Rising investment in Colombia's transport and logistics sector spurs economic growth

Despite slowing regional and global growth, Colombia saw its GDP rise 2.7% in 2018, up from 1.4% in 2017, according to the IMF. An important driver of this expansion of the economy has been rising investment in the transport and logistics sector. While the majority of investment comes from the private sector, state investment has also risen, increasing steadily from 0.6% of GDP in 2003 to 2% in 2013, before reaching nearly 3% in 2018.

Colombia has made considerable progress in the expansion of its air and maritime port capacity, while the country’s ambitious road-building programme appears to be back on track after a series of delays. addition, the government has sought to overhaul the industry’s legal framework to better facilitate private investment, while municipal authorities have made efforts to improve both urban and rural mobility.

Nevertheless, the progressive integration of Colombia into the international economy and the development of sophisticated global value chains has placed strain on the country’s transport system. Insufficient levels of historical investment, combined with rising demand from both business and consumers, and nation’s difficult geography have resulted in a significant infrastructure gap.

Overcoming these challenges to increase connectivity and boost competitiveness will be necessary in order to ensure the sustainability of Colombia’s development path well into the future.

Performance

While the sector’s contribution to GDP was relatively stable at around 4% between 2002 and 2017, its total value has nearly doubled, from COP296.8bn ($101.5m) to COP551.7bn ($188.7m) in constant prices, according to the National Administrative Department of Statistics.

Furthermore, the transport and public works sector has increasingly contributed to GDP growth, with this share rising from 6.7% in 2002 to 8.5% in 2017, and this latter figure continuing throughout the first quarter of 2019. This increase reflects the ongoing commitment by the administration of President Iván Duque to improve the country’s transport and logistics infrastructure.

The movement of goods within the country largely takes place via road, with 73.2% transported in this manner, followed by rail (25.5%) and river (1%), according to the Ministry of Transport (MoT). While investment in the sector has been on the rise, this has not been uniform across the segments. In 2017, 74% of public investment went into the road network, 7.8% went into aviation infrastructure, followed by railway (3%), river (0.26%), and the remaining 12% went into planning and administration.

More to Come

While rising investment and the issuing of new concessions to private firms has improved the competitiveness of some segments, it has not for others. The quality of the country’s roads ranked 102nd out of 140 countries in the World Economic Forum’s “Global Competitiveness Report 2018”. While this marks a weak performance by international standards, it nonetheless shows that improvements have been made, with this ranking up from 120 out of 138 countries in the previous report.

Furthermore, the country came in 31st in 2018 in terms of airport connectivity and 34th in terms of the connectivity of its shipping, well ahead of many of its regional peers. However, Colombia ranked 125th for the efficiency of its railway services and 72nd on efficiency of its port services. Moving forwards, improving the competitiveness of the transport and logistics system will require substantial increases in current public and private investment if the country is to meet its economic development goals.

According to the global professional services company KPMG, the country faced a transport infrastructure gap of $69.9bn in 2018. In order to close this gap, around $61bn will need to be invested in the Colombian road network between 2018 and 2035, $5.3bn in airport expansion projects and $3.6bn in the rehabilitation of the country’s railway system.

Structure

The sector is overseen by the MoT, which is tasked with developing and improving the transport and logistics system. The National Infrastructure Agency (Agencia Nacional de Infraestructura, ANI), meanwhile, is charged with planning, coordinating and executing concession projects and public-private partnerships (PPPs). Historically, the development of the country’s transport system has, to a large extent, been undertaken using public-initiative PPPs, with transport making up the largest share of PPP projects overall. According to the National Planning Department (Departamento Nacional de Planeación, DNP), 188 of the 743 PPPs under way in April 2019 were transport projects overseen by the ANI. With the passing of Law No. 1508 of 2012, the country overhauled its PPP legislation to provide a legal framework for private-initiative projects. This framework was further refined with the modification of Law No. 1882 of 2018, which provided greater transparency in the issuing of concessions and regulations to help mitigate private sector risk by ensuring the successful payment of agreed public funds to projects.

