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Venezuela Logistics Risk Report

Venezuela Logistics Risk Report


Venezuela's economic crisis has worsened significantly as many foreign investors have pulled out of the country over the recent past due to high political risks and for fear of violating US sanctions. This is negatively affecting the country's logistics network as back borne infrastructure is crumbling amid neglect, lack of maintenance and a dry up in investment funds. Consequently, businesses face a crippling shortage of all utilities that are essential for their operations including water, power and fuel, while the transport sector service quality has also deteriorated significantly. In addition to the already limited extent of the transport network, Venezuela's ongoing political crisis has severely strained the country's relationship with neighbours, resulting in frequent border closures and heightened inspections, lengthening travel times for cross-border supply chains. The road network, as the main mode of transport, exposes investors to substantial risks, including congestion, accidents, border closures and freight theft, which are difficult to avoid, given the lack of suitable alternative freight options. At the same time, trading across borders has also been complicated by a dry up in foreign currency in the Venezuelan market, with the oil sector and those that are politically connected getting priority regarding foreign currency allocations. Overall, there is little prospect of a significant improvement in the logistics network over the medium term as the country's political crisis - largely the centre of all the economic woes - is deepening, with no signs of ending.





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