After consecutive years of economic growth, Colombia is taking advantage of its macroeconomic stability to improve transport links. Much of this investment will go into the road network, especially through the flagship fourth-generation road concession programme. Expansion of port infrastructure, which has already benefitted from successful public-private concessions, will make the country better equipped to deal with rising cargo inflows stemming from enhanced trade. Air transport, meanwhile, is getting a boost from the increasing numbers of travellers, spurring improvements in airports. Better urban transit systems are also helping to make cities more liveable, reducing both pollution and commuting times.

Colombian authorities are aware that maintaining growth patterns will be inseverably linked to how effectively transport infrastructure can be improved to serve business. Over the coming years, the development of land transportation networks will be a top priority. The National Infrastructure Agency (Agencia Nacional de Infraestructura, ANI) aims to increase roads under concession from 6000 km to 11,000 km, revitalise the aged railway network and raise rail lines under operation from 900 km to more than 2000 km.

Taming The Land

The challenges are significant. The World Bank now ranks Colombia 97th out of 160 countries for transport and logistics infrastructure, a 33-place drop from the previous ranking, and a stark reminder of the difficulties it faces. According to “Doing Business 2014”, an annual World Bank report that compares the ease of businesses operations between countries, importing a container to Colombia requires an average of 13 days and six different documents, and costs up to $2470. Exporting a container costs an average $2355, compared to $890 in Peru. Of this total, $1535 goes to inland transportation and handling procedures, which are the most expensive of any Latin American country. The differences between Colombia and Peru illustrate the challenges posed by geography for Colombian companies, especially distances to ports. Bogotá and the port of Cartagena are 985 km apart; in Peru, a container leaving the capital Lima need cover only 15 km to reach its export point at the port of Callao.

Distance To Travel

Links by land are hard to achieve between the major cities in the north-west and the regions in the south-east. Although passenger traffic has been much improved in recent years through a consistent reduction of airfares, difficulties for freight travelling over land persist. With most production centres far away from ports, Colombian industry has been disadvantaged on the international markets.

“It is logical to have industry by the coast near the ports, but for cultural reasons this was not the case in Colombia,” Iván Villegas Bermúdez, general manager of construction firm Proyekta, told OBG. “People are very attached to their regions and each one has a different way of doing business from the other.” The problem is not so much the distances per se as the time it takes to cover them on existing infrastructure. Hence the efforts to expand the nation’s roads and build a network of wide highways across the country.

Road Cargo

Road transport accounts for 92% of internal freight movement, according to the Colombian Federation of Road Cargo Transporters (Federación Colombiana de Transportadores de Carga Por Carretera, COLFECAR). Transport of goods by road increased 2.55% in the first quarter of 2014 compared to the same period in 2013, with cargo companies moving 33.6m tonnes in January-March. Global sales for the road transport sector rose 2.5% over the same period, climbing from COP3.7trn ($1.85bn) in the first quarter of 2013 to COP3.79trn ($1.9bn) for the first quarter of 2014. “The free trade agreements and the high peso have been good for logistics due to the rise in imports,” Juan López Posada, general manager of Grupo Malco, a logistics broker, told OBG. “In 2013, around 25% of trade was exports and 75% was imports. However, this year we are confident that exports will start picking up.”

Road cargo companies tend to own about 30% of their transport fleet, while the rest is subcontracted to independent providers, according to the Ministry of Transport. COLFECAR figures show that as many as 500 new companies have joined the market in the last two years. The resulting increase in competition is pushing prices down: the cost of getting a container from Bogotá to the port at Buenaventura – one of the main transport corridors – has fallen by 34% in the past three years.

Informal Business

Informality remains a challenge, partly because freight transport is a relatively accessible occupation. But policy errors and poor coordination between government bodies have also led to an increase in the number of informal operators. Before a pipeline network was built to export oil, trucks were used to haul barrels between production regions and the country’s ports. Once the pipeline came on-stream, the large fleet of trucks that had been commissioned by the state oil company, Ecopetrol, became redundant, and many of these were absorbed by the secondhand market. “There are about 2500 companies that are legally registered to work as truck transporters. But in the chambers of commerce, you find 25,000 companies or individual drivers offering this service,” Alejandro Toro Londoño, general manager at Transmeta, a transport company, told OBG.

