The Importance of Diversifying Supply SourcesBy Ricardo Guzman | Wed, 10/21/2020 - 11:41
Q: What was Transplace’s strategy to face the pandemic?
A: Despite everything, this has been a very good year. We have achieved remarkable progress in products, divisions and geographies. We finally opened offices in Europe, in The Netherlands, which was a major milestone that is already paying off since we signed two customers there. We also acquired three new companies, including Lanehub, a matching and collaboration platform that would be the first of its kind in Mexico.
Lanehub allows the streamlining of collaboration between private and dedicated fleets, ensuring that cargo is available and preventing the infamous empty miles. No client wants to move air and this is the right solution for retail and manufacturers. For example, companies like Nestle, Procter & Gamble and Walmart can collaborate as shipment partners sharing routes and tracking cargo, so the entire fleet’s capacity and operation is optimized.
The other two acquisitions were Scandata, which is helping us strengthen our parcel services through its e-business and small deliveries expertise, and Leancor, a supply chain expert with a strong presence in automotive and manufacturing.
Q: What challenges are you facing?
A: The challenging part is to deal with the volume reduction at the domestic and cross border side. At the Laredo/Nuevo Laredo border, we have 450 employees handling over 10,000 monthly import and export orders and we are still facing the effects of the disruption in manufacturing and trade. First, the US faced shutdowns and one month later Mexico joined it. Even though demand has increased in the US, Mexican consumption has not recovered yet and the imbalance between exports and imports is still impacting several areas of the business. Despite an increase in demand for services, there are thousands of tons of cargo waiting for an operator or a truck to cross the border driven by the increasing trade imbalance.
On the other side, efficiency and productivity are driving changes since companies want to work with a smaller staff and do more with less. Companies are once again asking what else technology and logistics can do for them. Our Transportation Management (TM) division has recorded its best performance in many years. We have almost quadrupled our TM results since last year and we have closed nine very big contracts. Some of examples are a large new Control Tower contract with an automotive company in Queretaro, a Managed Transportation solution with a Tier 2 company with several plants in Mexico, three projects with CPG and retail clients and two more related to metal-mechanic processes. New contracts are forcing us to move faster. We had over 50 employees at the Queretaro airport mostly for customs services but now we have concentrated all our staff at a single facility in the Queretaro industrial area to create synergies with our logistics and TM teams. We are also working with medical devices, a sector where we almost did not have a presence despite its strong potential.
Q: What is Transplace’s added value and why should clients choose its services?
A: We have learned how important it is to diversify supply sources. We were all betting on China but putting all our eggs in one basket was not the right call. We need to rethink supply chains and with USMCA, moving cargo between the US and Mexico will be crucial, which is why we are still investing in multi-modal solutions. With the pandemic, everyone, from cargo companies to manufacturers and logistics experts, must rethink their strategies. We have the opportunity to attract investments to Mexico from companies in Europe, the US and Canada and we are in a position to provide them the best service. We have nine offices in Mexico, our headquarters are in Monterrey, our customs operations are in Nuevo Laredo and we have a strong presence in the Bajio and Mexico City.
Q: What problems do you see with Mexico-US shipments?
A: The Mexico-US border is connected by land through railroad and trucks, but both have problems. Rail tracks are at times blocked, and roads are not always safe. Another way to move cargo across the border is by sea, which is where we saw an opportunity. There is almost no nearshoring transportation connecting Mexico and US ports. We inaugurated two new services this year: one from Tuxpan, Veracruz, to the port of Manatee, Florida, and the other connecting Brownsville, Texas, with the port of Tampa to serve the Monterrey, Saltillo, Ramos Arizpe and Matamoros corridor. We innovated by offering 53’ containers allowing up to 24-26 tons of cargo. Shipments arrive in Florida, a major consumption spot, and from there cargo moves by truck to the southeast and northeast in the US.
Q: What challenges will USMCA bring to the logistics sector?
A: Customs compliance is gaining relevance in the US given rules and regulations established in USMCA. I think visibility and technology will always play a crucial role but we have to find new ways to break paradigms. Organizations are assessing how technology can help them and I believe we are ready for this challenge. Some people might have concerns about new technologies not working in Mexico but they are wrong. It is remarkable how advanced many transportation companies are, the solutions available in the market, and the solid success stories and business cases across industry verticals to share.
Transplace hosts a proprietary logistics platform and provides engineering and execution services to global shippers. With a growing client base in North America and Europe, it offers customs brokerage and logistics solutions to serve the US-MX international trade shipper community.