You want to show a seamless quality of your international logistics and distribution operation, but you need a local forwarder in Mexico? Make sure you’ve planned in advance the fine details of 3PL warehousing, consolidation services, customs and distribution with your local partner.

Your final customer does not want to handle the details of their supply chain network abroad: they are looking for you as their sole counterpart to provide the entire service.

To achieve that seamless quality, in global cargo logistics, you face a major challenge with exports abroad: “each country is a world on its own!”

The University of Tennessee’s Global Supply Chain Institute has checklists on how to secure efficient global transport & logistics operations.

They ask forwarders and international logistics companies:

  • Do they offer freight forwarding services?
  • Do they have customs expertise?
  • Do they have a comprehensive import capability?
  • Do they have experience in the countries in which you do business?
  • Do they offer cross-docking capability?
  • Do they have picking capabilities that you may want for your type of products, like voice, pick-to-light, ?
  • Do they offer kitting, light manufacturing?

If you’re partnering with 3PL companies in Mexico, there are details to ask for after reaching your destination.

1. Few partners and local economies of scale

According to our calculations, in Mexico, running distribution, warehousing, and labeling services under one supplier can cost a company up to 15% and 18% less.

In fact, according to a 2014 report by Capgemini Consulting, 40% of 3PL  executives stated that their company had moved some operations to Mexico, mainly from the United States, China and Canada.

The same study shows that inventory costs and other fill rates had shown improvement when operations moved to Mexico.

Even though these may face changes with the current relationship with the United States, the Mexican competitive advantage remains.

Just look at its trade agreements.

If you’re the sole counterpart of your clients back home, make sure you keep control on just a few local suppliers, to maintain top notch quality.

2. Kitting capacity

There are specific industries that require some delicate handling and preparation just after arriving in Mexico and before leaving the country. One of them is manufacturing.

For instance, a report by Automotive Logistics shows that carmakers are looking very careful at ways to simplify inbound logistics to assembly lines, including kitting operations.

Vanguardia recalls how Ford run its logistics strategy in Mexico. The company has developed partnerships with other manufacturers and auto parts, making the most of their expertise in customs to personalize each unit.

Along with distribution centers for imports and exports, their inbound logistics is quite a complex operation.

“Logistics is broad and complex (…) you must realize how the supply chain and transportation network intertwines. On the one hand, we have to introduce parts, on the other hand, we need to export vehicles. This leads in the future to require a continuous improvement of logistics infrastructure and competitiveness”, Rafael Lopez Ford Mexico’s head of logistics, told Vanguardia.

3. Reliable Warehousing

For some companies, warehousing may be 60% of the cost of the total supply chain operation, according to Entrepreneur. Not only do you need automation and proper planning, but a flexible network across the country.

According to Capgemini’s global 2017 Third-Party Logistics Study “The State of Logistics Outsourcing“, 3PL users report that in average 50% of their logistics costs are related to third party services in transportation distribution, warehousing, and added value services.

Customs bonded warehousing is a great option for some industry, but your 3PL partner needs to know how to handle it. 

4. Mastery of the elusive exchange rate

Alberto Montemayor, Marketing and sales director at Baja Ferries, tells Revista Logistica that companies must look for tariff management schemes to face the uncertainty in certain costs, designing and negotiating with clients some rates so they can balance the cost of fuel and exchange rates.

Your customer back home may not and will not understand increasing costs and surcharges because of currency problems and tax burdens. That’s why they hired you in the first place.

According to Inbound Logistics,

“Latin American expansion creates a growing need for service providers in areas such as warehousing and transportation. With third-party logistics (3PL) providers managing the supply chain, manufacturers can focus on production and sales.”

5. Specific industry expertise

Some suppliers may offer a standard quality for products that range from electronics to commodities. It’s important that your suppliers know their business and consignees.

Global Trade Magazine explains that delivering products “can be a very specialized process, especially for items like food.”

“Working with carriers who do not know your products will create extra work for you and your consignees. Not calling for appointments or understanding the potential for chargebacks with certain deliveries are necessities commonly overlooked by low-cost generalists.”

6. A precise distribution strategy

Mexico is currently improving its logistics infrastructure to handle the overwhelming volume of imports, exports and manufacturing it’s receiving.

That means that some roads may be better than others, and the cargo capacity of a given port may induce to some delays while the port authority extends it.

But your local supplier must know how to juggle this.

Cathy Morrow Roberson, president of research firm Logistics Trends and Insights, tells Logistics Management:

“(…)  forwarders must add much more value to their services by mapping out a sustainable distribution strategy even when the transport infrastructure is less than entirely reliable.”

7. Customs knowledge

A survey by the Economist Intelligence Unit notes that the top sources of regulatory challenges for freight forwarders are

  • Customs duties and valuation (26%)
  • Licensing requirements (23%)
  • Product quality standards (20%).

Inbound Logistics  adds that 3PLs can also help with customs regulations compliance which can vary from country to country.” A seasoned 3PL can navigate these rules, avoiding unnecessary delays and costs, or violations and penalties.”

So, your supply chain partner must

  • Master the complexities of the exchange rate between the US dollar and the Mexican peso
  • Excellent handling of bonded warehousing
  • Knowledge of customs, imports and exports regulation
  • Experience handling specific laws such as the IMMEX Decree, to take products at the right time, at the lowest cost.

 8. Awareness that forwarding is a rule and not an exception

Bryan Petersen, from Flexport in San Francisco, notes at Logistics Management that:

“Because no company is big enough to have all the assets required—trucks, container ships, cargo planes, trains, warehouses, and more, in every country on earth—freight forwarders have to use multiple asset owners on any given shipment,” he says.

“That’s what we do.”

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Do you have issues looking for a local logistics partner for 3PL shipping in countries like Mexico? What type?