Information Gap

The need for more comprehensive statistics constrains attempts to better regulate the sector. Although the Ministry of Transport estimates there are currently 275,000 cargo trucks operating in Colombia, there is no clear estimation of the demand for cargo services. This means that companies have to take more risks when planning investments. “Most transport providers simply go around looking for cargo to transport, but have no estimates of how much that might be,” Juan Carlos Rodríguez Muñoz, president of COLFECAR, told OBG. “A better understanding of cargo flows would help authorities and the private sector work together to improve regulation.”

Much of the data needed to predict patterns in cargo demand already exists, as a higher use of technology in recent years has improved traceability. As soon as a container leaves a port to continue its route, an electronic manifest is sent to the Ministry of Transport, allowing cargo flows to be reported in real time. This has opened the door for more effective enforcement by Customs authorities, which can stop transport trucks on the road and seize cargo if any information in the manifest is found to be incorrect or falsified.


Since 2011, the government has been enhancing its system of libertad vigilada (surveilled freedom), which replaced a scheme of minimum, fixed tariffs. This means that freight costs are liberalised, but that the Ministry of Transport is constantly monitoring tariffs across all transport corridors. Until recently, information requested about prices was strictly related to the price paid by transport companies to the drivers providing the service. However, starting in 2014, the price charged by the transport firm to the client requesting the freight service must also be submitted to authorities. “The libertad vigilada model for pricing cargo will translate into more flexibility for operators, as prices will be negotiated by the operators and customers based on objective factors, such as the route used and type of freight,” Orlando Vélez, general manager of Transer, a transport firm, told OBG.

The libertad vigilada scheme allows authorities to monitor prices and, if need be, intervene. If a transportation company repeatedly fails to comply with minimum tariffs, the Superintendence for Ports and Transport (Superintendencia de Puertos y Transporte, SPT) has grounds to impose fines. However, because price issues are generally related to unfair competition practices and thus fall under the realm of restrictive competition, Colombian authorities want to change this model, shifting the responsibility for fining companies found guilty of “dumping” to the Superintendence for Industry and Commerce (Superintendencia de Industria y Comercio, SIC). Due to the transport sector’s specific conditions, COLFECAR believes this may not be the right move: “This is a strategic sector, so we want SIC to deal with these issues, but regulation should be reviewed in conjunction with the Ministry of Transport.”

Better understanding of demand patterns would also help reduce costs. Fuel currently accounts for 30% of total operational costs, while 15-16% go towards toll payments. Other costs are related to security, a common business expense for Colombian operators. Some of the biggest road transport companies avoid shipments between 10pm and 6am for security reasons, and insurance premiums can strain budgets. Cargo valued at more than $150,000 requires an armed escort. Nonetheless, security has improved in recent years.

Trade Imbalance

Despite the large investments going into transport infrastructure, some issues related to Colombia’s urban development and geographic realities will be hard to overcome. The big problem affecting logistics is the widespread imbalance between inbound and outbound trade in key areas. Bogotá, for example, receives a large amount of goods that need to be carried by truck from the ports or other regions, but generates comparably little outbound cargo to fill truck fleets on their way back. The same issue arises in several other parts of the country, especially as most of the bigger cities are landlocked. This is likely be a recurring problem affecting transport price and efficiency in Colombia for years to come.

It also affects transportation costs, which are high. Moving a container between Bogotá and Cali, the third-biggest city, for example, costs up to $2000. The same container taken from the pacific port of Buenaventura to Bogotá will come to around $2200, for a land distance of 400 km. Transport from Bogotá to the Atlantic port of Cartagena can cost as much as $2800. Despite the challenges, import and export companies are confident that growth will come from increased trade. “The main opportunities for imports in 2014 will be in technology and health products, while for exports one of the most attractive markets will be cosmetics,” Camilo Angarita, general manager at UPS, told OBG.”

Road Projects

Better and wider roads will bring cost efficiencies. Perhaps the most ambitious of current plans to expand infrastructure are included under the fourth-generation road concessions, which involve a total investment of $25bn. Overall, Colombia is focusing on 40 road projects, aiming to build 8000 km of new roads, including 1200 km of four-lane highways.

