Private Freight Terminal in Mexico Buck Industry TrendMon, 09/01/2014 - 11:50
Q: What differentiates Terminal Intermodal de Queretaro from other intermodal terminals in Mexico?
A: Terminal Intermodal de Queretaro was the first private terminal in Mexico. That has given us a breadth of operation that many terminals do not have. It is likely that we have the most advanced technology, allowing us to provide continuous tracking of the customer’s goods from beginning to end. However, having the most comprehensive equipment and technology is enhanced by our accompanying expertise. Even though the initial study showed the state was not perceived as offering a lot of business opportunities, I bought five acres of land and built a customs area. This was in 1993, just before the financial crisis hit. Our debt went up but we were able to overcome this adversity, in large part thanks to NAFTA. After this, I presented my plan for the terminal to the Treasury, which gave me permission to go ahead and develop it in Queretaro. Soon after, GM became my first client.
Q: What are your growth perspectives in a crowded Mexican market?
A: NAFTA affected my business in a very positive manner. Today, along with Mexico in general, our terminal is growing and expanding to different sectors and different markets. 90% of the exports going through the terminal are bound for Asia, especially China. For auto parts and full vehicles, fortunes have been mixed. We currently move a lot of parts for Tremec, but outside that, few auto parts pass through the terminal. A few years ago, we also handled vehicles for Honda and Land Rover, but these have since moved on to other states. We depend heavily on railroad companies so if we do not strike an agreement with them, it will not matter if business booms in my area. As it stands, we do not have the cooperation of the railroad companies, which has undoubtedly slowed down my business. Trucking remains an option, but it is more expensive and insecure. However, this has not majorly dented our overall business. We have four important customers that each transport 500 containers a month, and in total we work with about 4,000 to 5,000 containers a month. My finances are good because I do not have partners, which allows Terminal Intermodal de Queretaro to maintain its streamlined working process, allowing me to make quick decisions and keep my customers happy by avoiding needless bureaucracy. 30% of our business comes from the automotive industry. As exports grow, we are improving our operations to cater to this expansion. We are expanding our courtyards and storage space to cope with the increased levels of freight coming through.
Q: What do you view as the major problems facing logistics in Mexico?
A: The main logistical problem is interconnection. Our terminal can receive goods from all ports, but cannot export to all ports. For example, we can receive a shipment from the port of Manzanillo from Ferromex, but products cannot be sent back as Kansas City Southern de México (KCSM) will not take them. The use of intermodal solutions is essential for the development of logistics but the railroad network in Mexico is a real problem. Some companies, unaware of the potential of Queretaro, have actually used highways to take their products to other states that have a direct rail link to the US. We keep spreading information about what our terminal can offer customers, and we continue to attract customers who see that it makes sense to work with us. Intermodal will become particularly relevant as more terminals continue to invest and expand. The terminal at Pantaco is investing money to service all the country’s rail operators. The one at Toluca belongs to KCSM. San Luis Potosi has authorized the construction of three terminals but those operations will be expensive. That leaves Queretaro where the railroad itself does not need improvement. Currently, a freight train passes our terminal every five hours or so. This rate could be increased to a train every fifteen minutes. However, I see this increase coming very slowly over a long period of time.
Q: What does the future hold for Terminal Intermodal de Queretaro?
A: This business of owning private terminals is not easy. You have to be very specialized to understand this business and to make it grow. I do not see more private investors wanting to start a terminal as you need a minimum of US$25 million. I am confident about our future growth but I cannot quantify it as I depend on the decisions of the government and an end to the lack of cooperation from certain freight train companies. Right now, we have the ideal terminal for Queretaro. We will grow over the next five years and even if we do not get business from Honda, we will get business from its suppliers.