Digitalization a ‘Significant’ Piece in Logistics Post-Pandemic

Q: What are the main logistical challenges your customers face and how do you help them solve these hurdles?

A: We have not fully returned to the pre-pandemic landscape and costs remain volatile. Before the pandemic, you could negotiate rates for several months, half a year or even longer with suppliers, whether they were maritime or air carriers. That is still not widespread post-pandemic, despite greater stability. In our case, as a logistics provider, we have the means to support clients with medium-term estimates.

The challenge for many clients is that they incurred exorbitant expenses during the pandemic for the reasons we just mentioned. People finally realized that to ensure good, reliable logistics, sometimes you need to pay more. They had to pay much more because costs increased by up to 10 times. Now, the effect we are experiencing, and we are generalizing here but it’s a very strong trend in the market, is the imbalance between cost expectations and performance.

Q: What solutions does Dietrich Logistics offer its customers in the face of uncertainties, including port congestions, currency fluctuations and natural phenomena? 

A: External risks or force majeure events are something we obviously cannot control and in those cases, we can only react. In other words, we must figure out how to deal with the emerging situation. These are external disruptions in which there is no way to intervene. What we can improve upon is our response time. For example, we look at how we can enhance our own performance and give clients more time. This is where digitization plays a significant role. We search for tools that allow us to be independent of something generic. The first step in alleviating an unexpected situation for clients is to provide instant quotes. Previously, people had to wait a long time for a quote but now we can almost instantly provide them with a quote, thanks to technology. This is a crucial factor that has yielded positive results.

Q: How has Dietrich Logistics handled the mandatory migration from AICM to AIFA?

A: Other alternatives could have been considered to the Mexico City International Airport (AICM), such as the airports in Toluca and Queretaro, for logistics operations, among others. However, the major complication has been the organization and implementation of the change. This caused many problems for all ground transporters, customs agents and Dietrich Logistics because there was tremendous uncertainty about which customs agent we could work with and which transporter could enter Felipe Ángeles International Airport (AIFA) to pick up our cargo, assuming everything else was already organized. Many clients also needed to arrange their import licenses.

We started exporting from AIFA with the first shipments that recently arrived but we face new challenges and situations daily that no one told us about. It has indeed been difficult. For example, Dietrich works with Talma as a bonded warehouse, which was  one of the first warehouses to have all its permits in order. We were operationally ready for a long time but we also work with many other entities to achieve a successful air shipment, and it has been very difficult due to inefficient implementation. This also affects your image and performance.

Q: What are your expectations for Mexico's logistics industry in the near term?

A: There is a significant security problem that, fortunately, has not affected us too much, although there have been unsuccessful attempts to steal merchandise. However, as a company with a relatively low volume compared to the industry's major players, we know how challenging it can be in some parts of the country. We must coexist with this issue and hope it improves over time. It will not disappear because the issue stems from problems that are deeply rooted in the country's fabric. 

We are not as concerned about the political landscape because the country remains attractive, so I see a positive future. As we mentioned, the country’s geographic location is highly favorable. Additionally, a significant advantage in the industry overall is the availability of labor.

We have a vast and skilled workforce in this country. We must nurture it, encourage everyone to do their job well and cooperate. We want our clients to be well satisfied with our work. We aim to grow organically to maintain the quality of our service. That's how we have done it since we started and it has worked for us, in addition to being innovators.

Q: What are Dietrich Logistics’ plans for further expansion and growth in the Mexican and Latin American logistics sector?

A: Before the pandemic, we had plans to open offices in Monterrey and establish a presence there but that likely will not happen in 2024, although the year after could be an option. Globally, we are expanding into South Korea, Vietnam and Thailand.

As a business, we  are using digital tools and refining and expanding our system, which is quite functional. We also will be part of a portal offered by a US-based company that will provide online quotes for shipments, although there will not necessarily be direct contact with Dietrich because these requests can come from anywhere in the world. In this role, we will act as a Mexican entity providing local support for maritime, full container loads, consolidated cargo and air imports and exports. On the portal, users will see the cost, transit time and all local charges. Depending on the service, users can also see the costs at the destination with the agent cooperating through the same portal. We see this as a significant opportunity. 

It has also been a major goal to become independent from our headquarters in Germany and, last year, we generated around 90% of our revenue directly in Mexico.