Panama: Panama Hub Helps Global Brands To Penetrate Latin American Markets

Hellenic Shipping News
Last Updated: 10 May 2017
Article by Patton, Moreno & Asvat

For global brands distributing into Latin America, establishing a regional distribution centre (RDC) in Panama has advantages to help them meet demand without incurring heavy costs. Damco's dedicated 3PL operation at their new Panama Hub enables their clients to scale space, labour and transportation according to needs. This means that they can respond to fluctuations in demand, having the ability to utilize more space and resources when needed. Two well-known global brands that are now successfully penetrating into Latin American markets by basing their RDC operation at Damco's Panama Hub – eliminating barriers to expansion while seamlessly supporting growth through a network of resources.

Damco supports a global technology company's supply chain into Latin America and Miami With approximately 64% of this company's overall net revenue coming from products sold outside the USA, having visibility and control of the end-to-end supply chain when distributing to emerging markets like Latin America is a major factor in achieving on-target performance. When the multinational needed to change its Latin America hub and distribution structure, Damco proved that investment in the new Panama Hub would cut transit times and costs, supporting their supply chain into Latin America and Miami.

Previously, the majority of their products destined for Central or South America had to move into Mexico or through Miami before being distributed. Through the use of the Panama Hub, their end-to-end transit times has substantially improved, and at the same time reducing their carbon emissions and costs.

The company directly benefits from Panama's low/zero taxes in its free trade zones and economic development areas while being able to reduce costly inventory by closing in-country warehouses.

The Panama Hub is also helping to meet the targets set in their sustainability program, which aims to cut carbon emissions in their supply chain by two million metric tons of CO2 by 2020. So far, Damco's Panama Hub team have been able to reduce emissions by up to 40% while still managing to bring order lead-times and shipping costs to Latin America down!

Appliance manufacturer establishes RDC in Panama to expand their portfolio of clients Damco's Panama Hub has also enabled a multinational appliance manufacturer to eliminate the need to invest in warehouse space, technology, transportation and staff to execute the logistics process. They now have a logistical network to penetrate markets in South America with lower risk and higher return. They have also made operational and transactional time and cost savings by using Damco to handle the paperwork, customs documentation, billing, audits, staffing, etc., that is required.

Damco's Panama Hub has state-of-the-art software for supply chain visibility, transportation management, inventory control, etc. Outsourcing their logistics to a reliable, seasoned 3PL has allowed to focus on core competencies while leaving the rest to the experts.

Since Central America and the Caribbean are very small markets, minimum size restrictions on orders from factories in Asia have made it difficult for brands to penetrate these markets. Thanks to their RDC at Damco's Panama Hub, there is no lower limit on order sizes. There is also a far greater degree of flexibility in daily dispatches to countries in the region: orders can be quickly reassigned and shipped to the markets where products are needed.

Previously this customer experienced a massive four month lead time before manufactured products could be delivered to customers in Latin America, giving the company only three opportunities a year to place their orders – a severe limitation. Now, thanks to Damco's 3PL solutions combined with the infrastructure advantages of the Panama Hub, when an order is received in Asia, it takes only three days before the products are shipped to their destination.

Damco's Panama Hub provides global brands with flexible, scalable resources The Panama Hub has all the necessary resources at hand to provide a flexible and scalable service that meets the changing needs of global brands. By setting up their RDCs in Panama, Damco's 3PL clients are able to utilize the latest and most effective logistics systems to ensure that products ordered from manufacturers in Asia arrive in excellent condition, at the right location, at the right time, and in the right quantity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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