Agustín Picado
Country Manager
UPS Mexico
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View from the Top

Logistics Solutions for Mexican Exporters

Thu, 09/01/2016 - 12:19

Q: As the largest logistics company in the world, how is UPS supporting local manufacturing?

A: We have created a comprehensive solutions portfolio including air, ground and ocean transportation for packages of all sizes and weights. Beyond transportation, UPS offers warehousing, aftersales, redistribution and inventory management. In Mexico, we are emphasizing the optimization of cross-border solutions as 76 percent of local exports head to the United States.

In a recent study called UPS Exports in Mexico: Challenges and Opportunities, undertaken by Grupo Expansión, we discovered that half the surveyed decision-makers were using one logistics provider and the other half used two or more. Among the first group, we observed that 95 percent were satisfied with the service, while only 55 percent of those that use two or more logistics providers were satisfied. This indicates that involving a larger number of transport companies decreases satisfaction. Last year we performed a survey of over 470 decision-makers from several manufacturing areas including technology, automotive and aerospace, which placed speed and reliability in deliveries as their main concerns, followed by product integrity and efficiency in customs procedures. Clients are often unaware they are using incorrect logistics solutions and of the additional costs incurred as a result. Our portfolio of solutions is aligned to solve these challenges.

Q: What are the main challenges that Mexican manufacturers face when exporting?

A: One of the challenges for Mexican exports is efficiency in customs procedures. This is one of the most defiant areas for logistics, as truckloads may have to wait weeks at the border before they can cross. We are approaching government officials along with other logistics companies to help them understand the needs of our industry and promote streamlined processes, which would facilitate exports and imports.

Customs would benefit from establishing preclearance processes to speed up product transport. Another solution would be to incorporate new technologies such as Target Search, which allows company organization under certain criteria. UPS has developed several technologies to streamline these procedures, which are already in use in many countries. For example, UPS’ air hub in Louisville, Kentucky holds a comprehensive database of all incoming flights including the data of origin and transported goods. This allows UPS to pinpoint potential issues through simplified procedures.

When exporting, it is necessary to analyze both the size of the package and its urgency. Transport time can range from a day to a week depending on these factors. Some clients might spend up to US$80,000 on chartered flights to send a set of pieces in a day and avoid production losses. They could shift to UPS Worldwide Express Freight, which provides this overnight service at a fraction of the cost. This service is growing, as emergency shipping is common in a sector without a consolidated supply chain.

Q: How are long wait times at customs affecting local manufacturing?

A: Since the process at the border can be long and complex, most export companies prefer to make a single trip. They often need to consolidate several suppliers but this can impair customer satisfaction. UPS offers diverse guaranteed services to avoid the need for several providers. When it comes to the manufacturing industry of automobiles, a missing part can stop a production line,scausing immense financial strain. The local manufacturing industry requires fast and specialized solutions to ensure that essential pieces arrive on time and UPS can provide them.

Q: What were the main advantages of UPS’ acquisition of Coyote Logistics?

A: Coyote Logistics is a company driven by technology and not based on assets. With its acquisition, UPS coordinates the transport of goods across the border. Many major and medium suppliers send their cargo to Mexico or the US and return with an empty truck. Coyote Logistics has a database to identify the origin and destination of the trucks. With this information, they can connect clients without a truck fleet interested in transporting their products. This creates significant extra profit for truck owners that would have made the trip either way. Coyote Logistics used to operate mostly in the US but after its acquisition, we are now able to build a Mexican client database. This will benefit transport companies and their clients and it will reduce the need for extra UPS trucks in peak season, before Christmas for example.

Q: What are your plans to grow alongside local automotive companies?

A: While Tier 1 and 2 companies generally have a global presence, Tier 3 to 5 can be of any size. We hope to improve the way products are transported in the market. Carriers sometimes wait up to a week for a truck to be full before crossing the border, creating extra inventory costs, which are not usually considered. UPS uses a method of Supply Chain Mapping to optimize companies’ logistics procedures to reduce expenses and position their products anywhere in the world.