International companies not yet shipping to Colombia are increasingly turning to the nation as a promising emerging market for expanding their business. Though the legendary golden city of El Dorado has never been found, the growing strength of the Colombian economy has many turning their heads. This populous and prosperous country situated at the northwest corner of South America is a major regional player that’s gaining increasing influence in the global marketplace.
If you’re considering shipping to Colombia for the first time, this guide introduces you to the country, its economy, the opportunities for international businesses there, and the ins and outs of exporting.
Spotlight on Colombia
While most people think of coffee when Colombia is mentioned, the country has much more to offer. Officially known as the Republic of Colombia, it’s a large country about twice the size of Texas that shares a border with Panama, Venezuela, Brazil, Ecuador, and Peru.
Today, Colombia is one of the world’s most populous nations, ranking 28th with nearly 50 million inhabitants. Many Colombians live in and around cities, with over 12 million in the Bogotá metropolis and at least a million in several other large cities including Medellín, Cali, and Barranquilla. Demographically, Colombia is primarily composed of people from mixed Amerindian and European ancestry, but it’s also home to people with African heritage as well as a small indigenous population.
While many Colombians live in and around cities, a significant amount of the populace is spread throughout Colombia’s diverse geographical regions. The country’s defining geographic characteristics include the Andes mountains, the Amazon rainforest, two coastal regions (Pacific and Caribbean), and a large plains region. Thanks to this geographic and biological diversity, Colombia produces a wide variety of natural goods.
For much of its history as an independent nation, Colombia faced internal strife, including decades-long guerilla warfare from groups like FARC. After a lengthy negotiation process, Colombia has declared a tentative peace with the rebel groups and has turned its sights to joining the international community. Colombia is part of international groups like FEALAC (Forum for East Asia-Latin America Cooperation) and the Pacific Alliance, alongside Chile, Mexico, and Peru—three of Latin America’s powerhouse economies.
Colombia is Latin America’s oldest democracy and the first constitutional government in the region. Like the United States, Colombia has an executive branch headed by a president, as well as a judicial and a bicameral legislative branch. Despite the violence the country has experienced in past decades, Colombia remains one of the strongest democracies in Latin America.
Colombia remains on solid economic footing even after recent economic trouble, thanks to a solid macroeconomic framework and a commitment to fiscal discipline, according to the World Bank.
Like its neighbor Venezuela, Colombia’s economy relies heavily on oil production and petroleum products. Declining oil prices in the past few years slowed the Colombian economy’s growth, but GDP growth has picked up in recent quarters thanks to higher oil prices, increased exports, and more consumer spending
Colombia’s largest trading partner is the United States, both in terms of import and export. In fact, the U.S. exports more to Colombia than any other Latin American country besides Brazil and Mexico. Trade growth between Colombia and the United States has continued to increase since the 2012 Trade Promotion Agreement.
Colombia’s trade shows that its economy is slowly becoming dependent on more than just coffee and oil (currently 54% of its total export value is tied to oil). Other top exports include flowers, sugar, bananas, medicinal products, cars, and machinery. Between 2016 and 2017, Colombia’s imports increased by nearly 3%, and included categories such as machinery, vehicles, pharmaceuticals, and plastic products.
Colombia’s GDP per capita is roughly equivalent to 59% of the world’s average, at US $6,301.59 (2017). While over a quarter of the population still lives below the poverty line, in the populous cities like Bogotá the middle class is dominant and continuing to grow—the middle class population is predicted to make up 46% of the country’s population by 2025.
Doing Business in Colombia
The 2012 Trade Promotion Agreement (TPA) between the U.S. and Colombia made conducting business in Colombia a much safer bet for U.S. companies. According to export.gov, the TPA
“immediately eliminated import tariffs on 80% of U.S. exports of consumer and industrial products to Colombia, with remaining tariffs to be phased out over 10 years. Other provisions include stronger protection for U.S. investors (legal stability), expanded access to service markets, greater intellectual property rights protection, market access for remanufactured goods, increased transparency, and improved dispute settlement mechanisms (arbitration).”
Cultural shifts are also helping foreign businesses gain traction in the Colombian marketplace. Between 2014 and 2017, e-commerce purchases increased five-fold, making Colombia the fourth-largest e-commerce market in Latin America. This is thanks to increased internet availability (primarily through mobile phones) and growing access to banking institutions.
