competitive environment. As
export inspections imply the need to add extra
the demand for qualified logistics professionals continues to grow
days to lead time calculations.
in this area, many people are pursuing industry-related degrees
locally, or are acquiring advanced logistics degrees overseas from
places such as the US and Europe.
As part of its pro-export focus, DIAN has added manpower and instituted processes that accelerate inspection and clearance require-
ments. First, inspection decisions are driven by risk-based criteria, so not all shipments are subject to export inspections. Also, companies
have the option of using the services of a broker for entry purposes, or they can file entries directly on an in-house basis. Finally, larger
exporters in close proximity to airports and ports can schedule inspections at their own facilities prior to movement of the goods. This
process has helped to reduce shrinkage and lead time concerns, making it possible for shippers to file entries, complete inspections, and
ship all in the same day.
Section VII. Convergence in the 21st Century
A. The Impact of the Panama Canal Project

Colombia’s first contact with the Panama Canal came in 1903 goods originating in Asia, as well as a transshipment hub for many
when the United States resuscitated the project and Panama of the world’s steamship lines. The expected widening of the canal
promptly seceded from Gran Colombia. One hundred and six to a 8,000 TEU capacity for post-Panamax vessels will only cre-
years later, the widening of the Canal implies new supply chain ate additional demand for its foreign trade zone, distribution, and
challenges—not only for Colombia, but the entire Western transshipment activities.
Hemisphere. Given the operational evolution of the Panama
The challenge for Colombia is centered on its ability to accom-
Canal Zone over the last sixty years, completion of the project
modate larger vessels at the ports of call on the North coast while
will present Colombia with as many competitive threats as it
fending off Panama’s attempt to take transshipment business away
does opportunities.
from cities like Cartagena. As the country’s largest container port
Originally, the Panama Canal served the singular (but strategically and closest facility to the Atlantic, it will be up to Cartagena to
vital) function of cutting as many as 8,000 miles off of the length simultaneously take advantage of the larger vessel arrivals while
of an ocean journey between the two coasts of the US. Not only defending against Panama’s efforts to bring transshipment busi-
was this important to trade, but it provided the United States the ness back to the Panama Canal Zone.
critical ability during WWII to quickly move ships from coast
Since Cartagena was the first port to be turned over to a conces-
to coast (and from the Pacific to the Atlantic theatres). Without
sion, its Sociedad Portuaria has a head start over other Colombian
question, US control over the Panama Canal and Britain’s opera-
ports when it comes to investments in land development, infra-
tion of the Suez Canal in Egypt were the two most important sup-
structure improvement, deep-draft berths, and productivity
ply chain components of the allied victory.
enhancements. With several terminal expansion and supporting
Much has changed since the end of WWII and the Panama Canal infrastructure projects well under way, Cartagena will be poised
Zone is now much more than a mid-hemisphere shortcut. The area to both compete with and benefit from the Panama Canal project
around the canal is one of the largest commercial Foreign Trade when it is completed in 2014.
Zones in the Americas. It is also a major distribution point for
B. The US-Colombia Trade Promotion Agreement
Business relations between the United States and Colombia
stand at a crossroads with the US-Colombia Trade
Promotion Agreement—modeled after the World Trade
Organization’s framework for trade agreements and driven
by the principle of reciprocity for imported goods. In addi-
tion to its tariff and non-tariff stipulations, the WTO model
mandates provisions for access to government contracts,
labor relations, and environmental standards. A subject of
much controversy, the US-Colombia TPA was signed by US
President George W. Bush and Colombian President Alvaro
Uribe in 2006—but is still awaiting approval by the United
States Congress.
Currently, Colombia participates in two special tariff pro-
grams: the Generalized System of Preferences (GSP) and the
Andean Trade Promotion Drug Eradication Act (ATPDEA).7
Established in 1974 and 2002 respectively, these programs
operate in more than one hundred countries and feature
reduced or eliminated import duties on approximately 80%
of the goods entering the United States. At present, there are
no such programs in place for US goods entering Colombia.
While the GSP program is offered to a broader group of
countries, Colombia’s participation in the ATPDEA symbol-
izes the commercial component of each country’s commit-
ment to fighting the war on illicit drugs. Linked closely to
DIAN’s customs reform and heightened inspection activi-
ties, the intent is to entice participating countries to take
an origin-based, proactive role in reducing drug trafficking
to the United States. Provisions of the US-Colombia Trade
Promotion Agreement continue this emphasis on upstream
supply chain vigilance.
C. Government, Business, and Academic Collaboration