Transport is also one of the primary destinations for foreign direct investment (FDI). According to the latest available figures from the Central Bank of Colombia (Banco de la República de Colombia, BRC), 24% of FDI went to transport in 2017, or $3.5bn, the largest share of any industry apart from hydrocarbons, which was tied for first place.

In order to help bridge the financing gap for large-scale infrastructure projects, Financiera de Desarrollo Nacional (FDN), a mixed-ownership development finance institution, was established in 2011. The FDN is 72.4% owned by the Ministry of Finance, with the International Finance Corporation, the Development Bank of Latin America (Corporación Andina de Fomento, CAF) and Sumitomo Mitsui Banking each holding a minority stake. The organisation provides direct financing for projects, along with a diverse range of advisory services for public and private entities engaged in PPPs.

In 2017 17% of the loans issued by the FDN went to transport, according to the BRC. In addition, the FDN has developed a number of products to attract private participation in the country’s transport network and broader infrastructure system; these include subordinated debt and liquidity guaranties. It also provides long-term financing options such as infrastructure bonds and senior debt, as well as deferred credit lines for refinancing.

Logistics

Colombia’s geography and topography – which are characterised by mountainous terrain and large distances between major cities in the hinterland, and ports on the northern and western coasts – has made the development of the sector more challenging and costly. Furthermore, policymakers have inherited a transport network that developed to facilitate national supply chains and domestic consumption rather than international trade. Although traffic and connectivity at airports and seaports has improved in recent years, difficulties remain for freight travelling over land and by rail. Logistics costs accounted for around 13.5% of corporate sales in 2018, with the bulk of costs stemming from storage (46.5%) and transport (35.2%), according to the DNP. Indeed, the average cost of transporting freight from a large city to a major port stood at $1535 in 2018, well ahead of that of Peru ($280), Chile ($450) and Mexico ($900), according to the World Bank. Reducing these costs could help the expansion of domestic firms and remove barriers to international investment.

Ongoing efforts to improve transport and logistics have already yielded positive results. Colombia has improved its overall ranking in the World Bank’s Logistics Performance Index, rising from 95th out of 160 countries in 2016 to 58th in 2018. In addition, the country achieved notable improvements in various Customs processes, infrastructure, logistics, traceability and export facilitation.

However, trading across borders remains a challenge, with the level of documentation required exceeding that of many neighbouring states. Indeed, according to the World Bank’s “Doing Business 2019” report, the average cost of export in terms of documentary and border compliance stood at $720, higher than that of Peru ($680), Mexico ($460) and Chile ($300) but below that of Brazil ($1088). In order to successfully address these issues, the government has set about rationalising logistics processes through the digitalisation of documentation and the optimisation of its Single Window for Foreign Trade, which was first adopted in 2004.

Intermodal

In order to integrate its national transport system and reduce the costs of domestic transit and international trade, the government launched the Master Plan for Intermodal Transport (Plan Maestro de Transporte Intermodal, PMTI) in 2015. The PMTI provides a programme for the development of a network of infrastructure that connects cities, regions, frontiers and ports. Under the PMTI, the authorities committed themselves to public investment of at least COP10.4trn ($3.6bn) per year in transport projects until 2035.

The plan envisions the building or upgrade of 19,561 km of roads, 1769 km of railway along with the development of 5065 km of river for transport purposes. Additionally, the plan outlines the expansion and modernisation of 31 airports, and the dredging of major ports. In order to achieve these objectives, the PMTI places a primary role on private sector activity through PPPs. It has also sought financing from international development organisations, commercial banks and private equity investors. In addition, the plan highlights the need for public expenditure from the national budget, along with tolls and surcharges on fuel and vehicles.

