Automotive Logistics & Supply Chain Mexico: Recap blog

In the latest of our Red Sofa interviews, Raúl Gamboa, director of material and transport control at BMW Group Plant San Luis Potosi sat down with Richard Logan, senior content producer, Automotive Logistics  to speak about the need to be more flexible and creative within Mexico’s supply chain. 

He said that some of the most important measures the OEM has taken in Mexico to combat capacity woes and bottlenecks has been to be more creative. He said that BMW created space in the carmaker’s plants to be able to handle higher numbers of vehicle inventory. On top of this, BMW increased its land transport capacity by buying new hauliers, bringing in flat beds, and introducing containerisation. 

For more Red Sofa interviews, visit our ALSC Mexico highlights page.  

During the conference, we were lucky enough to be joined by Ulises Neri Flores, vice-chair of the Expert Group of Sustainable Resource Management at the United Nations. 

He spoke to delegates about the growing move to electrification in Mexico and the environmental considerations that companies need to make in assesing the impact their BEV can have on the local communities. 

“More companies are making efforts and implementing different actions aimed at diversity and inclusion, transparency and responsibility, ethics, and anticorruption,” said Neri. “Which of these are properly feasible and applicable in your company depends on your geography, the size of your company [and] the place in which you are doing your business.”

Read more from the UN sustainability expert here  

That’s a wrap! Thank you for joining us at ALSC Mexico 2023!

Keep your eyes peeled on this recap blog, where we will be continuting to share updates and new articles.

And be sure to follow our highlights page, where you will find Red Sofa interviews with some of the most important people in Mexican automotive logistics, as well as video highlights of the event.

For our final session of ALSC Mexico 2023, we are hearing from industry experts on why now is the time to invest in Mexico’s secret weapon - its people and workforce. 

Chris Styles, vice president, Supply Chain Management, Nissan North America has been talking to the students in the audience about their career options in the industry. He highlighted Nissan’s career and education routes such as Nissan Learning Pathways, Nissan University and Nissian Drivers School.

Styles said the American Truck Association estimates the driver shortage will increase to 160,000 by 2030 only in the US and Mexico, hence the great need to bring in new talent to the career path. 

Daryl Knight, chief commercial officer, ProTrans said that as the industry in Mexico grows, so too do the opportunities for more leaders within logistics. “One of the strategic moves we’ve taken is unifying our company values, our career development paths and plans,” he said. “We’ve spent a lot of time on this idea of pride and purpose. What we do matters, we work with OEMs where if we don’t deliver on time, production shuts down. So we have taken a lot of time to show our workforce that what we do matters and is of great value.”

Julie Luna, chief commercial officer, North American Rail and Intermodal, Jack Cooper said: “It’s so difficult to find people and spend time training them, only to have them leave for more pesos somewhere else. We really have to grow our benefits package and make it more attractive to retain this workforce, and offer more benefits that are unique to Mexico.”

After a short break, we are back with our student forum hosted by César Pedrero, Logistics Director, Daimler Vehículos Comerciales México.

Pedrero told delegates, including students, that it takes a mindset of continuous learning and improving to work in automotive logistics, as well as a predilection for challenges and problem solving, innovation and out of the box thinking, a calling to help and serve others, and mental resilience.

“The logistics department are the only ones in the company that are not allowed to freak out when a crisis arises,” he said. “There are always problems to solve.”

He said the industry needs young talent with next-level skills including mathematical optimisation, programming, statistics and operational research. “The logistics industry isn’t really using these skills enough yet and we are losing a lot of opportunities because of it,” he said. 

We heard earlier from Lizette Gracida, senior director of external affairs and trade compliance at Toyota Motor de Mexico when she shared that OEMs in the country need to be open and collaborative with government and military officials at the border and ports, in order to reduce bottlenecks and capacity shortages.

Gracida joined us on the Red Sofa to expand on this, where she suggested creating a binational contingency plan between Mexico and the US as a long-term solution to the problem at the ports. Highlighting the success of the United States Mexico Canada Agreement (USMCA), Gracida suggested more trade policies and agreements like this could improve logistics further and help seperate politics from the supply chain. 

