Facing Ever-Changing Logistics ChallengesMon, 10/21/2013 - 11:01
Q: What impact did NAFTA have on the mining process? How does the free exchange of goods and services benefit exploration, development, and production activities?
A: During the preparation for NAFTA negotiations, Camimex provided the authorities with a list of products on which Mexico was ready to negotiate with its counterparts in NAFTA, as well as tax, duties, and tariff recommendations. Regarding the transportation of goods, we were also interested in bringing Mexico’s transportation costs to a competitive level internationally, and maintaining them there not being competitive could lead to commercial failure. Mexican companies had to learn and adopt new mechanisms and procedures in order to ensure that costs were kept at the lowest possible level. The impact of NAFTA was immediately a positive one. Investors knew that imports and exports would not be a problem anymore if they invested in Mexico. The transition was also easy because products were allowed to move freely - not just finished products, but heavy machinery and industrial equipment as well. Almost everything was considered under this trade agreement, allowing for greater growth at different stages of mining operations. Not only technology, but all kinds of the highest quality equipment were immediately available to Mexican producers, just as they were to the main companies in the mining industry worldwide. Thanks to NAFTA, when international metal prices increased years later, Mexico was ready and perfectly positioned to profit from larger volumes of production that were available for export, and had a well known list of markets and customers that it knew and could sell its products to.
Q: What are the main logistics and transportation challenges for the mining industry?
A: The main challenge is always being up to date with the latest developments in the logistics and transportation sector. The transportation industry is evolving, and as users we need to be aware and ready to adapt to those changes. Higher capacity vessels are continuously coming out and, at the same time, railroads, trucks, and even airplanes are offering different possibilities. It is important to be aware of these developments and constantly look for new ways to lower costs, while always searching for ways to increase competitiveness. It is the industry’s job to create the most cost effective solutions every time, by using intermodal transportation combinations that best suit each company’s needs. There are no general solutions that apply to everyone. Every purchase or sale transaction requires a customized solution, depending on the product’s origin and destination, and there are also other factors that need to be considered, depending on market and production conditions.
Q: What are the most significant challenges in transporting high value products?
A: The main challenge always has to do with security. The company that is shipping high value products needs to develop relationships with reliable service providers in the transportation sector, in order to take care of the goods at all times. But that is not all. As we know, Mexico has faced big security problems on its highways in recent years, but we are certain that these conditions will improve and return to normal soon. However, due to security challenges, the companies involved in handling these products have had to increase their security costs and have lost their competitiveness as a result.
Q: Which of the Transport and International Trade Commission’s achievements have had the biggest impact on the Mexican mining industry?
A: Camimex has been successful in helping Mexican companies learn about new developments in the transportation industry. Nowadays, most of the companies involved in the mining industry are well aware of the basic requirements and they have enough experience to manage transportation processes on their own. The current role of the Commission mostly has to do with regulations. We work alongside the government on both transportation and international trade matters.
Without doubt, the international trend is to use higher capacity transportation, including vessels, railroads, trucks, and airplanes, with the aim of lowering costs. Mexico therefore needs to develop the required infrastructure. Port terminals, railroad facilities, highways, and airports need to be continuously adapted to take new requirements into account. Users need to be aware and ready to adapt to a constantly evolving and changing market.