Road Transport

Colombia’s roads provide the primary means for transporting goods; 73.2% of freight is moved in this manner, according to the MoT. The segment is growing, with the Colombian Federation of Road Cargo Transporters (Federación Colombiana de Transportadores de Carga por Carretera, COLFECAR) reporting a 1.7% increase in road haulage in 2018, while the MoT reported a 4.8% increase. The total weight of transported goods reached 112.4m tonnes. In terms of operating costs, cargo transport registered a 5.14% increase, driven primarily by higher fuel prices and labour costs. In 2018, 22% of Colombian companies owned their own transport fleet, with the rest subcontracting to independent providers, according to the DNP.

In late 2018 there were a total of 376,764 legally registered cargo vehicles in the country, the majority of which were independently owned. The market was characterised by a high level of informality; including an ageing fleet and limited access to credit among vehicle owners. In 2008 the government introduced a range of regulations aimed at improving standards for transport vehicles and established a “one-forone” rule, requiring the scrapping of an old transport vehicle prior to the purchase of a new one. The impact of these policies has been limited, however, with 25.3% of all cargo vehicles over 20 years old in 2019. Indeed, among vehicles exceeding a gross total weight of 10.5 tonnes – the primary vehicle size for cargo transport between cities and ports – the share of vehicles over 20 years of age reaches nearly 50%.

In order to address this challenge, the government launched the National Cargo Vehicle Modernisation Fund in early 2019, with an initial funding allocation of COP260bn ($88.9m). The programme is set to provide value-added tax exemptions for the renovation of old vehicles and the acquisition of new vehicles for owners of up to two vehicles. The scheme also provides access to credit via the state-owned financial institution Bancóldex for small traders.

Road Infrastructure

The improvement and expansion of road infrastructure remains a major priority for Colombia given the primacy of the segment in terms of freight transport. On average, 114 roads were affected each month by either adverse weather or maintenance issues in 2018, according to COLFECAR. As of late 2018 the country’s had approximately 204,000 km of road, divided into a primary (17,000 km), secondary (45,000 km) and tertiary (142,284 km). COP6.8trn ($2.3bn) was invested in the country’s road infrastructure between 2010 and 2018, according to the National Roads Institute (Instituto Nacional de Vías, INVÍAS). However, the ANI has stipulated that more than COP40bn ($13.7m) will need to be invested in the segment by 2025.

Private and public investment in road development has been channelled through a series of four investment packages since the 1990s. The third round of these concessions, launched in 1998, included 10 projects, and the majority were either completed or in their final stages by the beginning of 2019.

However, some concessions have experienced significant delays in their successful execution. For example, after finding irregularities in the attribution of the project to build section two of the Ruta del Sol highway project, between Puerto Salgar and San Roque, won by the Brazilian firm Odebrecht in 2009, Colombian authorities announced the liquidation of the contract in February 2017. With 30% of the project already completed, negotiations are ongoing to revive the project as of mid 2019.

Currently under implementation is the Fourth Generation (4G) road infrastructure programme, which was initially expected to extend Colombia’s road network by 7000 km through over 40 highway projects (see analysis). According to the original estimates, the programme was expected to bring in $24bn in new investment, not only for new road links, but also the renovation of existing road and the construction of tunnels. In addition to reducing operational costs and stimulating employment, the expansion of the highway network is intended to boost the country’s manufacturing sector and support its further integration into the global economy. As of mid-2019 a total of 29 concessions had been awarded and 15 had reached financial closing, with two expected to reach completion by the end of 2019.

Road Connectivity 

However, according to the DNP, road congestion is concentrated in the access roads to the country’s major cities. In addition, the national highway network is not sufficiently integrated with the country’s overall road network, nor to its major industrial and logistics centres. In order to improve connectivity across the entire network, the government launched a COP500bn ($171m) programme for the improvement of the rural road network in January 2019, with the objective of rehabilitating 50,000 km of tertiary roads.