Watch the full Red Sofa interview below. 

Yesterday, we heard from several experts from Volkswagen in our final panel of the day. The crises that have disrupted to the supply chain network over the last few years and the normalisation of volatility, uncertainty, complexity and ambiguity (Vuca) has taught VW Group some valuable lessons. 

The logistics experts spoke about expansion in North America and Mexico, battery cell supply from Canada, inbound flows to Mexico and future network planning. 

Read the full story here.

Isidoro Massri, director of Giant Motors Latin America and general manager of JAC México took to the stage this morning to talk about the focus of the Chinese carmaker’s Mexican facility. 

He said JAC México’s focus is on being a “fully autonomous Mexican company for Mexico”, and that the carmaker developed a factory in Mexico to buck the trend of being focused on imports and exports from Mexico. “We wanted to first be a Mexican company, and second a Mexican-focused retail company,” he said.

Read the full story here.

Welcome back to day two of ALSC Mexico! We are back full swing into panel sessions with expert insights that we will share soon, but in the meantime, check out our Red Sofa Interview with Leonardo Martins, director of Global Logistics at Bocar Group.

Watch Martins discuss how Bocar is championing localisation by investing a lot of money, time, effort and training into strengthening its partnerships, using tools like digitalisation and upskilling the workforce to make the Mexican logistics industry more attractive and competitive. 

Now we’re talking about digitalising Mexico’s supply chains, and the challenges and opportunities within that, with Peter Koltai, senior director of production control and logistics, Volkswagen de México, and Efrain Hernandez, supply chain management innovation director, Nissan North America. 

“You really need artificial intelligence (AI) to look through all this past data and impacts from supplier incidences,” said Koltai. ”We are not able to handle this amount of data on our own.”

Similarly, Hernandez said Nissan is working with a Mexican expert in cybersecurity, along with governmental organisations. “We created this new division to deploy innovation solutions and to work on cybersecurity together with our suppliers,” he said. ”We have our expert and also we are working with FBI and other governmental organisations.”

Read more on how Peter Koltai is digitalising VW Mexico’s supply chain

Mexico’s growing logistics market represents opportunities to push new boundaries and develop seamless international flows, particularly for inbound logistics, according to a panel of experts in session four of ALSC Mexico. As expressed by many speakers in the previous panels, inbound logistics firms are facing are dealing with the pressures on capacity  and insufficient infrastructure. 

Hector Espinoza, director of operations for Mexico and Central America at global logistics provider MSC, said the current state of play in Mexico includes problems such as bottlenecks at custom controls, which “will require efficiency and flexibility” to deal with. 

As to the solution, Espinoza said: “I believe what is needed is investment in infrastructure and sea ports, as well as more specialised terminals. At the same time, we need investment in accessibility in roads and highways as well, and a digital highway to support these investments.”

David Resetar, head of vertical market automotive, the Americas region, at DB Schenker, highlighted the reliance on transport by truck, and reiterated the sentiment that Mexico’s rail service is under-utilised. He said that some digital solutions could help ease capacity constraints and bottlenecks. ”From a DB Schenker perspective, we made Mexico ground zero,” he said. “The biggest opportunity [for 2024] is systems integration, whether that’s with customs, suppliers, or carriers, but we need that integration [coordinated].”

While day one panel sessions are ongoing, you can now check out our highlights from the ALSC Mexico 2023 cocktail reception last night.

Gerardo Gómez Gálvez, senior director and country manager for Mexico at analyst JD Power, has been talking about the growing presence of Chinese brands in the Mexican market.

He said that at the beginning of the year there were four Chinese brands present in the market, and now at the end of 2023 there are seven. Chinese brand market share has grown quickly in the past two years, with market share rising from 2.6% in 2021 to 9.39% in 2023. 

“What we need to remember is that Chinese brands have more technology advancements in terms of EVs,” he said, “so it is really key to keep an eye on these brands.”

Next we have a conversation between key logistics suppliers in Mexico, on how automotive logistics can be a competitive advantage in the race for nearshoring in Mexico.

