MIT International Logistics Spring 2003 15.765/1.265/13.67/ESD 265 Professor Henry S. Marcus Dr. Abbot D. Weiss Specialized aspects of international logistics -- country and regional issues ARGENTINA Team: Fernando DOBRUSKY Maria Andriana Papaioannou Thanattaporn RASAMIT Alicia BARBERENA DOMINGUEZ Timothy HWU Pablo TERCEROSpecialized aspects of international logistics -- country and regional issues Choose a country you are familiar with, not the United States. For that country, answer briefly the following questions. ARGENTINA 1. What are the rough dimensions of the country in miles? Located in the southern part of South America and thus in the southern hemisphere, Argentina has an area of almost 1.47 million square miles, of which 1.08 are on the continent and the remainder in the Antarctic. Its length of 2,360 miles goes from latitude 22º to 55º. Its frontier with Uruguay, Brazil, Paraguay, Bolivia and Chile has a perimeter of 5,826 miles. The coast on the Atlantic Ocean is 2,936 miles long. 2. What is the population? What percentage live in the 3 largest cities? Total population: 37 million Buenos Aires and Greater Buenos Aires: 12 million Cordoba: 1.1 million Rosario: 1 million 3. What is the predominant language? How widely used is English in business? Predominant language: Spanish English is not widely used at all. Only in companies with direct trade with English speaking countries, and not at a very high level.4. In the last three years have there been any instances of political instability? Yes, as a matter of fact in December 2001 there were riots all around the country, the president Fernando de la Rua resigned and in the following 2 weeks there were 5 different presidents. After that, Duhalde became president but elected by the congress and not by the people. 5. What is the currency? What is the exchange rate to US dollars? How has it changed in the past two years? The currency is the peso. For 10 years (1991-2001) the currency was 1 peso = 1 US dollar. After the crisis of December 2001, the peso was devaluated and the currency exchange jumped almost overnight to 3.5 pesos = 1 dollar. Since then is floating but fairly stabilized. Today is at 3.17 $ per 1 U$S 6. What time zones exist in this country? What time is it in the capital when it is noon in Cambridge, MA? Only one time zone. When its noon in MA, in Buenos Aires is 2 PM 7. What unique requirements exist for products sold in this country? (e.g. testing, packaging, language, safety, etc.) No special “unique requirements”. Products sold in Argentina must be in Spanish. 8. What regulations or limitations exist regarding freight transport? Freight transport is deregulated. There are regulations on the size and weight of trucks for different types of roads There are regulations over transportation of hazardous materials (special permits, etc.)9. Are there saltwater ports which can handle large ships? How far are the major population centers from those ports? The main port is Buenos Aires, which is on the Rio de la Plata but has direct access from the Atlantic Ocean. It is a few blocks from the center of the city. 10. What business terms and financial instruments are typically used for import commercial transactions? Commercial banks in Argentina offer loans to creditworthy importers, although interest rates are still high by U.S. standards.The U.S. Export Import Bank (EXIM) guarantees numerous trade facilities from U.S. commercial banks. The U.S. Comercial Service in Buenos Aires has compiled a list of U.S. Banks, which have expressed an interest in financing export tranasactions for small and medium sized companies, using EXIM programs.In all transactions there must be a reasonable assurance of repayment.More than 80 percent of approved transactions are for small businesses.The financing programsare offered: -Working Capital Guarantees -Export Credit Insurance policies. -Direct Loans -Lease Guarantee Program. -"One-Stop-Shop" Co-Financing Facility -Engineering Multiplier Program -Project Finance -Environmental Technologies -Agreements with other Argentine Agencies 11. How large is a typical supermarket or retail food store (square feet or meters)? Carrefour is the leader in the retail industry. Other players are Wal-Mart, Norte, Coto, Disco. A typical supermarket has between 10,000 to 20,000 square foots in the main cities.12. Do any of the large US discount retailers (Wal-Mart, K-Mart, Toys ‘R Us) have stores in this country? Wal-Mart is in Argentina since 1995, but they have been loosing money since then. They lost the competition with Carrefour and could not understand the Argentinean consumer. 13. Describe the highway and rail infrastructure. Are the: extensive, moderate, or primitive nationwide? Highway structure has been improved in the last 10 years. Roads that connect Buenos Aires with the major cities are in good condition. There is no extensive structure to connect Cities other than Buenos Aires. Both Highway and Rail infrastructure have a “star” shape, with Buenos Aires in the middle. Rail infrastructure is moderate. Service is improving since the privatization in the 90’s. 14. How bad is the traffic congestion in the major cities? Buenos Aires has traffic problems weekdays on peak hours between the center of the city and the suburbs in all directions. 15. Which countries are the primary trading partners? For each partner, in which direction is the balance of trade (import or export)? Exports $23 billion (f.o.b., 1999 est.) Exports - commodities edible oils, fuels and energy, cereals, feed, motor vehicles Exports - partners Brazil 24%, EU 21%, US 11% (1999 est.) Imports $25 billion (c.i.f., 1999 est.) Imports - commodities machinery and equipment, motor vehicles, chemicals, metal manufactures, plastics Imports - partners EU 28%, US 22%, Brazil 21% (1999 est.) Balance Trade: Brazil: Export EU: Import US: Import Note: This data are previous to the currency exchange, since then, the levels of import have decline to very low levels.16. Is security an issue in logistics? Why? Argentina had 2 terrorist attacks. In 1992 a bomb in the Israel embassy and in 1994 a bomb in the Jewish community building. After those attacks security in transportation was discussed (the bomb of 1994 was inside a cargo van that was