Helping Mexico Seize the Moment

Q: How is the FedEx Program for SMEs impacting these companies in Mexico? 

A: FedEx was founded by an entrepreneur who started a small business in Arkansas, the United States, 52 years ago. The company now handles 18 million packages daily. While FedEx offers global connectivity for large corporations, this is not its only service. We also have a value proposition for SMEs and entrepreneurs. We have developed various programs and offer highly competitive rates, which are essential for entrepreneurs. We support training programs and documentation assistance. Our goal is to connect SMEs to 220 countries and territories. Since international trade regulations vary depending on the destination, we offer specialized advice to help navigate these complexities. We have also implemented national awards for SMEs, boosting their growth and enabling them to become major exporters in the country. 

Q: How is FedEx assisting businesses in regions affected by Hurricane Otis? 

A: We have signed over 20 collaboration agreements with the Ministries of Economic Development (SEDECO) of 20 states, including Guerrero, which was significantly impacted by Hurricane Otis. While these agreements normally offer standardized preferential rates with up to a 40% discount on all national and international shipments for SMEs, in Guerrero, we provide up to a 60% discount, three months after signing the agreement. This strategy allowed FedEx to reactivate its operations in record time; we were the first parcel delivery company to restart operations in the state. 

We also provide substantial contributions to organizations such as Direct Relief, the Red Cross, and the Salvation Army. After the hurricane, we transported backpacks, water, food, and other supplies to the affected population using multiple trailers, delivering them to the institutions that needed them. We also supported our internal community. We have 60 employees, and therefore 60 families, in Acapulco who experienced partial or total damage to their homes. We activated an internal economic support program to help these 60 employees rebuild their homes. 

Q: FedEx has set an ambitious goal of achieving carbon-neutral operations globally by 2040. What specific steps is FedEx Mexico taking to contribute to this goal? 

A: This corporate strategy targets three areas in Mexico: air fleet, ground fleet, and packaging materials. First, we are transitioning to more efficient aircraft that consume less fuel and generate less noise. An example is the ATR 72-630, which has a capacity of 16,000lb, and its innovative design significantly contributes to emission reduction. Second, we are migrating to EVs for our ground fleet. This means replacing thousands of units as FedEx operates in 220 countries and territories. Third, we use recyclable and biodegradable packaging materials that can be used for multiple shipments and decompose naturally. 

Q: What specific challenges and opportunities has FedEx Mexico encountered in adapting to the e-commerce boom in Mexico? 
A: According to the Mexican Association of Online Sales (AMVO), e-commerce grew by 81% in 2020 on average, with peaks in March, April, and May. Access to information is immediate, 
allowing customers to make a decision within minutes. The challenge for logistics companies is to close the gap between this speed and physical product delivery. Years ago, receiving a 
product within a week was acceptable. Later, receiving it within three days was acceptable. Now, the industry demands next-day delivery to same-day delivery. 

Q: What innovative approaches or technologies is FedEx Mexico employing to optimize 
last-mile delivery? 
A: We have developed predictive consumption models using AI to anticipate what products will be bought depending on the region. This has led to a shift from a centralized distribution model to a regionalized model. For example, if companies sell a thousand phone cases in Nuevo Leon every day, instead of shipping them daily, 50,000 cases can be stored in a nearby distribution center. This system is not limited to easily accessible areas; it is also used in more remote locations like Oaxaca. 

We have moved from a centralized distribution model in Mexico City to a nationwide model, reducing delivery times from several days to same-day or even three-hour deliveries. This is achieved through intelligent inventory management based on predictive consumption models, bringing the last mile closer to the customer. This culture of immediacy has become more prevalent for items like food, medicine, and personal protective equipment, but also extends to other types of products. Moving goods is an essential activity, and the COVID-19 pandemic proved it. According to Deloitte, the 7% of economic activities that were deemed essential during the pandemic included the transportation of people and goods. This gave us an opportunity to serve humanity beyond just business and commerce. In the digital era, the pandemic and subsequent lockdowns greatly increased our dependence on digital means. 

Q: How is FedEx Mexico preparing for the changes expected from nearshoring? 
A: The pandemic globally reshaped commerce and economic dynamics, ultimately leading to trends like nearshoring. Other consequential events included conflicts in the European Union, which involved two major producers of important goods. There was an excess inventory of 
non-essential products and a lack of essential goods, along with a shortage of ships, containers, and operators. The economic decoupling of the two largest global economies, the United States and China, further complicated the problem. 

One collateral effect is the relocation of production processes that has led to nearshoring to the United States and Mexico, as well as the clustering of production in regions like China and India. Globalization is not stopping, but there is now a fragmentation into economic blocs that are geographically united. Strengthening these regional blocs is more efficient and economical than transporting goods across the globe. By reducing the distance, we save time and money, making regional logistics more viable. Mexico shares a 3,000km border with the world's largest consumer market, the United States. According to the US Economic Census, Mexico became the United States' top trading partner in 2023, surpassing China and Canada. Over 14% of US trade is with Mexico. Mexico has an unprecedented opportunity to capitalize on this situation, not only to attract investments and expand production processes but also to increase exports. Mexico has the potential to expand its exports to the United States and many other regions thanks to trade agreements with more than 40 countries and economic blocs. 

This is the Mexico Moment. By capitalizing on this opportunity, we can achieve significant prosperity over the next six to 10 years. FedEx can play a crucial role in contributing to the country’s economic growth and competitiveness thanks to a value proposition that connects Mexico with the world via land and air, offering competitive transit times and delivery commitments.
 

FedEx is the world leader in air freight services and one of the leading providers of ocean freight services.