It may be that Colombia presents more niche opportunities and greater market accessibility than other Latin American countries. According to export.gov, Colombia is unique among Latin American countries because it has more commercial hubs than most countries in the region. Its five hubs include Bogotá, Medellin, Cali, Barranquilla, and Cartagena. Each city has an American Chamber of Commerce.
Doing business in Colombia isn’t without its challenges, though. On the whole, Colombia isn’t very proficient in English, ranking 11th out of 15 among Latin American countries. Since you’ll need some local help to navigate the regulatory and tax landscape, translation can be an issue for foreign companies not proficient in Spanish.
A word of caution: doing business in Colombia requires vigilance to changing regulations.
Top Industries for Exporters
Foreign companies looking to export to Colombia may find success in a variety of industries, including:
Automotive parts and accessories
Computer hardware and software
Health and beauty supplies
Since Colombia’s internal infrastructure is underdeveloped in many sectors, Colombians are willing to buy imported goods, often purchasing hard-to-obtain items from foreign websites.
According to Mauritius Trade, “Price is an important factor in buying decisions in Colombia. However, Colombian consumers are giving increasing importance on ecological and ethical characteristics when buying a product.” Any company looking to export to Colombia should be considerate of both the price (including tariffs) and whether the perception of the brand can stand up to the scrutiny of a conscious Colombian consumer.
Shipping to Colombia
Like many Latin American countries, shipping to Colombia has historically been a time-intensive process. But thanks to robust investment in the country’s many seaports, airports, and roads, the logistics of shipping to Colombia are steadily improving.
Colombia recently restructured its postal service, renaming it 4-72 from Adpostal. Until recently, the country had no postal codes, but with the institution of 4-72 the country has been zoned for postal codes—though they still aren’t widely used.
Last Mile Delivery
For reliable parcel delivery when shipping to Colombia, many companies depend on courier services rather than the postal service. Keep in mind that, regardless of the shipping method, deliveries to urban areas are often much quicker and more reliable.
To ensure successful last mile delivery of mail and parcels, it’s best to choose a provider that provides door-to-door tracking. Not only does this option offer peace of mind to customers, it can also reduce issues that arise during the customs process.
To import most goods, shipping to Colombia is very similar in cost and time when compared to other Latin American countries. Keep in mind that Colombia’s customs department can be quite strict. According to export.gov, “When mistakes are made by the exporter or importer, the goods may be refused entry into Colombia and be returned at considerable expense,” including significant fines.
Here are a few country-specific restrictions to keep in mind:
New and used clothing must be mailed as unaccompanied baggage, carrying the label “Equipaje no acompañado.” Include the passport number of the owner on the address label. When shipping used clothing, enclose a certificate of disinfection.
Books and printed materials valued over $20 must carry a consular invoice and addressees need to obtain an import license. Additional restrictions apply to books and periodicals shipped for commercial purposes.
Postal shipments are exempt from import licenses and payment of value added tax (VAT) and duties.
De minimis amounts for shipping to Colombia follow these regulations:
Parcels valued at US $200 or less can enter the country without being subject to VAT and duties.
Express or courier packages valued between US $200 and $2,000 and weighing less than 50 kilograms will be applied a 16% VAT and 10% Cost Insurance and Freight (CIF) tariff.
Shipments sent via express or courier with a value of over US $2,000 must pay duties and VAT based on the particular harmonized code of the product(s).
The VAT rate for most goods in Colombia is 19%, with exceptions for basic foodstuffs, health services, and other select goods. There is an additional Consumption Tax on luxury goods (16%) and mobile phones (4%). In general, customs duties for most goods range from 0-20%.
Resources for Shipping to Colombia
Colombia’s rising regional and international power make it an attractive market for many international companies. If you’re considering shipping to Colombia, there are a few things you should do beforehand.
First, check out export.gov’s Country Commercial Guide for a comprehensive understanding of doing business in Colombia.
Second, do your research on the marketplace to make sure your products won’t be subject to taxes or duties that can make your products less competitive.
Lastly, find a logistics partner with experience in the country. Between the language barrier and the nuances of the many regulations and tax challenges, local experience is critical.
With decades of experience shipping to Colombia and the rest of Latin America, SkyPostal can provide your business with:
The largest private delivery network in Latin America
Fully trackable packages
Integrated data and tracking management
Customs clearance and duty collection
Contact us today to see why some of the world’s largest retailers have trusted SkyPostal for years when shipping to Colombia.