Speaking at the launch of the scheme, Juan Esteban Gil, director of INVÍAS, stated that regional and local governments will be invited to submit plans for the development of 50-km stretches of road connecting rural areas to the country’s overall network. Oversight of the programme will be provided by INVÍAS, in collaboration with the MoT and the DNP. Further investment will likely be required to consolidate the country’s road infrastructure. According to the Colombian Chamber for Infrastructure (Cámara Colombiana de la Infraestructura, CCI), there are six roads and 26 stretches of road with links to the 4G programme that still need to be developed to create a fully integrated national road network.

Railways 

While Colombia’s railway system carries 25.5% of all transported cargo, 98.8% of this consists of coal. The reason for this is that the bulk of investment in railroad infrastructure has been undertaken by mining companies to connect mining sites with export infrastructure. The two largest coal mines, the Cerrejón mine in La Guajira and La Loma mine in Cesar, both have highly developed railway infrastructure. According to the MoT, only 51% of the country’s total 3515-km railway system was operable in 2019, of which 11% is continuously in operation, with this used for the transport of coal. Connecting the La Dorada-Chiriguaná and Bogotá-Belencito corridors would enable the country to expand its railway freight offering, allowing for the transport of cargo from Bogotá to port infrastructure in the Atlántico department and the industrial zone in Sogamoso. Efforts to achieve this have shown progress, with the opening in February 2019 of a new railway link between the Port of Capulco in the department of Cesar to La Dorada, 400 km away. The project, which entailed the rehabilitation of 4 km of rail for around COP9bn ($3.1m), was developed by the domestic consortium Ibines Férreo. The new railway line is expected to carry 15,000 tonnes of cargo per month, including coal, cement, coffee and maize.

On the River

Public authorities and private operators have long wanted to leverage the potential of Colombia’s waterways — once a key transport segment — as a means to lower logistics costs. Despite this potential, only 1% of all cargo is transported in this manner. The Magdalena River – which extends for 1500 km, linking Páramo de las Papas in the south of Colombia to the city of Barranquilla, on the northern Caribbean coast – accounts for over 60% of all river cargo, with 87% of this being oil derivatives.

Further development of Colombia’s rivers faces a number of obstacles. Currently, many strategic corridors face interruptions to their navigability during several months of the year, due to inadequate depth and shifting sand banks. In addition, there is a lack of piers and quays at important points along the river network, and cargo vessels follow an inefficient unidirectional operations model.

Despite this, as a result of the efforts of Cormagdalena – the government agency in charge of the country’s river system – total cargo transported by river grew by 7% in 2018, totalling 11.3m tonnes of cargo. Most of the focus on river transport in recent years has gone into improving the navigability of the Magdalena River. In 2014 a PPP contract was signed between the national government and a consortium led by Brazilian company Odebrecht for the dredging of a 908-km stretch of the river from Puerto Salgar to Bocas de Ceniza. If completed, the project is expected to increase cargo capacity fivefold to 10m tonnes by 2029, reduce freight costs, and help commodities producers and agricultural companies increase exports. However, as a result of the continent wide Odebrecht scandal, the contract was terminated in April 2017. A new round of bidding is expected to take place during the second half of 2019. In April 2019 Pedro Juradó, executive director of Cormagdalena, told local media that the project is set to cost COP1trn ($342m).

Ports

Since the privatisation of the Port Society in 1991 Colombia’s port infrastructure has been managed by private firms, with the ANI responsible for granting and managing the country’s 57 port concessions. Total cargo volumes moved through Colombian ports fell by 2.9% in 2018 to roughly 199m tonnes. The Caribbean coast – which accounts for 85.5% of total port traffic – experienced the sharpest contraction, with cargo volumes falling 3.6%. This drop was driven primarily by a decline in the export of petroleum derivatives, according to the Superintendency of Transport. Nevertheless, in line with an overall increase in international commodity prices, port traffic was up 3.4% year-on-year (y-o-y) during the first quarter of 2019.