Projects began to be tendered and awarded during the first quarter of 2014, and the process is expected to go on for much of 2015. The first of the fourth-generation highway concessions to be tendered was the COP1.3trn ($650m) Girardot-Puerto Salar highway, which received two offers. The second was the Conexión Pacifico 1 highway concession, at an estimated cost of some $927m. This project is part of the Autopistas de la Prosperidad, a 900-km network of four-lane highways linking several rural areas.

In May 2014 two other highway projects were launched. The first of them, the COP910bn ($455m) Conexion Pacifico 2 highway to be built in the region of Antioquia, received one offer. Conexion Pacifico 3 highway project, a COP1.3trn ($650m) contract to maintain 119 km of road and add an extra 28 km, received two offers from consortia made up of Colombian and foreign companies. This road connection links the regions of Antioquia, Caldas and Risaralda, and the project will involve building six tunnels and 26 bridges. Other works expected to go to market in 2014 are the 146-km Conexión Norte highway, involving a $475m contract to build and operate a road in the north-west region, and the Autopista del Mar 1 and Autopista del Mar 2 highway projects, worth $732m and $805m, respectively. These three contracts are expected to be awarded in the third quarter of 2014.

Despite the positive effects expected from the road projects, the relatively low interest that some of the initial tenders have been getting from the private sector has raised fears that the way concession projects are financed may need to be reconsidered. The government has been working to increase access to financing for companies involved after a change in the laws governing such contracts required firms to provide the initial capital themselves and be paid in instalments as functional units are completed (see Construction chapter).

Air Transport

Underdevelopment of road infrastructure has helped solidify air travel as an alternative for covering long distances. Economic growth, in tandem with better conditions for tourism and business travel, has driven enlargement of this sector, which has been growing at three times the rate of Latin America as a whole, according to the Association for Air Transport in Colombia. The number of passengers going through the country’s airports rose from 10.8m in 2003 to 29.5m by the end of 2013. This tripling of numbers over the past decade has been noted by the government and airport concessionaires, which are now undertaking improvements to upgrade airport infrastructure and increase competitiveness of the sector, as several Latin American countries vie for a bigger share of international air travel (see analysis).

Currently being tendered are the $128m Barranquilla airport expansion project and upgrades at several airports in the south of the country, expected to cost $121m. The coming years will also see upgrades to the capital’s El Dorado Airport, including new runways and expansion of the terminal area as an air force base located on the premises is moved away.


While air transport remains largely driven by passenger traffic, most imports and exports of cargo use the country’s port network. Much investment in recent years has also gone into medium-sized ports, to alleviate pressure on the more sought-after entry and exit points. Port operations improved considerably after private sector concessions began to take shape in the early 1990s – both Colombian and foreign operators now manage terminals at various sites – but there is pressure to modernise further. “The functioning of ports in Colombia is a good example of how private investment is crucial to improve the country’s transport and logistics.” Juan Fernando Uribe, country manager at French engineering firm Soletanche Bachy Cimas, told OBG. “Railroads and fluvial transport need to be developed to complement the ports.”

A succession of trade deals and the expansion of the Panama Canal both signal a big opportunity for Colombian ports to further establish themselves as transshipment points along the Caribbean. The amount of cargo passing through the country’s ports rose from 147m tonnes in 2010, to 183m tonnes in 2013, according to the SPT. Rising traffic was supported by a jump in public investment in ports, which went from $168m in 2010 to $379m by 2013, and is expected to reach $451m by the end of 2014. These figures, provided by the ANI, are for public outlays and omit the additional investments made by private concession-holders.

Cartagena port, for one, is undergoing a $500m expansion. As the biggest container port on Colombia’s Caribbean coast, a full 80% of its current traffic is related to trans-shipment, which is expected to increase once the Panama Canal expansion is complete. Dredging of the port’s access bay is currently under way at a cost of $60m, which will allow it to receive ships with a dead-weight tonnage of up to 160,000.

The second-biggest port on the Caribbean coast, in Barranquilla, handles several types of cargo, and registered a 13% increase in freight in the first two months of 2014, reaching 746,683 tonnes. Strategically located at the mouth of the Magdalena River, the port forms an important link with river cargo traffic, which is set to grow in coming years as a project takes shape to increase the river’s navigability. Also located on the Caribbean, the Santa Marta port handles container traffic and coal exports, and has installed two Panamax cranes, making it a beneficiary of enlargement of the Panama Canal. Expansion work will allow the port to more than quadruple its container capacity, from 100,000 twenty-foot equivalent units to 440,000.

