- Central America, Panama, and the Dominican Republic have built a strong network of trade and shared institutions, but logistics connectivity remains the main gap preventing the region from reaching its full potential.
- Better connectivity, by reducing time, costs, and duplication, would boost trade, investment, and employment, while bringing more firms, products, and regional value chains into the market.
- The Cargo Pass initiative, under the América en el Centro program, aims to transform freight mobility across the region and make borders faster, safer, and more competitive.
Central America, Panama, and the Dominican Republic start from an exceptional advantage: their strategic location, which connects them to some of the world’s most important markets. In addition, decades of cooperation have helped make this one of the most commercially integrated subregions in Latin America and the Caribbean. Today, around 30% of Central American exports go to other countries in the region, and thousands of firms are actively engaged in intraregional trade.
Regional integration in this part of the world is already an economic reality, built on agreements, institutions, value chains, and trade relationships that have grown stronger over time. Yet being integrated does not necessarily mean being well connected. And that is precisely the major challenge facing the region today.
Logistics Bottlenecks Still Constrain Trade
Central American firms trade actively with one another within an increasingly integrated market, but they still face obstacles that make the movement of goods more costly and slower. Despite existing agreements, freight flows are often hampered by duplicate procedures, uncoordinated controls, repeated information requirements, and unpredictable waiting times.
As a result, an additional economic distance is created between countries that are geographical neighbors. A container traveling along the Pacific Corridor from Guatemala to Panama can take between three and six days to cover roughly 2,000 kilometers. A freight truck moves at an average speed of just 18.5 kilometers per hour, and each border crossing can take around 16 hours, not including time spent waiting in line. The impact of these delays goes far beyond the simple movement of goods.
They also affect how much is traded, which products reach markets, and which firms are able to participate in regional trade. For perishable goods, every hour counts. And for any small business, additional logistics costs can make exporting unviable. Overcoming these obstacles is no small challenge, but it also represents a major opportunity.
Improving Connectivity for More Productive Trade Integration
This opportunity is not simply about enabling firms that already export to export more; it is also about helping more firms begin exporting, enabling new products to reach markets, and fostering deeper and more sophisticated value chains.
New technologies offer a path toward a new generation of borders that are faster, safer, more traceable, and more predictable. According to the OECD, a 10% improvement in the automation of border procedures, combined with simpler documents and processes and greater cooperation among border agencies, could increase global goods exports by as much as 18%.
Better connectivity can also bring more regional inputs and services into exports, strengthen supplier networks, and make the region more attractive to investment. In other words, it can help turn trade integration into productive integration. This is within reach.
In recent years, the Inter-American Development Bank (IDB) has supported major efforts to modernize logistics and border management across the region. Experience shows that when countries coordinate investments, processes, and institutions, borders are more likely to become genuine points of connection.
In Costa Rica, for example, import clearance times fell by 87% at Peñas Blancas and 71% at Paso Canoas. We also now have tools that can accelerate this transformation.
Digitalization, information sharing, smart risk-management systems, and artificial intelligence are opening up new possibilities to improve trade efficiency without compromising security. Far from compromising security, they can help build smarter borders, identify risks more precisely, anticipate congestion, improve cargo traceability, and speed up transit for trusted operators.
Cargo Pass: An Initiative to Improve Connectivity
The question is no longer whether we should move toward greater connectivity, but how to do so faster and at greater scale. This is where Cargo Pass comes in: an initiative that aims to transform freight mobility across the region by combining technology, infrastructure, processes, data, and regulatory harmonization.
With an initial investment of US$130 million in the Pacific Corridor, Cargo Pass has the potential to generate an estimated US$700 million in economic benefits annually by improving traceability, strengthening security, and reducing logistics costs.
Launching a project of this scale requires the collaboration and leadership of multiple stakeholders to maximize synergies and achieve the necessary scale. For this reason, at the recent América en el Centro Ministerial Dialogue, “Connectivity and Integration for a More Competitive Region,” held in Panama City on August 12, 2026, countries in the region agreed to move the initiative forward jointly and tasked the IDB with a series of specific actions.
These actions include:
• Prepare a proposal for Cargo Pass’s institutional and governance framework, assessing different alternatives in line with international best practices and experience.
• Propose options for financing and implementing Cargo Pass, engaging governments and the private sector and exploring resource-mobilization mechanisms that ensure the sustainability of the mechanism and the quality and efficiency of services, while respecting each country’s fiscal priorities.
• Design a roadmap and identify pilot projects for the gradual implementation of Cargo Pass, including a sequence of actions and decisions.
• Submit an initial proposal for the Governance and Financial Framework and Action Plan to the countries within three months, and, based on the feedback received, develop the comprehensive proposal to be submitted to ministers and regional authorities in the first quarter of 2027, with a view to adopting the necessary decisions.
This commitment by the countries of Central America, Panama, and the Dominican Republic to a more connected region represents a historic opportunity to boost growth and connect markets, people, businesses, and supply chains.
Our countries need to trade more, and more efficiently, in order to grow, and the IDB Group stands ready to support the region along that path, working with governments, the private sector, and regional institutions to make Cargo Pass a reality and turn borders into true hubs of connectivity and competitiveness.