Erik Meade
Country Managing Director Mexico
Panalpina
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View from the Top

Freight Forwarder Moonlights as Carrier with Own Flight

Fri, 09/01/2017 - 12:02

Q: What advantages can Panalpina offer over other international players in the logistics sector?

A: Panalpina offers a service that no other logistics company can provide in the Mexican market. We control a Boeing 747- 8 that travels twice a week to Mexico City after departing from Stansted, UK and passing through Luxembourg and Huntsville, Alabama. Although the automotive industry more commonly uses ocean freight, this flight offers many benefits to our clients. The plane has 140 tons of cargo capacity, is environmentally friendly and can be configured to accommodate our clients’ space and volume needs. With a layover in Huntsville, we are the only company that can target the entire US Midwest. Panalpina chose to control this route and use secondary airports to offer its clients more flexibility, instead of larger cities with saturated airports.

We have the added advantage of acting as both forwarder and carrier. Managing our own plane allows us to compete with airlines and carriers, while our other services match those of international logistics players. We manage 70 percent of our capacity as forwarders and we negotiate with the same airlines as all other forwarders in the market. But we can offer clients an additional 30 percent cargo capacity that no other player can provide. When airports are saturated, we still have the possibility of moving that 30 percent of our cargo.

Q: How does the Boeing 747-8 benefit automotive companies?

A: Companies may experience incidents during the production process and this plane allows us to address our clients’ emergencies so they can avoid any production stops. With this aircraft, we do not have to depend on other airlines nor do we have to compete with other forwarders for cargo space. Our clients have enjoyed the flexibility we offer, particularly Volkswagen, which is now managing the launch of the new Tiguan in Europe. Our services have proven a great advantage for Volkswagen to meet its production deadlines.

Q: Aside from its added value in air freight, what can Panalpina offer to automotive clients?

A: On top of our air freight and charter services, we also offer purchase consolidation services and maritime logistics, mostly for car imports and exports. We offer purchase consolidation services to companies that have a supplier network distributed across Europe and Asia. We manage shipments from different countries and consolidate them into one big shipment to avoid extra costs for the client. We have specialized services for the automotive industry such as hand carriers and charters for extraordinary situations when just one component is needed in a short amount of time. In the automotive industry time is money and through our portfolio, we want to make sure our clients have all possible options to deliver products on time at a competitive cost.

Q: How important are automotive operations in Mexico for Panalpina’s international strategy?

A: The company had a strong share in the oil and gas and energy industries. After oil prices dropped in 2014, Panalpina had to grow in other markets, one of them being the automotive sector. Thanks to our intercontinental logistics approach and our European origins, we are wellconnected with German companies. We have already built strong relationships with leading OEMs plus a number of Tier 1 and 2 businesses. The automotive sector is our biggest industry in Mexico, representing 36 percent of our total revenue compared with 25 percent in 2015.

Mexico is one of the main markets for Panalpina in the Americas, even ahead of Canada and Brazil. Our local operation is one of the biggest in the company’s international network and Mexico is ranked among the top 10 countries in terms of importance. In the local market, the International Air Transport Association (IATA) in Mexico positions us as the second-most important company and when we add our charter operations, we come up as the biggest forwarding company in terms of air freight volume.