In 2018 the largest Colombian port in terms of transport volume was the Port of Cartagena, with 2.9m twenty-foot equivalent units (TEUs), followed by the Port of Buenaventura (1.4m TEUs), the Port of Barranquilla (155,000 TEUs), the Port of Santa Marta (105,000 TEUs) and the Port of Turbo (73,300 TEUs), according to the UN Economic Commission for Latin America and the Caribbean. While total port traffic fell, transport volumes at the three largest ports increased, rising 6.9% at the Ports of Cartagena, as well as Buenaventura (48.8%) and Barranquilla (3%).

Furthermore, with a combined throughput of 4.6m TEUs, the country ranked fourth in the region in terms of the total volume of traded goods in 2018. In addition, as a result of the ongoing upgrade and expansion of the country’s port infrastructure, Colombia was the second-highest-ranking country in Latin America in terms of maritime connectivity that year, falling behind Panama, but ahead of Mexico, Peru and Chile, according to the UN Conference on Trade and Development. The dramatic increase in TEUs at the Port of Buenaventura is largely the culmination of a long-term process of investment. This has been undertaken by the Sociedad Portuaria Regional de Buenaventura, which has managed the port and its infrastructure since 1994 under a concession of private and public players led by UAE-based port operator DP World, with minority shares held by the MoT and the local government. The concession agreement stipulated that $449.6m was to be invested in the port between 2007 and 2035, according to the ANI. This investment was earmarked for infrastructure and equipment upgrades, along with the dredging of the seaport, a process which was reportedly 80% completed in 2018, according to local media.

In the most recent round of investment, in 2018, the port authorities invested a total of $83m, with the aim of increasing storage capacity to 24,220 tonnes and handling capacity to 2m TEUs by 2020. The upgrades included the acquisition of three new gantry cranes and six rubber-tyred gantry cranes, costing $38m, as well as the installation of cross-docking technology for $600,000.

Total cargo serviced at the port reached 17.1m tonnes in 2018, with container cargo reaching 11.1m tonnes, the latter presenting a 2.5% increase compared to 2017. Currently, the facility is at a disadvantage compared to other ports in the region, in that it cannot, at its current depths, service New Panamax vessels. Nevertheless, plans are under way to dredge the port to increase its depths from 12.5 metres to 14 metres, in order to provide access to these vessels. Recognising the need to increase the country’s deepwater port offering, the government announced plans in April 2019 to develop a new deepwater facility in Tribugá in the department of Chocó. However, these plans have been subject to criticism from some lawmakers, who have stated that resources would be better allocated to increasing the depth of the Port of Buenaventura.

As one of the most important ports in the region and Colombia’s largest export facility, the Port of Cartagena has also been undergoing significant upgrade and expansion. In late 2018 the Port Authority of Cartagena approving an additional €16m in capital to increase transport capacity for liquefied natural gas and livestock cargo. “Colombia’s port infrastructure has strong prospects for expansion,” Camilo Gonzalez, infrastructure lead for multinational professional services firm EY, told OBG. “While ongoing concessions have had very positive results, we need to rethink the current model to create an integrated and innovative transport and logistics system in order to increase import/export capacity and make use of new investments.”

The port authority also announced a public tender for several projects intended to increase efficiency through the digitalisation of port documentation and procedures. These moves follow the purchase of six gantry cranes in 2017 designed to service New Panamax vessels, thereby substantially increasing the efficiency of its operations.

Work is also ongoing on a $92m concession to upgrade and expand a terminal at the port, being undertaken by logistics group COMPAS. Upon completion, which is scheduled for 2020, the new terminal is expected to have an increased capacity of 3.7m tonnes. “With the current concessions coming to an end during the next decade, it is important that plans on how to structure the upcoming negotiations begin today,” Gonzalez added.

Further Investment

Despite these substantial increases in investment and output, a further $1trn is expected to be needed by 2025 to respond to rising demand for trans-shipment in the region. According to CAF, the compound annual growth rate is expected to reach 3% by that date, requiring capacity in the country’s port network to increase by around 3.3m TEUs. Responding to this projected rise in demand, the CCI announced in late 2018 that the country was planning 17 new maritime terminal projects, the first of which was agreed on in March 2019. Indeed, the 30-year concession for a new multipurpose terminal in Turbo was signed between the ANI and the local port authority.

