The transport sector remains a vital aspect of Peru’s economic success, growing by 2.30% in 2016, and by an average of 2.26% in the first eight months of 2017, according to the National Institute of Statistics. This expansion was driven by a 3.05% increase in airport transit, a 4.26% growth in railway transport, as well as respective increases of 2.11% and 0.74% for passenger and freight ground transport.

However, there remains a significant gap in infrastructure that limits its capacity. In 2016 the OECD completed its “Multidimensional Study of Peru” report, which identified the transport sector as one of three fundamental areas crucial to achieving inclusive development in the country. A series of recommendations were proposed to boost mobility, which in turn would support broader socio-economic development. These included the establishment of a national transport plan aligned with the country’s development agenda, the creation of a national policy for urban and metropolitan transport, as well as improving transport connectivity in the Lima-Callao Metropolitan area. Taking steps to address these issues will not only directly impact the economy, but, in many cases, will lead to an improved overall experience for commuters. GROUND LINKS Roads are the primary means of transporting both goods and passengers for short and mid-length distances. The low start-up and maintenance costs for equipment, as well as competitive wages, make trucking a popular option.

However, proper road expansion has traditionally faced challenges due to the difficult jungle and mountainous terrain. Of the country’s 166,765-km total road network, as of 2017, 25,965 km, or 15.6%, have been paved, according to the Ministry of Transport and Communications (Ministerio de Transportes y Comunicaciones, MTC). There are also safety concerns, including a lack of street lights, theft and a low compliance with traffic regulations, among others.

In a move aimed at facilitating local road access and reducing logistics costs, the MTC announced in late 2017 it would invest $600m to upgrade and improve rural roads in 24 regions and 100 provinces via its Subnational Transport Support Programme Project. The initiative will involve the restoration of over 2200 km of roadways, and maintenance and The MTC has also looked to address issues with safety, launching the National Road Security Policy during a meeting of regional and provincial councils in November 2017 in Chachapoyas. Omar Revolledo, president of the National Road Safety Council ( Consejo Nacional de Seguridad Vial, CNSV), announced at the event that officials would be focusing their efforts on reducing transit-related injuries and fatalities by up to 30% by 2021. This will be done by promoting road safety education, enforcing traffic regulations, and involve the active participation of all citizens. The CNSV policies also look to strengthen the rights of passengers and pedestrians, who make up 71% of all traffic-related fatalities.

Although Peru still lacks a national transport plan, modifications made to the National Transport Regulation Administration, which regulates the ground transport of goods and people, serve to address the needs that arise within the sector. The most recent changes required irresponsible drivers to temporarily give up their vehicle and obliged those breaking traffic laws to take road safety and awareness classes.

Lima Transportation

With an estimated 10m inhabitants in the greater Lima-Callao Metropolitan area, the country’s capital has long suffered from traffic congestion, disorganised private bus services and high levels of pollution. According to a 2017 survey conducted by Lima Cómo Vamos, an independent group charged with monitoring quality of life indicators in the capital, public transportation was the primary means of transportation in Lima and Callao, with a respective 73.4% and 67.5% of the population traveling by bus, minibus, metro or the Metropolitano bus rapid transit system (BRTS).

Traffic is being relieved by the continued development of public transport options, which officials hope will eventually act as a substitute for the large number of privately operated bus services. Fleet increases include additional trains for Metro Lima, with the final delivery of 20, five-car trains to the capital set for September 2018. The new trains, which will be added to the existing 28 currently in operation, can carry up to 1000 passengers per trip, bringing the Lima Metro’s daily capacity up from 320,000 riders to 500,000. While Lima Metro currently has one line in operation, plans are under way to extend the system to up to four lines (see analysis).

Protransporte, under the Metropolitan Municipality of Lima, was created in 2004 to oversee urban public transport in the Lima-Callao Metropolitan area. The group is working to bring more public buses to the capital city with the introduction of the Pan American Complementary Corridor route, from Canta Callao to Javier Prado in June 2018. The colloquially named Yellow Line will be the fourth corridor bus route to be added to the country, joining the Blue Corridor, from Javier Prado to La Marina-Faucett; the Purple Corridor, from Jicamarca to Francisco Pizarro; and the Red Corridor, from Javier Prado to Faucett. With a fleet of 53 buses, the Yellow Line will move some 33,000 passengers per day in some of the city’s most crowded areas, according to Protransporte.

The added public services and the replacement of Lima’s private bus services is welcomed by residents of the capital city, with the population viewing state-run transportation more favourably than private bus services, according to Lima Cómo Vamos. In both Lima and Callao, residents gave positive ratings of between 48.6% and 67.7% to public services, depending on the type of transport. Privately-run options, meanwhile, were generally rated more negatively. Speed is the primary reason why passengers value Protransporte-managed services, followed by cost, safety and punctuality. Adding to favourable views of Protransporte, the group was able to prevent an increase in bus fares in May 2018.