Such expansions at the three main Caribbean ports are helping to attract further investment to cities on the northern coast. “While Cartagena has the strongest port for containers on the Caribbean coast and Santa Marta has specialised in bulk cargo, Barranquilla has emerged as the most developed city in the region, showing a significant increase in consumption. Being ideally located between the other two cities, Barraqnuilla is a strategic place for any provider of logistics services,” Rodolfo Arbelaez, president of logistics provider Corporación Colombiana de Logística, told OBG.

Customs Check

While infrastructure has seen many improvements, challenges remain in getting goods through Customs. Multiple government agencies are required to check cargo, and this is done without coordination, meaning the same cargo may be checked several times before it can leave its transit point. As a result, freight often remains in port for two to three days before continuing through its distribution chain. To streamline this process, authorities are implementing a new system for cargo verification (see analysis).

On The Pacific

Improvements have also been under way at the Pacific port of Buenaventura, which already handles 60% of cargo going through Colombian ports. The current expansion plan involves an investment of $450m, of which the biggest portion, $215m, will go towards infrastructure. Another $175m will be allocated for new equipment, and the remaining $60m will go to enhance logistics operations. Spanish operator TCB, which manages the container terminal at Buenaventura, has announced a $150m investment to increase the terminal’s handling capacity.

Meanwhile, the new Aguadulce terminal – operated by a consortium made up of International Container Terminal Services from the Philippines and Singapore’s PSA International – is set to start operations in 2015. This facility will have an initial area of 600 metres for containers, which can be extended to reach 900 metres in the future. It also includes a 250-metre space dedicated to handling shipments of coal.


To benefit fully from its port infrastructure, however, Colombia must also expand its railway network, as this would enhance efficiencies from multimodal transport. Development of the rail system has been minimal over the past few decades, representing only 0.7% of investments in transport infrastructure in 2012, according to a report by Fedessarollo, a think tank. Trains remain a marginal part of the general cargo sector, with coal accounting for a large majority of freight transported by rail. Although there are more than 2180 km of railways, only 756 km are operational and, of that, only 592 km are used to transport goods.

There are currently two private concessions for rail. The 498-km Red Ferrea del Pacífico line links the Pacific port of Buenaventura to Cali and the Cauca Valley. The other line, the Red Ferrea del Atlantico, a 250-km railway operated by Fenoco, connects Bogotá to the Cienaga mining port on the Atlantic.

Investment On The Lines

Several investments from both public and private concessionaires aim to revive Colombia’s railway system. As free trade agreements begin to attract new businesses to the country, the ANI aims to focus more on public-private partnerships (PPPs) for concession deals to provide opportunities for private sector involvement. In late 2013, Fenwick Colombia, owned by port operator Impala, bought a majority stake in the Ferrocarril del Pacífico railway line. The entrance of a new concession partner, which joins minority stakeholders Mariverdo and Railroad Development Corporation, will bring fresh investment into the railway link enabling it to raise weekly capacity from its current 10,000 tonnes to 80,000 tonnes.

Overall, in the short term, the ANI expects up to $212m of private investment to be made through the existing concessions. This will be used for a number of works, including to improve 498 km of railway between Buenaventura and La Tebaida, build a second line to cover the 245 km between Ciénaga and Chiriguaná, and do maintenance on the 524-km line that connects Dorada and Chiriguaná. The stretch between Belencito and the capital Bogotá, too, is set for improvement under current investment plans. Revamping of the railways is essential to take at least some of the pressure of cargo transport off the roads. This would improve mobility in the bigger population centres.

The challenge to improving multimodal transport in the country will be not only to invest in infrastructure, but also to enhance the connectivity between different transport modes. Much of this task will fall under government plans to increase transportation of freight inland though some of Colombia’s major rivers, such as the Magdalena (see analysis).

Urban Transport

Investment in infrastructure will also be geared towards improving transport in urban centres. Several projects aim to reduce the traffic jams that have become a regular nuisance in cities such as Bogotá. In October 2013 the Inter-American Development Bank approved a $40m loan to Colombia to enhance alternative means of transport in the capital. These funds will be used to acquire 282 electric or hybrid buses, which will reduce greenhouse gas emissions by public buses in the city by 46% and cut operating costs of the bus network by some 35%.