Alondra Alejo, director of southern border at CH Robinson said: “Nearshoring has brought an extreme focus on logistics as a competitive advantage. For us, being in Mexico is about collaborating with our customers. We will work with them, for example to mitigate challenges by looking at warehouse options or multimodal options, so that we can deliver what they need.” 

Leonardo Martins, head of global logistics at Bocar Group, said there are a lot of opportunities for logistics to be seen as a competitive advantage in Mexico, but added there are hurdles to overcome.

”There is no doubt that we need to take better care of our roads and infrastrucutre. It’s also a challenge because there are so many demands from clients that sometimes we have a lack of drivers,” he said. He added that safety is another key focus for Bocar, and at times an area of investment. “We are increasing our transportation costs because there are some areas in Mexico where you need to take greater care of driver safety and implement counter measures to support that,” he said. “These issues are very challenging for our supply chain and there is no doubt these increase the costs.”

When asked from where demand for Mexico logistics services is coming, Lars Krosch, chief operating officer and managing director for emergency logistics pnrovider, Time:Matters, said it is mainly from China, but also from Europe, and Germany in particular. He said: “Mexico is growing in nearshoring and many international companies are establishing factories here. We also have to deal with that additional congestion, so we need to rely on a really resilient supply chain with smooth import and export flows.”

Lizette Gracida, senior director of external affairs and trade compliance, Toyota Motor de México is now on stage with Christopher Ludwig, editor-in-chief, Automotive Logistics. 

She said that the industry in Mexico is not only recovering from pandemic disruption but surpassing it. With additional growth and transformation, the industry needs support on key issues such as electrification, vehicle logistics capacity, and congestion and labour recruitment and retention. In addition, imports from China are causing a strain on Mexico’s supply chain.

“Last year and this year we have witnessed imports from China increasing and they are severely stressing the logistics chain,” Gracida said. ”There is potential for further growth for trade and for the supply chain. However, I also believe it is key to modernise the exisiting infrastructure and also develop new infrastructure if we want to continue supporting this growth.”

To help solve some of these problems, she said Toyota has been working closely with governent and military officials who are controlling the borders and ports, and other key stakeholers.

“At Toyota, we always prioritise collaboration and maintain continuous communication with government and key stakehodlers,” she said. ”We believe there are great opportunities for Mexico, and it is very important to develop holisitic and long-term policies which should address the critical challenges Mexico is facing. [They include] the availability of clean energy, modern infrastructure, seamless 5G, and developing talent and human capital. For that, we need policies. By focusing on these pillars, the industry can contribute to the sustainability and the success of Mexico.”

Watch: Interview with Lizette Gracida on why Mexico needs a holistic energy policy

When asked how OEMs and logistics firms can improve trust and understanding with the government and military officials, Gracida said: “Opening communication channels with the authorities is key. You need to invite them to your plants and sites to see how you are working and improve collaboration. Opening our doors and explaining what we do is a way for them to familiarise themselves with what we need.”

She added that OEMs, who are trusted and certified traders, should have priority for fast lanes when crossing the border, adding that carmakers need to work together to bring this matter to the authorities in an open and constructive way. 

Welcome to ALSC Mexico 2023!

We are starting the conference with Lizette Gracida, senior director of external affairs and trade compliance, Toyota Motor de México.

Before Gracida takes to the stage, we are asking the audience about the market in Mexico this year, and what they expect in the near future. 

When asked about expectations for business and operations in 2024 for Mexican automotive logistics and supply chain, 93% of delegates said they expect business to expand, with 79% expecting it to grow 10% or more compared to 2023, and 13% expecting it to grow less than 10%.

It is almost time to kick off ALSC Mexico 2023 in the country’s capital Mexico City! Over the coming days we will be keeping you updated with the insights and key topics discussed by automotive logistics experts. Import and export trade is booming and improving the flow of parts and vehicles across the modes is a key focus.

In the meantime, read one of the most recent developments which is promising greater efficiency for cross-border trade - the new intermodal service set up between BNSF Railway, Mexican rail operator Grupo México Transportes, and intermodal operator JB Hunt. It will run from Monterrey, Silao-Bajio and Pantaco-Mexico City regions through Texas’ Eagle Pass to the wider US and support containerised automotive shipments.

See you soon in Mexico!