Logistics costs impact Argentine dairy industry competitiveness

Logistics expenses represent approximately 29% of total costs for dairy companies in Argentina, according to a report by Focus Market. This makes logistics the second largest cost component for the sector, surpassed only by the cost of raw milk.

The report indicates that these costs are roughly 50% higher than comparable networks within the country and can double those of regional benchmarks. Key drivers of these high costs include Argentina's vast territory, heavy reliance on road transport, infrastructure deficiencies, and volatile operating costs.

Industry challenges are compounded by a contraction in domestic consumption. While dairy consumption has fallen by about 15% over the last decade, the volume of goods transported has decreased by approximately 35% over the last 15 years. Because logistics capacity has not shrunk at the same rate as the volume of goods, companies are facing higher per-unit costs due to underutilized transport capacity and the necessity of maintaining strict cold chain requirements for perishable goods.