Optimizing Transportation Infrastructure and Global Supply Chain Integration for Nicaragua’s Autonomous Caribbean Regions through Network Modernization

Abstract

The autonomous regions of the Nicaraguan Caribbean Coast are resource rich, yet they are among the poorest regions of Latin America. To realize economic growth and potential, this research examined Nicaragua’s primary-sector economic activities and developed a transportation network that would enable the creation of a functional logistics network, therefore enabling integration into the global supply chain for timber, beef, seafood, and light manufactured goods. The main goal of this research is to determine the minimum cost of developing a multimodal transportation network in the region by using roads, rail, intracoastal waterways, and Caribbean Sea transport. In addition to the initial construction costs, a 50-year horizon was evaluated, including operation and maintenance expenses for all possible modes as well as the cost to move all goods from point to point within the network using various options per Ton-kilometer. Several sensitivities were also run using Excel Solver in order to determine what triggers would alter the network’s construction and operation plan for each transportation arc. In the aggregate, the least-expensive option, to include deployment of rail, road, and intracoastal waterway use, costs $861,419,624.87 over a 50-year period. This cost captured the initial construction expenses, operation and maintenance estimates, and the rate to move goods across the network; the best-case scenario enabled construction over a 5-year period. More expensive options for the network’s construction and operation/movement of goods are more likely given the region’s inefficiencies. This research will be given to the Nicaraguan Department of Transportation with the hope that the findings may be used to orchestrate economic and community development in the region.