How we’re supporting automotive logistics in Mexico
Millions of vehicles are produced each year in Mexico, with the automotive industry playing a pivotal role in the country’s economy. With many of these vehicles destined for export markets, car manufacturers in the region need the support of an experienced logistics partner.
While the automotive industry was heavily impacted by the pandemic and is grappling with the semiconductor shortage crisis, it is showing strong signs of recovery, with export volumes increasing by 9.6% since 2020. In fact, Mexico’s 11 global car manufacturers produced over two million cars for export to the United States and other countries, such as Japan, Colombia, Brazil and nations in Europe, from January to September 2021.
Despite the upsurge in the industry’s fortunes, there are still issues to contend with such as labour shortages, limited access to infrastructure and port congestion. That means OEMs need logistics partners that can provide everything from managing inventories of finished vehicles at manufacturing plants and distribution centres to coordinating safe and cost-efficient transportation of vehicles to dealers.
With global ocean transportation services, an extensive network of vehicle processing centres (VPCs), and railcar services for finished vehicles, we are poised to respond to market changes and deliver the support car manufacturers need to reduce lead times and costs.
Scalable processing capabilities and labour flexibility to meet market demand
In Mexico, as the vehicle export market has grown, so have our services – and our team. With 14 vehicle processing locations across six states and close to 2,000 employees, we currently have the capabilities to handle two million vehicles a year, with potential to scale up.
“In the event of service production peaks due to accumulation of inventory, our expansive footprint allows us to share resources, sending drivers, rail loaders or accessory installers to where they are needed, which is unrivalled in the plant processing space,” says Roberto Zavala, VP Mexico operations. “Our footprint also enables us to implement new plant processing operations in as little as three months.”
Our in-plant VPCs effectively act as an extension of the carmaker. Performing as part of the OEM’s business, they are typically located on the actual factory site. Port VPCs cater for many manufacturers at one facility. Both in-plant and port processing centres carry out a wide range of work, including customisation and homologation.
Our extensive processing services ensure cars are in pristine condition when arriving at their end destination. Other VPC services include battery charging for EVs, installation of accessories such as radios and alarms, fitting of interior and exterior trim, and maintenance.
In addition, access to our own towing equipment means we are able to provide railcar switching services to ensure both reception and towing of empty bi/tri levels to the plant premises and a timely handover of loaded railcars to Class I railroads.
Geared to meet government regulations
Recent government regulations in Mexico prohibit the outsourcing of personnel to provide services that form part of the corporate purpose or main economical activity of a company. Depending on their organisational structures and human resources strategies, service suppliers have had to accommodate major changes in a very short period of time.
“Some logistics suppliers relied entirely on personnel outsourcing to provide their services and many are likely still working to be able to comply with the new regulation,” says Zavala. “With minor internal adjustments and a timely registration as a specialised supplier, we were ready on time allowing us to continue to service our customers without any disruptions.”
Reliable ocean services to keep supply chains running smoothly
Getting vehicles ready for export is just one piece of the puzzle – ensuring the safe delivery of these cars to export markets can be complex and costly.
While direct rail distribution has traditionally been the preferred mode of transport for cars destined for the US market, OEMs are realising the advantages of ocean transportation to optimise the supply chain and ensure faster, safer and more cost-efficient delivery of vehicles.
Our regular liner services to the US east coast and other destinations in central and South America ensure vehicles are not only delivered on time, but also damage-free.
Leveraging technology to improve supply chain visibility
Technology is also helping us deliver vehicles on time by giving customers an overview of the whole supply chain to identify potential bottlenecks and disruptions.
“With access to digital end-to-end visibility tools and sophisticated software, we are able to digitise processes for better quality control and to seamlessly manage inventory,” says Zavala.
Wireless scanning devices at all facilities drive operational efficiency and ensure data quality, while our online visibility tool provides VIN-level visibility across all operational systems globally. Optimisation software enables us to model and optimise our distribution networks.
“Production levels might not be back to what they were pre-pandemic, but there is still a steady flow of vehicles from Mexico to many other countries around the world,” adds Zavala. “And with this comes the need for logistics services that offer a one-stop solution to support Mexico’s automotive exports.”
Our vehicle processing operations in Mexico by numbers:
- Two million vehicles processed by end of 2019 across 14 locations
- Over 360,000 vehicles accessorised by end of 2019
- One million vehicles loaded into railcars per year
- 1,800 full-time employees
- Deliveries co-ordinated to over 340 dealerships
- Supporting 12 automotive OEMs with our logistics services