In today’s global landscape marked by geopolitical tensions and the reconfiguration of supply chains, Latin America emerges as a strategic region with the potential to become a key hub for manufacturing and distribution. The trend toward nearshoring and friendshoring has opened new opportunities for Latin American countries to strengthen their position in international trade.
Geopolitical Context and the Reconfiguration of Supply Chains
Trade tensions between the United States and China, along with the disruptions caused by the COVID-19 pandemic, have led companies to reassess their production and distribution strategies. The need for more resilient supply chains located closer to consumer markets has driven the rise of nearshoring, which involves moving operations to geographically closer countries. In this context, Latin America stands out as an attractive option for companies seeking to reduce logistics costs and mitigate risks associated with geopolitical conflicts.
One recent event worth noting is the imposition of tariffs by the United States under the administration of Donald Trump. This development will have significant implications for international trade and nearshoring strategies, depending on how it is ultimately implemented. Tariffs, taxes applied to imported goods, serve as a tool used by countries to protect their domestic industries. However, they also have the potential to trigger trade retaliation and disrupt global supply chains. While it is still too early to predict the outcome, Trump’s so-called “Liberation Day” marks a turning point in global logistics geopolitics.
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Mexico: A Leader in Nearshoring
Mexico has been one of the main beneficiaries of this trend. Its proximity to the United States, combined with trade agreements such as the USMCA, has solidified its status as a preferred destination for the relocation of industrial operations. Between August 2022 and December 2023, investments in non-residential construction in Mexico grew by 57%, reflecting companies’ interest in strengthening their supply chains in the region.
Opportunities in Other Countries in the Region
Beyond Mexico, other Latin American countries are positioning themselves to attract nearshoring-related investments:
- Brazil: Its diversified economy and role as a key supplier of commodities make it attractive for manufacturing and logistics investments. Its trade relationship with China has strengthened its position in the global market.
- Colombia: With a strategic location and favorable trade agreements, Colombia has experienced an increase in foreign direct investment, especially in sectors such as textiles and light manufacturing.
- Costa Rica: Known for its political stability and skilled workforce, it has attracted investments in technology and services, establishing itself as a hub for companies seeking proximity to the North American market.
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Challenges for the Region
Despite the promising outlook nearshoring presents for Latin America, there are structural and short-term challenges that could hinder or limit the full realization of these opportunities. These obstacles must be addressed through clear public policies, strategic investments, and collaboration between public and private sectors. The main challenges facing the region include:
Deficient Logistics Infrastructure
One of the primary bottlenecks in Latin America is the lack of modern and efficient logistics infrastructure. Poorly maintained roads, limited-capacity ports, congested airports, and outdated rail systems hinder the smooth movement of goods within countries and to international markets. This situation not only increases logistics costs—which can represent between 15% and 40% of a product’s value in some Latin American countries, far above OECD averages—but also reduces the region’s competitiveness compared to other investment destinations.
Infrastructure investments have traditionally been insufficient and uneven, resulting in significant disparities between countries and even within regions of the same country. To attract and retain nearshoring-driven investments, it will be critical to modernize logistics corridors, streamline customs processes, and digitize transport and distribution management.
Political Stability and Legal Certainty
Another crucial factor is institutional stability. In several Latin American countries, unstable political cycles, abrupt shifts in economic policy, and lack of regulatory continuity generate uncertainty for foreign businesses. Legal insecurity, compounded by structural problems such as corruption and excessive bureaucracy, complicates long-term investment decisions.
In addition, high levels of crime in certain regions directly affect logistics operations, increasing security and transport costs. Without political stability and legal security, it will be difficult for the region to establish itself as a reliable destination for global manufacturing and distribution.
Gaps in Human Capital Development
Human capital is another major challenge. Despite having a young and growing population, many countries in the region face deficiencies in the quality of their education systems—particularly in technical fields, engineering, logistics, and information technologies. The shortage of qualified talent limits companies’ ability to scale operations and adopt new technologies, which is essential in a competitive advanced manufacturing environment.
Promoting technical training programs, encouraging dual education models, and aligning educational curricula with the needs of the productive sector will be vital to closing this gap. Ongoing training and adaptation to technological change must also become regional priorities to sustainably capitalize on the nearshoring boom.
The Rise of Friendshoring
In addition to nearshoring, the concept of friendshoring has gained prominence. This strategy involves relocating production to allied countries that share similar values and geopolitical goals, regardless of geographic proximity. Latin America, with its cultural affinity and diplomatic ties with Western countries, is well-positioned to benefit from this trend. Countries such as Uruguay, Chile, Costa Rica, Brazil, and Panama stand out for their political and economic stability, making them attractive destinations for friendshoring-based investments.
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Investment and Economic Growth
The reconfiguration of supply chains has resulted in a significant increase in foreign direct investment (FDI) in Latin America. In 2022, the region attracted more than USD 224 billion in FDI, the highest volume since 2013. This flow of investment reflects growing business confidence in the region as a viable destination for manufacturing and distribution.
Latin America is strategically positioned to seize the opportunities emerging from the new logistics geopolitics. The combination of nearshoring and friendshoring offers the region the possibility of becoming a global nerve center for manufacturing and distribution. However, to realize this potential, Latin American countries must address challenges in infrastructure, political stability, and workforce development. Only by doing so can they solidify their role in the reconfigured global logistics map and foster sustainable economic growth in the decades to come.
