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Transportation and logistics system acts as one of the major reflectors of a country’s economic capability and resource availability. Such elaborate system, determines various trends within market environment based on critical aspects. Consequently, nature of transportation and logistics systems within a region determines costs and ultimately nature of pricing on consumer goods.
For example, significant costs of transportation and logistics on agricultural materials differ depending on whether a country is developed or underdeveloped.
Developing countries within South America imposes higher freight rates making charges on their exports higher i.e. between 10 to 20% compared to other goods from developed nations such as United States. Such cases are also attributed to presence of inadequate transport capacity within underdeveloped regions (Lieb and Randall, 1996).
Argentina Transportation System
Argentina is currently identified as one of the emerging economic power within South America. Consequently, privatization movement within Argentina’s transport sector has attained great advancement within the last few years.
There has been tremendous influx of investment from domestic and foreign bodies acting as major force behind gains in movement and storage of goods and services. However, such positive changes within Argentine logistics environment are expected to remain high within the next couple of years (Cottrill, 1999).
One notable change experienced involves development of river transport systems within the country as well as neighboring Mercosur nations. The water highway system referred to as ‘hidrovia’ project, contributes towards extensive improvement on the access of large vessel ships within inland ports. This has adequately enabled enhancement of economies of scale gained by shippers from various goods within export markets.
Additionally, the railway network within Argentina received necessary boost form investors in mid 1990s. The nation’s five rail lines received uplift through privatization which has ultimately contributed towards concentration of much transportation within railway system.
Such privatization has seen diversion of most traffic away from road transport, since large volumes of goods are moved efficiently over longer distances through rail. Extensive use of rail by Argentine Shippers has contributed towards enjoyment of economics of scale by the nation due to convergence in volumes and operational costs (Cottrill, 1997).
Despite achievement experienced within the rail system, there has been lack of sufficient storage facilities within Argentina’s grain industry. This has forced most farmers to seek for trade opportunities for their grains despite prevailing market conditions within domestic market. Argentina’s logistic system encounters difficulties based on the limited capacity at various elevators and river terminals.
The country’s agricultural sector focuses on attaining high productivity standards within farming zones based on improved nature of the country’s elevator. Such improvements would demand significant shift of investments towards storage facilities for the purposes of alleviating storage deficiencies.
However, the country has significantly improved processes through which commodities and value-added goods are moved from production sites to consumption points. This has eventually made Argentina to be recognized as one of the competitors within international grain market (Argentina Business, 1998).
Motor transport is used in Argentina for the purposes of transporting goods especially agricultural produce from farms to various destinations. However, most feeder roads serving rural locations have been identified as predominantly poor, making transportation of products difficult.
The network of roads serving busy terminal locations such as Rio Parana are considered costly based on nature of breakages usually experienced on transit containers. Such road conditions are associated with frequent failure on equipments and wastage of transit time leading to higher operational costs. This has made trucking costs to be approximately over 60% higher compared to those of developed countries.
In Argentina, various motor operations within agricultural sector focuses on small service providers specializing in the movement of different commodities. Their operations are usually seasonal with high demand being experienced during peak harvests. Such operations have led to relatively growing congestion within major metropolitan regions within the country as well as port locations.
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Movement of bulk goods through railway system has created significant economies in terms of volume due to reduction in costs. Argentina has approximately over 34,000 Kilometers of rail which is currently under private ownership of five companies (Cottrill, 1997).
However, a number of problems have been encountered within the rail system which includes loading and off-loading of shipments across rail line which at times results into higher costs based on time. This has solicited concerns based on transit times as well as locomotive failures.
Despite such drawbacks, rail freight in Argentina has risen significantly over the last decade (Argentina Business, 1998). On the side of water transport, there has been elaborate dredging of major rivers for the purposes of accommodating large barge tows with transit goods.
From the discussion above it can be noted that the level of comparative transportation as well as nature of performance on logistics is largely determined by the nature of infrastructure present within a country. Various modes of transportation used in many countries include; water, overland, air and pipeline transportation.
On the same note high seas navigation provides one of the major means of accessing overseas export markets. In the case of Argentina, highway system presents one of the critical links between farmers, elevators and consumers.
Argentina Business. (1998). The Portable Encyclopedia for Doing Business With Argentina.2nd Ed. San Rafael, CA: World Trade Press.
Cottrill, K. (1997). Argentina’s Privatization Signals Rail Revival. Traffic World, 2 (10), 8a.
Cottrill, K. (1999). Fairer Climate for Exports? TrafficWorld, 5 (4), 22-23.
Lieb, R. & Randall, H. (1996). A Comparison of the Use of Third-Party Logistics Services by Large American Manufacturers. Journal of Business Logistics, 17(1), 306-21