Elías Dana
Director General
Transportes LIPU
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Insight

Differentiating Transportation from Service Based on People

Fri, 09/01/2017 - 11:29

Buses are not all the same, nor are all transportation services. Making users aware of this is part of the mission set out by Elías Dana, Director General of Transportes LIPU. The transport company aims to create differentiated transportation services. “We want to change the traditional transportation model to that of service based on people,” says Dana.

“We intend to compete with a differentiated service with the person driving the bus at its center, through constant training, recruitment filters and incentives for our drivers.” The incentives LIPU offers its drivers are part of the company’s social responsibility strategy, focusing on staff wellbeing.

To differentiate the company’s services, Dana is also pushing to increase Transportes LIPU’s fleet. For 2017, the company expects to maintain the 20 percent growth it has been experiencing for the past three years. Growth itself is important because it feeds into the company’s fleet renewal policy. “Every year we renew around 10 percent of our fleet. However, in 2017 we will renew around 30 percent as we enter new markets.” Transportes LIPU’s growth is partly rooted in the company being the preferred transportation service in several public and private sectors. “We are focused on personnel transport. We have a significant presence transporting personnel from the public sector thanks to annual bidding processes. However, we believe that the private industrial sector has much more growth potential,” says Dana.

Technology advances change the way companies such as LIPU conduct their business and operations. “We are experiencing rapid technology changes. Year after year the company’s needs change,” says Dana. LIPU’s concern regarding technology advances translates into more than just telematics systems. “Besides tracking and fleet monitoring, we want to update mileage precision using GPS solutions. We also intend to increase safety mechanisms with the introduction of virtual co-drivers that provide real-time warnings of road hazards to operators.” Waze and Google Maps are recognized leaders in virtual co-drivers but many companies are entering the field, as their popularity becomes a necessity rather than a luxury. Telematics tools are useful for monitoring the operator’s behavior but are not the only way LIPU is involving its drivers with the use of technology. “A common misconception is that operators do not use technology tools because they do not know how to use them,” says Dana. He believes apps can help operators adopt more efficient driving routes. “We use apps on a daily basis, applied to the management of the operation.”

Though several heavy vehicle OEMs like Scania and Daimler have invested in the development of telematics features, Dana says this is not enough. “OEMs have fallen behind when it comes to the added value they offer with their buses. We have had to find solutions on our own to meet our requirements.” The automotive sector offers promising opportunities for Transportes LIPU. “This year the automotive sector grew impressively and we believe in the next two years it will enjoy a similar level of performance.” According to data from ProMéxico, the automotive sector contributes 3 percent of the country’s GDP and the country hosts 12 light vehicle OEMs, nine heavy vehicle OEMs, and 90 of the top 100 Tier 1 companies in the world. This means that there is an immense pool of possible clients for LIPU.

The accelerated growth LIPU has experienced in past years due to its entrance into new markets and the corresponding increase in its fleet have prepared Transportes LIPU to brave the Mexican peso’s volatility caused by the global economic climate. “A volatile exchange rate is a circumstance that we have contemplated in our business negotiations. We have debt coverage and are open to establish negotiations to review our clients’ price terms when facing volatile exchange rates.” Transportes LIPU’s approach contrasts with the decision taken by members of the Mexican Council on Transport and Logistics (CMET), who have already announced that it will postpone possible increases in its fleet. Dana is not fazed. “OEMs are looking for ways to counter exchange rate volatility, they cannot just increase their prices. They have to find ways to lessen the impact.”

At the end of the day, LIPU’s biggest bet is service. “Punctuality, quality service performance and users’ safety are our main concerns,” says Dana. “We do not intend to be the transport service with the lowest price but the service with the best quality and the best drivers.”