As a sub-plot to the ubiquitous influence of globalization, trade-related functions. In some instances, these divisions
the convergence of factors like the Panama Canal Project are directly operated by the government. Others are com-
and the US-Colombia TPA have forced Colombia to adopt mercial institutions in which the Ministry of Commerce,
a long-term, strategic approach to global supply chain Industry, and Tourism is either a minority or majority
management. Since 1991, when Colombia began the proc- shareholder.
ess of globalization, a number of government, business,
Two entities that fall under the Ministry’s auspices are
and academic entities have collaborated to develop the
PROEXPORT COLOMBIA and BANCOLDEX. These
infrastructure, financial backing, and human capital neces-
are at the forefront of Colombia’s three-pronged strategy
sary to compete.
to promote exports, foreign direct investment, and tour-
The primary government agency that deals with foreign ism. The former is a government agency established to
trade issues is the Ministry of Commerce, Industry, and encourage exports, while the latter is a trade financing
Tourism. With hierarchical control over other government bank in which the Ministry is a majority shareholder.
institutions, this ministry is responsible for the negotia-
As a promotional arm of the government, PROEXPORT
tion of trade agreements, setting customs duties, and the
is responsible for helping exporters develop overseas
coordination of intermediary financing for importers and
markets, as well as working with off-shore companies
exporters. The Ministry manages its multiple responsibili-
to stimulate foreign direct investment. PROEXPORT
ties through several divisions, each responsible for specific
COLOMBIA’s headquarters are in Bogotá, but it also
has a network of offices around Colombia and operations in eigh- full-time, and executive programs in international business and
teen other countries. Through the provision of market intelligence supply chain management. On a national level, there are five uni-
trade missions, logistics advice, and export training PROEXPORT versities in Bogotá that feature logistics programs and another ten
is the primary source of information for Colombian companies around the country that have full-time degrees in these disciplines.
interested in global trade. In addition to the network of national universities offering logis-
tics related programs, many executives have opted to study supply
BANCOLDEX supports a variety of traditional financing activi-
chain management overseas, returning to Colombia to apply this
ties that include factoring export receivables and financing import
new knowledge and best practices to the unique challenges in
purchases. Conducted through pre-approved intermediary banks,
Colombian supply chain management.
these functions support the core activities of Colombia’s interna-
tional business community. From a trade development perspective, The Colombian business community is an active participant in the
both BANCOLDEX and PROEXPORT provide specific financing advancement of logistics, and works closely with the government
and support services to small and medium sized exporters. Known and university system. The Colombian Logistics Association (La
as “Pymes” in the trade sector, these growing entities are entitled Asociación Colombiana de Logística or ACOLOG) is an organi-
to trade finance, consulting services, and training classes.8 zation of 230 companies committed to the dissemination of logis-
tics knowledge around the country. With yearly conferences, trade
Colombia’s academic community has responded to the need for
missions, and joint training efforts through the university system,
qualified logistics professionals by developing certificate, under-
ACOLOG is the largest logistics and supply chain organization in
graduate, and graduate programs in logistics. The country’s most
Colombia.
prestigious institution, La Universidad de Los Andes, has several
doctorate-level professors and provides fully accredited part-time,
Section VIII. Colombia’s Competitive Response: A Strategy for

