Energy Reform Creates Opportunities, QuestionsThu, 09/01/2016 - 10:51
Q: How have you diversified the business into different commercial areas to strengthen ALMU’s offering?
A: ALMU was established 39 years ago to cater to a client of Tresguerras called Negromex, which needed logistics services for a specific division of its production that Tresguerras was not able to provide. By fulfilling this existing need, doors into other industries opened for us. Tresguerras had been offered several business areas but never felt the urge to diversify. ALMU saw an opportunity in the automotive industry and in 2004 we created a division called ALMU Logistics to capitalize on the automotive boom in the Bajio region. The combined 60 years’ experience held by leaders of both Tresguerras and ALMU was fundamental to swiftly consolidating processes that would normally have been part of a long learning curve. Tresguerras remains our administrative company but every partner creates and manages a division.
We work closely with iron workers such as Ternium and Steel Technologies and are negotiating with Posco. These companies have specific automotive lines, so we are indirectly serving different parts of the automotive industry by offering transportation services to automotive suppliers. Today, we manage 56 units comprised of 45 tank trucks and 11 industrial platform trucks. The 11 platforms we own are Volvos, four of which have Halcon platforms. We have been considering including car transporters and small trucks in our range of services to serve Puerto Interior.
Tresguerras has been an excellent example for us to follow. The fuel gauges used in their tank trucks require a precision that is difficult to achieve, but after Tresguerras spent three years testing the gauges, ALMU can adopt the technology, allowing us to remain at the cutting edge of the industry while also enjoying the reduced prices and rates that our associates negotiate. We always try and pass on these savings to all our partners, from the smallest to the largest.
Q: Is ALMU participating in the vehicle scrappage scheme and how do you maintain the highest quality in your units?
A: Our participation offering capital and purchasing scrap will be extensive. Our long-term target is to operate fleets no older than 2.8 years and the scrappage scheme will be important for achieving this. We operate one unit that is almost 10 years old and will be removed this year to respect ALMU safety regulations, but the majority of the units we manage for our partners are an average of 3-4 years old. On top of the obvious safety issues that characterize older units, vehicles that have seen heavy use for more than six years begin to cost more in maintenance than they can make for our partner companies. Thus, we plan to push ALMU toward moving the 10 year age limit on trucks to seven years.
Q: ALMU set a unit growth target of 10 percent in 2015. Do you have the same goal this year and what short-term obstacles have you identified?
A: We planned to reach the 10 percent increase in units by the end of 2015 and in the last three months of the year we added six tank trucks to the existing 45, meaning we achieved our target. Our projections for 2016 are less optimistic because of the Energy Reform and its influence on the petrochemical industry. It seems that having opened up the petrochemical industry, PEMEX will struggle to maintain market share and its logistics division will change its infrastructure considerably so we could potentially become direct competitors. We also expect tariffs to drop because there will be excess logistics supply. Nevertheless, we hope that new companies will arrive with logistics requirements, for which ALMU has been preparing since 2014. ALMU began a certification process through the National Association of Chemical Distributors (AMIQ) last year and is now officially SARI certified for the chemical industry. This will undoubtedly help us attract the new companies entering Mexico by providing quality assurance and sustainability as well as environmental responsibility.
Achieving our target of 100 units by 2020 depends on the formality of companies in terms of payments. Normally, realistic growth would be 10 percent per year, but we hope to take advantage of the open market created by the Energy Reform. Ideally we would like to begin serving direct suppliers, such as those working with Mazda, Toyota, Honda, and Ford, as this would allow ALMU to be part of the OEM supply chain.