Sector Snapshot: Logistics & Supply Chain Technology
The Caribbean as a Logistics Innovation Hub
The Caribbean's strategic position at the crossroads of major trade routes, combined with its unique logistical challenges, has created a compelling environment for developing innovative supply chain and logistics solutions. The region handles over $700 billion in annual trade flows, serving as a critical transshipment hub connecting the Americas, Europe, and beyond [1]. However, the archipelagic nature of the Caribbean, with 28 island nations and territories spread across 2.75 million square kilometers, creates complex last-mile delivery challenges, high transportation costs (often 2-3x continental rates), and vulnerability to supply chain disruptions from hurricanes and other climate events [2]. These constraints have made logistics optimization an economic imperative, driving innovation in port automation, inter-island connectivity, and supply chain resilience.
The Challenge: Optimizing Logistics in a Fragmented Market
Caribbean businesses and consumers face significantly higher logistics costs and longer delivery times compared to their continental counterparts. The fragmented nature of island markets, combined with limited inter-island connectivity and high fuel costs, creates inefficiencies throughout the supply chain. Traditional logistics models designed for large, contiguous markets fail to address the unique challenges of island-to-island distribution, customs clearance across multiple jurisdictions, and the need for climate-resilient supply chain infrastructure. The COVID-19 pandemic further exposed these vulnerabilities, with supply chain disruptions causing shortages of essential goods and highlighting the urgent need for more resilient and efficient logistics systems.
| Challenge Area | Description | Startup Opportunity |
|---|---|---|
| Last-Mile Delivery | High costs and long delivery times for inter-island and rural deliveries. | Drone delivery networks, autonomous boats for inter-island shipping, and route optimization platforms. |
| Port & Warehouse Automation | Inefficient cargo handling and limited warehouse capacity at Caribbean ports. | AI-powered port management systems, automated sorting and loading, and smart warehousing solutions. |
| Supply Chain Visibility | Lack of real-time tracking and transparency across fragmented supply chains. | IoT-enabled tracking systems, blockchain for customs and documentation, and predictive analytics for demand forecasting. |
| E-commerce & Cross-Border Trade | Complex customs procedures and high costs for cross-border e-commerce. | Digital customs clearance platforms, regional e-commerce marketplaces, and integrated payment and logistics solutions. |
Scalability: From the Caribbean to the World
Logistics solutions proven effective in the complex Caribbean environment are highly scalable to other archipelagic regions and emerging markets worldwide. The technologies and business models developed to address island-to-island connectivity, last-mile delivery in remote areas, and supply chain resilience are directly applicable to Southeast Asia's 25,000 islands, Pacific Island nations, and coastal Africa. The global logistics market is projected to reach $12.7 trillion by 2027, with the fastest growth in emerging markets facing similar fragmentation and infrastructure challenges [3]. Caribbean-born logistics innovations—particularly in drone delivery, autonomous maritime transport, and digital customs solutions—are uniquely positioned to serve the 1.8 billion people living in island and remote coastal communities globally [4].
References
OECD/IDB (2024), *Caribbean Development Dynamics 2025*, OECD Publishing, Paris.
IDB (2025), *ONE Caribbean Framework*, Inter-American Development Bank, Washington, D.C.
World Bank (2021), *Groundswell Africa: Internal Climate Migration in West African Countries*, World Bank, Washington, D.C.
Bank of America (2021), *Climate Adaptation: $2 Trillion Market by 2026*, Bank of America Global Research.