Customs Operations a Hurdle for Logistics ProvidersFri, 09/01/2017 - 12:19
Although Mexico is a natural logistics hub, enough experience is needed to handle the country’s challenges, especially when dealing with customs operations. Not all companies are capable of that, says Justin Facey, CEO of North America, Central America and Caribbean for TIBA Logistics Solutions.
“Logistics are complex but with a carefully structured process and the right people in your team, everything gets easier,” says Facey. “We have a very strong team with experts in customs operations. They are in constant training and have a good knowledge of the administrative operations required by the Mexican government.” Customs are, according to Facey, one of the biggest problems in the country, especially for smaller companies that do not have the resources to face such complicated processes.
Prior to arranging any logistics operation, TIBA, a Spanish logistics freight forwarder and customs brokerage service provider founded in 1975, works hand in hand with its clients to understand what they will export and showing them the best way to do it. “Our relationship with our customers is really close,” says Facey. “We must understand their requirements, problems and how to address whatever their logistics demands.” The company also works with industrial parks in different automotive clusters, especially in the country’s northern region, to plot the logistics route that best meets its customer’s needs.
“We specialize in high-volume and oversized shipments and there is not enough infrastructure to support these operations.” Infrastructure is among the main complications companies face, according to Facey. Port saturation sometimes forces ships to dock at alternate destinations instead of adhering to their scheduled arrivals, increasing logistics costs and slowing delivery times for customers. Airport capacity also represents a problem, especially at the Mexico City International Airport. “We work with many Asian companies and there are normally problems when cargoes arrive to Mexico,” says Facey.
The complexity of the Mexican market, however, can help TIBA grow its presence in other regions, Facey says. The company has Spanish roots but its focus in Mexico and Latin America has helped it understand the local problems automotive companies face and translate those experiences into access to markets in Central and South America.
Facey says TIBA has strong growth expectations based on its results in 2015 and 2016. Between January and March 2017, the company grew its invoicing by almost 40 percent compared to its total reported in 2016. According to Facey, growth in 2017 could have been higher but some projects were canceled due to economic uncertainty, the political strain between the US and Mexico and the negative repercussion this had on the peso’s position against the dollar. However, the company’s fortunes have recovered since July 2017 and it expects further growth by the end of the year and for 2018.
Mexico’s automotive industry will underpin that growth. The sector represents 10-12 percent of its business and the plan is to boost that number. According to the company’s results from 2016, offices in automotive hubs like Puebla, Mexico City and Leon have contributed most to TIBA’s invoicing and the first quarter of 2017 delivered similar results. The company already works with European OEMs and it is developing a strategy to bring personnel from TIBA’s operations in Japan, Taiwan and Korea to target the Asian market. “In the automotive industry, culture and trust play a key role,” says Facey.
Approximately 40 percent of the company’s clients are OEMs, with the remainder from among suppliers and the aftermarket. “That percentage is strategic,” says Facey. “The more specialized we can be in a sector, the better.” Facey wants to take advantage of the industry’s overall growth, which according to numbers from AMIA totaled 1.5 million light vehicles exported during the first half of 2017 and a 14 percent increase compared with the same period in 2016. TIBA has positive expectations for the future of the industry, detecting new opportunities in the sector thanks to its privileged location to import or export from anywhere in the world.