The success of Protransporte in Lima has highlighted the benefits of involving local traffic authorities in the decision-making process. In 2017 the MTC proposed the foundation of a new entity that would manage urban traffic guidelines, oversee the transport of goods and manage overall urban transit infrastructure across the country. In January 2018 Congress passed a law to create the Urban Transportation Authority (Autoridad de Transporte Urbano, ATU). In creating the ATU, the MTC aims to decentralise power and allow all urban municipalities to have more say in local transport management by being part of an ATU Directive Committee.

Green Capital

To combat the problem of environmental pollution, authorities in Lima have placed an added focus on eco-sustainability. The Metropolitano, for example, is the only BRTS in the world to run fully on natural gas, preventing the release of around 185,000 tonnes of carbon dioxide in the atmosphere per year. Adding to city’s sustainability objectives, the first fully electric bus arrived in March 2018 as part of the country’s plan to reduce up to 20% of its of greenhouse gas emissions by 2030. Encouraging the use of electric buses was the idea of the multisector working group established to design and implement Peru’s commitments to the 2015 UN Climate Change Conference in Paris. Use of these buses is expected to eliminate 40% of public transport-related CO2 emissions.

Flying High

Sustained economic growth in recent years has led to an increase in both domestic and international air travellers. Air transport is progressively opening up throughout the region, with the number of regional flights and routes also increasing. Passenger traffic within the country grew by 8.5%, to reach 11.7m passengers in 2017, according to the General Directorate of Civil Aviation in Peru. Meanwhile, total air traffic, both international and domestic, grew by 8.7%, from 20.88m in 2016 to 22.79m in 2017. That same year, the aviation industry supported 280,000 jobs and contributed $4.4bn, or 2.1% of GDP, to the economy, according to the International Air Transport Association.

The most popular tourism destinations tend to have the highest air traffic. The three busiest airports in 2017 were Jorge Chávez International Airport in Callao with around 22m passengers, followed by Alejandro Velasco Astete International Airport in the south-eastern city of Cusco with 3.4m passengers, and Rodríguez Ballón International Airport, which services the Arequipa region, with 1.7m.

According to “The Travel & Tourism Competitiveness Report 2017”, published by World Economic Forum, Peru was ranked 73rd out of 136 countries in the air transport infrastructure category, which takes into account infrastructure quality, the availability of seating, the number of airlines and airport density, among others. Peru ranked ahead of Latin American neighbours Ecuador and Bolivia, which placed 75th and 86th, respectively, but came in behind Argentina (66th), Chile (64th), Colombia (60th) and Brazil (40th).

Major Players

There are 11 airline companies operating in and out of Peru. As part of the strategy to increase the connectivity of South America, carriers are adding new routes. LATAM Airlines, which currently accounts for 57.6% of the domestic market, started new flights to Madrid and Brussels, Belgium in April 2018, while flights to Lisbon and Munich are expected to begin in September 2018 and the early-2019, respectively. Meanwhile, Peruvian Airlines, which holds a 14.3% local market share, confirmed that it will start operations to Quito, Ecuador in the fourth quarter of 2018, and is considering adding Santiago, Chile and Buenos Aires, Argentina as part of its expansion plan. In July 2018 the carrier signed an agreement of intent to purchase 10 SSJ-100 aircraft and 10 MC-21 passenger jets from Russian manufacturers Sukhoi Civil Aircraft.

The market is characterised by high levels of competition due to the growing presence of low-cost carriers, which continue to expand their services within Peru and internationally, contributing to accessibility and an overall higher transit rate.

In March 2018 Viva Air, the leading Latin American low-cost airline owned by Irelandia Aviation, linked its Viva Air Peru and Viva Air Colombia branches to facilitate connections in the continent. Lima was chosen to serve as the connecting hub. Additionally, the firm signed a memorandum of understanding with Airbus in June 2017 for the purchase of 50 A-320 aircraft.


In addition to growth in air travel, recent years have seen an increase in activity for the maritime sector. Commercial ports mobilised 11.5m tonnes of cargo in the first quarter of 2018, representing a growth of 0.8% compared to the same period in 2017. At 5.2m tonnes, or 45%, container cargo made up the bulk the total. This was followed by solid bulk cargo and other general cargo with 4.5m tonnes and 929,533 tonnes, respectively.

The biggest port in the country, the port of Callao, is divided between three private concession holders. APM Terminals manages the port’s northern area, while the southern area is managed by Dubai Ports World. The third concession holder is Mineral Concentrate Terminal, managed by Consorcio Transportadora Callao. These three port areas handled nearly 70% of the shipments that came into Peru in the first quarter of 2018. Located in Arequipa Region, the Port of Matarani is also a key shipping area, handling 1.76m tonnes, or around 15.3% of total shipments, in the same period.