World Class Supply Chains
A. The Platform for Colombian Logistics Systems

The Colombian government has responded to the demands of modern supply chain management by formulating a dual strategy of
upgrading existing infrastructure and developing new logistics capabilities. Colombia’s System for Logistics Platforms is driven by a gov-
ernment agency known as the Department for National Planning (Departamento Nacional de Planeación) and designed in conjunction
with departmental (state) governments, private enterprise, and academia. This program outlines a plan for an integrated logistics infra-
structure traversing the entire country. Although the plan focuses on traditional logistics improvements in ports, airports, and roadways,
it also emphasizes additional capabilities such as the expansion of foreign trade zones, multimodal logistics facilities, and dry ports.
1. Foreign Trade Zones (FTZ) 2. Dry Ports
Although FTZs have been a part of the Colombian logistics landscape for Integral to Colombia’s System for Logistics
several decades, they have recently undergone a renaissance due to favor- Platforms, dry ports will serve as an inland node in
able tax changes benefiting companies operating in those zones. In addition multimodal networks and key enablers in reducing
to the low 15% income tax rate for foreign zone companies, Colombian truck traffic in major cities. As plans to revitalize
legislation also allows the operation of commercial foreign trade zones the country’s rail links take shape, the need for dry
(warehousing and distribution of imported finished goods), and manufactur- ports will increase on the outskirts of cities like
ing sites (importation of raw materials and export of finished goods). Part Santa Marta, Bogotá, and Medellín. In addition to
of the foreign zone strategy allows non-traditional companies to operate as rail links, plans include the presence of truck depots,
well. With an eye towards attracting foreign direct investment, foreign zone container yards, marshalling areas, and distribution
operations in Colombia are open to business models that include interna- facilities.
tional call centers and surgical facilities for offshore patients. Another component of the dry port plan is the devel-
Ever since the change in tax legislation took place, there have been over 25 opment of alternative truck routes circumventing
free zone applications with many on the northern coastal corridor between residential areas in large cities. Because the dry ports
Cartagena, Barranquilla, and Santa Marta. It is anticipated that these loca- will be strategically located outside of large metro-
tions will have a logistics advantages in terms of lead times and landed politan areas, the ability to develop perimeter access
costs, making them viable manufacturing sites for companies shipping to the roads into densely populated areas will play a major
US, Mexico, Canada, and Europe. role in Colombia’s efforts to control inner city traffic.
3. Multimodal Logistics Parks
In recognition of the importance of the 3PL industry to the country’s overall supply chain infrastructure, the Platform
Strategy includes the development of integrated logistics parks around the country. Known as “Zonas de Actividades
Logísticas” (Logistics Activity Zones), parks are being launched in places like El Canal del Dique in Cartagena, as well as
Barranquilla and Santa Marta. Based on a one-stop-shop approach to meeting logistics needs, these parks offer consoli-
dation facilities, customs brokerage, domestic shipping, international forwarding, and small parcel capabilities.
Section IX. Due Diligence and Market Research: Sources Of

Concluding Summary Information
The history of international trade clearly Any organization that is seeking business opportunities in
demonstrates that a country’s ability to Colombia should avail itself of the vast amounts of information
expand its economy is a function of internal available on commercial and legal topics. Whether a company
supply chain capacity. If a nation adopts a is interested in sourcing products from Colombia, developing
free trade policy without the commensurate export opportunities to the Colombian market, or is trying to
investment in ports, airports, and highways understand how the import process works there, a variety of
the entire network will eventually collapse sources exist to facilitate entry into the market and increase
under the weight of increased import/export the probability of success.
activities. This phenomenon was observed
For companies based in the United States, a great deal of in-
in many Latin American countries during
formation can be found through the Department of Commerce
the 1990s, and Colombia’s ability to avoid
and its US Commercial Service at www.buyusa.gov/colombia.
similar pitfalls has depended on its continued
Interested parties can download the entire text of the US-
commitment to the development of world-
Colombia Trade Promotion Agreement, analyze industry-specific
class supply chain operations.
studies, or read reports like the “Colombian Commercial Guide
Colombia initiated the process of becoming for US Exporters.” For information on setting up a business,
an open economy in 1991 with its Apertura banking rules, or hiring practices another excellent resource is
Económica and has since taken many the “Trade Information Country Data Base” at www.export.
positive steps towards achieving that goal. gov. Companies operating outside the United States can find
Improvements in the logistics infrastructure similar sources of information on the trade-oriented web sites
have been a fundamental component of the of their home countries.
country’s national competitive strategy and
are clearly articulated in the Department The Colombian government also provides multiple resources
of National Planning’s System for Logistics for research and access to local expertise. For example, organi-
Platforms. As these projects come to fruition zations that need guidance on foreign direct investment can find
they will contribute to productivity gains a list of legal firms that specialize in this area on the government
and support the continued growth of the sponsored site www.proexport.com.co. Another resource is
economy. www.mincomercio.gov.co, where companies studying the prod-
uct-specific tariff benefits of Colombia’s various trade agree-
As a member of the WTO and a party to ments can find detailed information.
several trade agreements, Colombia has
also made a long-term commitment to the In addition to government-sponsored trade facilitation there are
elimination of commercial barriers, enhanced a variety of less formal (but equally effective) ways to enhance
trade facilitation, and equal legal treatment market knowledge. A good source of logistics infrastructure
for foreign companies. True membership in and service provider information is the Colombian Logistics
the global trade community has compelled Association at www.acolog.org. The Commercial Attaché of
Colombia to compete on the merits of its foreign embassies in Bogotá can also play a role in the vet-
industry and supply chain capabilities, with- ting of suppliers or customers. Additionally, the trade services
out the advantage of tariff and non-tariff division of international banks can provide valuable insights
barriers to trade. While it has been an ardu- on handling letters of credit or documentary collections.
ous process, the benefits that have accrued Finally, industry associations and the US-Colombia Chamber
to Colombia’s trade statistics point to an of Commerce can offer additional perspective on operating
economy that is much more prosperous than in the Colombian market.
when the effort first began.
Section X. Source Materials
A. Print Sources
Colombia: Foreign Investment
PROEXPORT COLOMBIA 2005
Connecting to Compete: Trade Logistics in the Global Economy 2007

