Today’s Mexican freight landscape is rapidly changing. The country’s reputation for logistical anarchy is being quickly tamed by visionary industry leaders eager to invest in visibility technologies and comprehensive cross-border insurance solutions to boost Mexican freight opportunities.
Mark Vickers, Executive Vice President of International Logistics at Reliance Partners, recently reached out to Antonio Luna, Managing Partner at Vitti Logistics, to highlight the booming freight industry in Mexico and provide reasons why U.S. shippers should take a second look at Mexico.
Vitti Logistics is a third-party logistics provider and light asset-based carrier headquartered just southwest of Monterrey in Saltillo, the capital and largest city of the Mexican state of Coahuila.
The 3PL specializes in FTL, LTL, specialty and heavy transport, but is also involved in cross-border and international trade through its contract logistics and customs brokerage services for manufacturers, retailers and distributors across North America.
However, Vitti Logistics differs from other Mexican 3PLs in that it only serves international customers from the United States, Canada, and China.
“We don’t have a single client based in Mexico,” Luna said. “So over the years we have focused on the NAFTA, now USMCA market, and we have a proven track record of providing good service.”
Vickers describes this as very advantageous for North American shippers interested in Mexico. While it helps to have advanced technology, nothing beats the use of a liaison officer in Mexican cross-border shipping, especially an insurance adjuster.
Luna praises all-risk solutions such as Borderless Coverage to streamline and mitigate cross-border insurance risk.
Previous solutions were not always available for standard cargo, but Reliance Partners’ Borderless Coverage program provides shipper’s all-risk and interest insurance for standard and high-value Mexican and international shipments, per shipment or per project from the time of pickup to final delivery, regardless of mode.
“Having the ability to secure a load, regardless of the number of carriers involved, is something that gives the customer the confidence to say, ‘I don’t have to worry about carrier one, carrier two, or carrier three ; I pay for insurance from point A to point B – period,” Luna said.
Additionally, Mexican companies can easily provide US and Canadian customers with documents in English to take the guesswork out of what is covered. Luna said he often struggles with the language barrier when discussing franchises, terms and conditions. But that all changed with Reliance Partners’ simple and inexpensive solution.
“Back then you had to manage multiple layers to make sure your load was protected, but now it’s all under one umbrella,” Luna said. “It creates a lot of confidence not only on our customers’ side, but also on the carrier side of the company.”
Language wasn’t the only barrier between Mexico and the rest of North America. US and international shippers tend to feel weary when doing business south of the border, and it’s not just for security reasons either. While the risk of cargo damage and theft is a factor, Vickers said what deters many businesses from Mexico is that many have become accustomed to US standards for shipping, visibility and warehouse design – best practices not often promised in other countries.
It doesn’t help that Mexico is almost always excluded from every cargo insurance policy.
But Luna challenges the preconceived notions foreign shippers have of Mexico, pointing to the wave of manufacturing that has entered Mexico in recent years.
In fact, the U.S.-China trade disputes and then the pandemic prompted many U.S. companies to move their outsourced workforce closer to home, setting up shop in Mexico. Even US importers, seeking to avoid West Coast port congestion, have opted to reroute their freight through ports like Manzanillo, using free trade zones to avoid delays.
Things got a bit complicated for Vitti Logistics during the pandemic. Luna said the amount of warehouse capacity demanded has grown exponentially as companies need more and more space to store materials as manufacturing slows at a breakneck pace. Capacity was further boosted by the continued arrival of fully laden container ships.
What started as a need for temporary storage has quickly become a permanent strategy for many businesses as manufacturing has since come back strong. Vitti Logistics has capitalized on the country’s need for more warehousing, in turn increasing its capacity by 300% in 2020.
If that’s not worth a second look at Mexico, Luna also points to its recent adoption of technologies that have leveled the playing field.
Supply chain visibility platforms like FourKites, MacroPoint, and project44 have made headway in Mexico with a growing number of carriers and 3PLs. Companies like Vitti Logistics use such platforms to track every shipment by aggregating GPS, ELD and TMS data, which Vickers says can then be shared with a US, Canadian or Chinese shipping customer’s TMS. This guarantees foreign shippers visibility across the entire Mexican side of their supply chain.
Luna thinks even bigger things are on the horizon for Mexico’s freight industry, as a vast array of industries come to the country. He describes Saltillo as the “Mexican Detroit” due to the city’s automobile manufacturing facilities of General Motors, Chrysler, and Daimler. Also, industries such as furniture manufacturing have opened up, with Ikea and La-Z-Boy having entered the area in the last five years.
This new business means that warehousing and transportation needs won’t be in demand in the state of Coahuila anytime soon. Luna said Vitti Logistics plans to increase its warehousing capacity in Saltillo this year and bolster its freight brokerage and asset-based operations to meet demand.
“Being part of the automotive industry for 16 years gave me a different perspective,” Luna said of her pursuit of shipping the right way. “We very quickly create synergies with shippers and customers because we understand what it’s like on the other side of the desk.”
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