The importance of Peru as a shipping hub has been noticed globally, and in 2017 the country hosted the TOC Americas 2017, an annual event that brings together those actively involved in the import/export chain for three days to discuss trends in the industry. The event welcomed over 718 delegates and visitors, representing 58 ports and terminals from 32 countries. The main discussion items included the container supply chain; automation, digitalisation and innovation; and a special focus on bulk industry.

Government moves to facilitate maritime trade activities include the creation of the Multisectorial Commission for the Facilitation of Foreign Trade (Comisión Multisectorial para la Facilitación del Comercio Exterior, CMFCE) in December 2017, of which the National Port Authority is a member. The CMFCE falls under the remit of the Ministry of Foreign Trade and Tourism and is tasked with strengthening coordination among local governmental bodies that engage in foreign trade across multiple sectors. The CMFCE will also facilitate compliance with the World Trade Organisation’s Trade Facilitation Agreement.

Additional government moves include Urgent Decree No 007 of 2017, which, although temporary, allows for boats with a capacity up to 350 cu metres to engage in domestic coastal trade. Previously, only boats with a capacity of up to 35 cu metres qualified. This decision means that 6341 out of 7335 boats with valid fishing permits will now be permitted to engage in import and export activities between national ports, potentially boosting local trade.

Infrastructure Gap

Medium- to long-term plans will see government working to reduce gaps in infrastructure. An analysis conducted by the state-run Association for the Promotion of the National Infrastructure in 2016 found that investments of $159.5bn were needed to build, maintain and repair infrastructure until 2025. Of this sum, transport was pegged to receive $57.5bn, representing 36% of the total. To compare, the next two largest allocations were set aside for the energy and telecoms sectors, comprising a respective 19.3% and 16.9% of the budget. The government expects to supplement project funding by securing $70bn through the promotion public-private partnerships (PPPs).

In accordance with government plans, recent medium-term actions identified by state investment promotion agency ProInversión include projects to address port and maritime infrastructure, road building and maintenance, and railway infrastructure from 2018 to 2020. An estimated 40% of ProInversión’s portfolio for that period, or around $4.36bn, will be directed towards these goals. The first period from 2018 to 2019 will see $450m of the state agency’s budget going towards the modernisation and development of the Salaverry Multipurpose Port Terminal and upgrades to the Huancayo-Huancavelica railway. The Salaverry Port project was awarded to Grupo Romero’s Salaverry Conveyor Consortium under a PPP framework in May 2018, while the Huancayo-Huancavelica railway’s award date has been estimated for early 2019 (see analysis).

The second period, from 2019 to 2020, will see ProInversión allocating $3.86bn to implement extensive road works, including maintenance, bridge building and the construction of new roads. Projects will include the refurbishment of 117 km and initial periodic maintenance on 498 km on the highways connecting Huancayo, Ayacucho, Abancay and Pisco; the construction of a 33-km peripheral ring road around Lima and Callao; and the construction of a 101-km second road from Marcavelica to Tumbes on the border with Bolivia. ProInversión has also drawn up a declaration of interest for the $485m port terminal project in San Juan de Marcona.

Up in the Air

A number of investments aimed at easing transport and logistic costs have been shelved, however, while the current government settles in and decides its policy objectives.

One such plan proposed by the former administration sought to restore the non-commercial Marcona and Chimbote airports and rebuild airports in Ilo, Jauja, Jaén, Tingo María, Huancayo, Rioja and Yurimaguas for the shipment of cargo. The plan was proposed as a way to help reduce logistics costs, which can contribute up to 30% of the final price of a product. Peruvian exports, which in 2017 had reached $40bn, are expected to hit $60bn by 2021. The solidification of these plans with the new government, however, remains to be confirmed.

As for ground transportation, mining can serve as a powerful ally in the development of road infrastructure. Considering that the majority of roads in Peru are unpaved, there are a number of investment opportunities for interested parties. Cayetana Aljovín, the former minister of energy and mines, and Bruno Giuffra, former minister of the MTC, led a delegation to London in November 2017 to present investment opportunities in various sectors, including road infrastructure and mining, which according to Giuffra are “two potent lines of investment opportunities in Peru.” With the UK’s exit from the EU there is increased interest in establishing new bilateral agreements. However, Peru’s plans could be hampered by the instability observed through the resignation of the former president in early 2018 and subsequent government change.


Reducing the current infrastructure deficit will be key to sustaining recent positive growth trends, especially if the country is going to accommodate the fast pace of expansion in tourism and mining. The MTC along with ProInversión are now urgently prioritising investment in transport infrastructure so as to restore the minimum conditions for the private sector to operate. This investment will, in turn, deliver an important boost to economic activity across several sectors, creating jobs in the process.

To better compete internationally and accelerate the economic growth of its regions, Peru will also have to prioritise reducing its logistics costs. Road transportation remains the area with the greatest future challenges as well as investment potential. That being said, significant upgrades in infrastructure, both at an urban and provincial level, appear that they are going to occur in the next few years.