Since its opening in December 2000, Bogotá’s Transmilenio bus system has done much to improve the city’s public transport. Its 1300 large-capacity buses serve 11 routes that run on 100 km of dedicated road space. The network carries 2.4m people every day across the city’s busiest transport corridors. It has been characterised by both success and controversy. Despite opening new possibilities for commutes, the system has faced pressure from over-crowding and inefficiencies.

Much of this has to do with delayed expansion. According to the government plans launched in 2000, the Transmilenio system was intended to have 388 km of exclusive lanes by 2014, but as of March only 109 km had been established, leaving city growth insufficiently matched by the expansion of the public bus system. One cause of this was the low execution rate of public transport projects, which reached 34% in 2012 and 68% in 2013, according to local media reports. Expanding the system in the coming years, as well as increasing investment in new buses, will be essential to keeping Transmilenio sustainable.

The possibility of building a metro has been long debated; if constructed, it would bring sweeping improvement to the capital. In March 2013 the World Bank, which is expected to finance part of it, gave its approval for Colombia to start initial engineering studies. Currently managed by the Institute for Urban Development, the project is expected to finish these, along with tendering information, by September 2014. Authorities expect to award the project in first-half 2015, at a cost of $3bn. The metro system, which will run for 26-29 km between 27 stations, is then due to be operational by 2021. “There is no doubt that Colombia needs the new roads and highways, but it is also true that a localised project like the Bogotá Metro will have an very positive impact on nationwide productivity,” Julio Torres, managing partner at Multiple Equilibria Capital and former credit director at the Treasury, told OBG.

Legal Framework

Conscious of the need to make investment in the sector more palatable, authorities have made regulations more agile. The passing of law 1682, known as the Infrastructure Law, through Congress at the end of 2013 has set the stage for construction work to advance more swiftly. One of its new provisions relates to land expropriations, which historically have had a considerable impact in delaying road projects.

As in previous road concession deals, the management of land acquisition for a project, and related costs, fall under the responsibility of the concessionaire. However, the new regulation includes features designed to help reduce the time required for land acquisition. In the past, the need to use time-consuming judicial expropriation of land led to project cost overruns and had been red-flagged by private contractors as a deterrent to investment. As an alternative to judicial expropriation, the new law encourages administrative expropriation through the ANI, which awards road contracts, rather than through the courts. Further, police force may be used to secure access to the land assets after 15 days if the owner has not cleared the way. Moreover, any price disputes will be resolved separately, and cannot be used to delay or stop expropriation.

The government’s more aggressive stance on expropriation processes arises from the status which the new law gives to land. In essence, any land that is needed for a transport project is considered an asset of public interest, which precludes it from any analysis by the project that is the basis for expropriation.

Connect The Pots

With expansion of transport infrastructure happening on the ground, however, more may need to be done to better articulate public policy. In certain cases, central government intentions are blocked by local governments through existing Territorial Development Plans (Plan de Ordenamiento Territorial, POT). To avoid this, the Ministry of Transport is now establishing priority logistics routes across the country (see analysis). This will prevent local authorities from changing POTs that affect transport projects without first consulting the ministry. Further clarification and stewardship could be achieved by joining all of Colombia’s large infrastructure projects into a master plan that could prioritise them in full view.


Colombia’s transport sector is set to benefit extensively from the investments now under way. In a sense, this is a unique opportunity for the country. The investment involved and the ambitious drive to upgrade long-obsolete transport routes will give a lift to business, especially in the country’s rural areas. Road projects will improve economic performance by reducing travel times and connecting Colombian companies with domestic and international markets.

Investment in road infrastructure alone, however, will not be sufficient to connect all the dots. Improving ports and revamping rail infrastructure will be vital to support increasing trade flows. Reinstating rail as an effective means to move freight will take several years and high investment, but it will help link production centres and consumer markets with port infrastructure and strengthen multimodal transport networks.

The current model for PPPs presents some challenges as a means to attract foreign direct investment. The government is working to improve access to financing for contractors to increase interest in road concessions. Much of the country’s future growth hangs on the success of the fourth-generation programme, which requires a thorough evaluation of the costs and benefits of current financing models. How concession deals are structured today will have an impact on the quality of infrastructure and budget allocations for decades.