The port terminal will be designed to serve container ships of up to 366 metres and have a deepwater depth of 14.5 metres. According to the MoT, the project will benefit the region’s agriculture sector, and in particular the banana industry. The project is expected to cost $300m and the development of the infrastructure has been granted to domestic firm Puertos Invesiones y Obras, in partnership with the France-based international shipping and container transport company CMA CGM.

Skyward

The country’s difficult terrain and openness to global trade has supported the development of a significant airport offering, with 74 airports, 57 of which are state-owned and 17 of which are privately owned and operated, according to the MoT. In 2018 passenger volumes in Colombia grew by 6.1% to 37.8m, according to the state-owned Civil Aviation Authority (Aeronáutica Civil, Aerocivil). Driven by rising incomes and the opening of 18 new domestic flight routes, the number of Colombian nationals taking domestic flights increased 2.9% in 2018.

These figures are expected to continue to rise; the Airport Council International ranked the country fourth internationally in terms of projected passenger growth for the period 2016-40, and the government aims to facilitate the movement of 100m passengers per year by 2030, according to the MoT.

Between 2006 and 2018 the segment tripled in size, and air traffic is expected to continue to increase in the years to come. Air traffic activity is concentrated among 20 major airports in the country, which together account for 96% of total passenger traffic and 98% of airborne cargo. By far the largest of these is Bogotá’s El Dorado International Airport, which accounts for close to half of all passenger traffic in the region.

New Air Offering

The steady growth of the segment has promoted existing airlines to expand or renew their fleet, along with the establishment of new players. In July 2018 Gran Colombia Aviation was launched, with its maiden domestic flight from Alfonso Bonilla Aragon Cali International Airport. The new airline, which is a subsidiary of Venezuelan firm Avior Airlines, is expected to concentrate on domestic flights, though it has been granted permission to operate internationally. Established domestic operator Avianca also increased the capacity of its domestic flights by 5% during 2018, before launching the discount airline Regional Express Americas. Flying from Bogotá, the new subsidiary began operations in March 2019 with five domestic routes to Ibagué, Yopal, Villavicencio, Florencia and Manizales. The new airline joins an increasingly competitive market for low-cost carriers, which has grown in recent years to include Viva Air Colombia, Wingo and EasyFly.

In addition, LATAM Airlines Colombia, the country’s second-biggest air carrier, announced a three-year, $300m investment plan in March 2019. The company, which has a 22% share of the Colombian market, aims to expand its operations and consolidate its position in the segment. Air taxi providers have also recently entered the market for the first time. These are small commercial aircraft that connect routes that are not serviced by traditional operators. In July 2018 the aviation authority announced that 54 companies had been granted licences to operate air taxi services. In March 2019 the Colombian firm SARPA began regular air taxi flights between Medellín and Puerto Berrío. This launch forms part of a pilot project organised by Aerocivil to improve flight connectivity in rural areas.

While domestic flights are on the rise, the industry also saw its largest ever increase in international passenger traffic. This was driven in part by the opening of 35 new international routes. In 2018 international passenger numbers grew by 12.1% to reach 12.3m, according to Aerocivil.

In an effort to capitalise on this increase in flight activity, the government introduced two additional taxes on international flights, which came into effect on January 1, 2019. However, with a growth rate of close to 10% y-o-y during the first quarter of 2019, the new taxes do not appear to have negatively affected demand among travellers.

Aviation Infrastructure

Colombia’s aviation infrastructure constitutes one of the most developed segments of the transport sector. Between 2010 and 2018 approximately COP5trn ($1.7bn) was invested in the network, averaging 0.1% of GDP per year, supporting an increase in the segment’s overall efficiency and competitiveness, according to the National Association of Financial Institutions.