The International Bank for Reconstruction & Development/The World Bank
Doing Business 2009: Country Profile for Colombia

The International Bank for Reconstruction & Development/The World Bank
Invest in Colombia
PROEXPORT COLOMBIA, September, 2008
Republic of Colombia: Public Administration Country Profile 2007

Department of Economic & Social Affairs, The United Nations
The Global Competitiveness Report 2008-2009

2008 World Economic Forum
B. Internet Sources
Banco de Comercio Exterior de Colombia (BANCOLDEX)

www.bancoldex.com
Departamento Nacional de Planeación

www.dnp.gov.co
El Departamento Administrativo Nacional de Estadística (DANE)

www.dane.gov.co
La Dirección de Impuestos y Aduanas Nacionales (DIAN)

www.dian.gov.co
Ministerio de Comercio, Industria, y Turismo

www.mincomercio.gov.co
Ministerio de Transporte
www.mintransporte.gov.co C. Endnotes
Presidencia de la República
www.presidencia.gov.co
1 Análisis de Costo Total de Logística en Empresas
Colombianas 2004-2005, Maria F. Rey, Latin
PROEXPORT COLOMBIA American Logistics Center
www.proexport.com.co 2 The World Fact Book
The United States International Trade Commission 3 Presidencia de la República
The Harmonized Tariff Schedule of the United States 4 DANE, 2005 Census
www.usitc.gov
5 DANE
The World Fact Book 6 PROEXPORT COLOMBIA
www.cia.gov
7 The Harmonized Tariff System of the United States
The World Trade Organization 8 “Pymes” is a Spanish language acronym that stands
www.wto.org for “small and medium sized businesses”

333 East Butterfield Road, Suite 140
Lombard, Illinois 60148-5617 USA
Phone +1 630.574.0985 • Fax +1 630.574.0989
cscmp.org
Colombia

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Ease of Doing Business 53

Table 2.2: Regional Ranking:* Logistics Performance Index 2007

Section IV. Key Industries and Trading Partners

Table 4-1: Balance of Trade (FOB Value, Billions of USD)

Year Exports Imports Balance

*Figures from January-August 2008

A. World Trade Organization Membership

Table 5.1: Trade Associations and Free Trade Agreements

The Latin American Integration Association (ALADI)

The Andean Community

The Andean Community of Nations & The European Community

Colombia-Chile Free Trade Agreement (signed 2007)

Colombia-European Union (in negotiation)

Colombia-Canada Free Trade Agreement (in negotiation)

Colombia, Mexico, and Venezuela Free Trade Agreement

Colombia-US Trade Promotion Agreement (signed 2007)

Source: Ministry of Commerce, Industry, and Tourism

Table 5.2: Foreign Direct Investment by Sector (1994-2007)

0% 5% 10% 15% 20% 25% 30%

Total USD 41.4 Billion

CEVA Logistics Kuehne + Nagel

DHL Global Forwarding Maersk Logistics

Expeditors International of Washington, Inc. Panalpina

JAS Forwarding Worldwide UPS Supply Chain Solutions

Section VI. Logistics and Customs Infrastructure

C. Rivers and Canals

Section VII. Convergence in the 21st Century

A. The Impact of the Panama Canal Project

C. Government, Business, and Academic Collaboration

Section VIII. Colombia’s Competitive Response: A Strategy for

A. The Platform for Colombian Logistics Systems

1. Foreign Trade Zones (FTZ) 2. Dry Ports

Section IX. Due Diligence and Market Research: Sources Of

Connecting to Compete: Trade Logistics in the Global Economy 2007

Doing Business 2009: Country Profile for Colombia

Republic of Colombia: Public Administration Country Profile 2007

The Global Competitiveness Report 2008-2009

Banco de Comercio Exterior de Colombia (BANCOLDEX)

Departamento Nacional de Planeación

El Departamento Administrativo Nacional de Estadística (DANE)

La Dirección de Impuestos y Aduanas Nacionales (DIAN)

Ministerio de Comercio, Industria, y Turismo

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