Digital transformation of transportation in Latin America and the Caribbean - 10/06/2022
Inter-American Development Bank (IDB)
International and Regional Organizations | International
In the context of the Fourth Industrial Revolution, the adoption of technologies such as the Internet of Things, big data, artificial intelligence, and edge computing can bring unprecedented benefits to the sector in order to increase its efficiency, sustainability, and inclusion. The crisis of the COVID-19 pandemic gave concrete examples of these benefits allowing, among others, to continue with the distribution of products to isolated populations through e-commerce and reducing the risk of contagion in transport processes through the digitization of documents and payments. Recognizing these benefits, the private, public, and academic sectors of the world’s leading transportation countries are actively driving digital transformation, with positive results in terms of costs reductions and operating profits, decreasing the environmental impact of transportation, improving the competitiveness of economies and providing greater accessibility of citizens to employment, health and education opportunities. The situation in Latin America and the Caribbean (LAC), however, is far from this reality. This analysis, the first in the region on the subject, shows that the transformation is incipient and focused on certain sectors and countries. However, the COVID-19 pandemic and the increased awareness of the benefits of digital transformation are generating a change of perspective, increasing the attention of regional leaders and, consequently, the allocation of investment resources in this area. In line with the pillars of the Inter-American Development Bank ́s (IDB) Vision 2025, the main message of this study is that to overcome the challenges of transportation in LAC -increased urban congestion, loss of public transport ridership, high logistics costs and fight against climate change, among others- a big push of digital transformation is required.