As a result, the country saw its ranking in terms of the quality of its airport infrastructure rise from 89th in 2010-11 to 81st in 2017-18 in the WEF’s “Global Competitiveness Report”. Nevertheless, while the segment has seen improvements, substantial investment will be necessary given rising demand. Although the country has a number of major airports, the estimated increase in the number of passengers may prove difficult to accommodate if investments in infrastructure do not keep pace. Indeed, a number of smaller facilities still lack the necessary infrastructure to benefit from the growth prospects of the country’s airport segment.

Faced with this challenge, Aerocivil announced in November 2018 that it would invest $3.8bn over the next four years to upgrade the country’s aviation infrastructure. In addition, it was announced that tenders would be offered to private companies for the upgrade and expansion of 14 airports in the country. The ANI has also been working to structure the expansion and rehabilitation of nine airports through private initiatives, with these projects expected to break ground during 2019 and 2020. The largest of those under consideration is the so-called South-west Airports concession, which will integrate five major airports in the region.

In February 2019 Grupo Argos, one of the largest infrastructure conglomerates in the country and majority shareholder in El Dorado airport, presented plans to the ANI for the expansion of the capital’s airport, with the aim of increasing its capacity from 40m passengers to over 70m. Furthermore, in May 2018 the ANI announced that a tender for the longawaited El Dorado II airport would soon be issued. The $3.5bn project was originally scheduled to open in August 2023 with an initial capacity of 4.5m passengers and 3800 metres of runway. However, the new facility, which is expected to be connected to El Dorado airport via a light rail link, has experienced a series of delays. According to industry players, moving forwards a choice will need to be made on whether to increase capacity by expanding the current airport or by building a second terminal.

Urban Mobility

While the development and management of the country’s urban transport system is the responsibility of regional authorities, the national government provides an overall framework. The country’s urban mobility strategy is guided by two policy programmes: the Integrated Mass Transit System for cities, with over 600,000 inhabitants; and the Strategic Public Transport System (Sistemas Estratégicos de Transporte Público, SETP) for urban areas with fewer inhabitants.

As the largest city in Colombia, with a population of about 8m, Bogotá introduced the country’s first bus rapid transit (BRT) system – the TransMilenio – in 2000. The articulated bus system offers regular and express bus services through bus-only lanes across the city and has been fundamental to improving public transport in the capital. It is operated under a PPP model, with the private companies running the bus fleet and ticketing system, while the government is responsible for developing and maintaining the accompanying infrastructure.

Other urban transport options have subsequently been implemented to improve connectivity and reduce congestion in Bogotá. December 2018 saw the launch of the capital’s first cable car – the TransMiCable – running above the municipality of Ciudad Bolívar. Spanning 3.34 km and linking four stations, the project is expected to reduce travel times in the neighbourhood, enabling commuters to travel a journey that normally takes one hour in around 13 minutes. Bogotá is the third city to implement such a transport solution, following the success of similar projects in Medellín and Manizales.

Other major cities in Colombia have also been modernising and expanding their public transport networks. Launched in late 2006, the Medellín Metro Master Plan outlines the creation of an integrated network by 2035, with 16 new transport links comprising two trains, five cable cars, two buses and a tram, to be integrated with the city’s 10 existing lines. The latest of these infrastructure projects, a cable car located in the municipality of Villa Hermosa, opened in February 2019. Under the plan, the city will also modernise its fleet of city trains and upgrade the signalling system to increase efficiency.

Outlook

Notable progress has been made in expanding the country’s road system, and increasing port and air transport capacity. Furthermore, new projects are set to increase the transit of goods along Colombia’s railways and rivers. Rising investment in these segments has boosted the competitiveness of the country and contributed to growth.

Nevertheless, Colombia faces high logistics costs and ongoing bottlenecks to connectivity. The transport infrastructure gap is large and set to grow further as demand rises. Significant investment will be needed across the sector to close this gap and ensure that the country can sustain its economic development. While this presents a challenge, the country stands to benefit from its mature PPP framework and openness to FDI. Leveraging private sector expertise and investment within the framework of a long-term national strategy presents a promising formula for an integrated transport network.