March 3, 2022
All-risk coverage, visibility tech turning heads in Mexico
What’s happening south of the border is hard for US shippers to ignore
The Mexican freight landscape of today is changing rapidly. The country’s reputation for logistics lawlessness is quickly being tamed by visionary industry leaders willing to invest in visibility technologies and comprehensive cross-border insurance solutions to spur Mexican freight opportunities.
Mark Vickers, Reliance Partners’ executive vice president of international logistics, recently connected with Antonio Luna, managing partner at Vitti Logistics, to highlight Mexico’s burgeoning freight industry and give reasons why American shippers should give Mexico a second look.
Vitti Logistics is a third-party logistics provider and a 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, specialized and heavy hauling transportation, 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 distinguishes itself from other Mexican 3PLs in that it only serves international clients from the United States, Canada and China.
“We don’t have a single customer that is Mexican-based,” Luna said. “So over the years we have been focusing on the NAFTA, now USMCA market, and have a proven track record of providing a good service.”
Vickers describes this as very beneficial for North American shippers interested in Mexico. While cutting-edge technology is helpful to have, nothing beats using a liaison in Mexican cross-border shipping, especially an insurance-savvy one.
Luna praises all-risk solutions like Borderless Coverage for streamlining and mitigating the risks involved with cross-border insurance.
Previous solutions weren’t always available for standard commodities, but Reliance Partners’ Borderless Coverage program provides All-Risk, Shipper’s Interest Cargo Insurance for both standard and high-value Mexico and international shipments on a per-shipment or per-project basis from the moment of pickup until final delivery regardless of mode.
“Having the ability to insure a load, regardless of how many carriers are going to be involved, is something that provides the customer with confidence to say, ‘I don’t have to worry about carrier one, carrier two or carrier three; I’m paying for insurance from point A to point B — period,’” Luna said.
What’s more, Mexican companies can easily provide U.S. and Canadian clients with documents in English to take the guesswork out of what’s covered. Luna said he often found it difficult to traverse the language barrier when discussing deductibles, terms and conditions. But that all changed with Reliance Partners’ easy and inexpensive solution.
“Back then you had to deal with multiple layers to make sure that your load was protected, but now everything is under a single umbrella,” Luna said. “That’s creating a lot of confidence not only on our customer side, but also on the carrier side of the business.”
Language hasn’t been the only barrier between Mexico and the rest of North America. American and other international shippers tend to feel weary when conducting business south of the border, and it’s not just for reasons of security either. While the risk of cargo damage and theft are factors, Vickers said what deters a great deal of business from Mexico is that many have grown accustomed to America’s standards of shipping, visibility and warehouse design — gold-standard practices that aren’t often promised in other countries.
It doesn’t help that Mexico is almost always excluded in every cargo insurance policy.
But Luna challenges the preconceived notions that foreign shippers have of Mexico, pointing to the wave of manufacturing that’s entered Mexico in recent years.
In fact, trade conflicts between the U.S. and China and then the pandemic prompted many American companies to move their outsourced labor closer to home, setting up shop in Mexico. Even U.S. importers, looking to avoid West Coast port congestion, have chosen to reroute their freight through ports like Manzanillo, utilizing free trade zones to avoid delays.
Things did get a bit tight for Vitti Logistics during the pandemic. Luna said the amount of requested warehouse capacity grew exponentially as companies needed more and more space to store materials when manufacturing slowed to a crawl. Capacity was further exacerbated by the continual arrival of fully loaded container ships.
What began as a need for temporary storage quickly became a permanent strategy for many companies, as manufacturing has since returned in full force. Vitti Logistics capitalized on the country’s need for more warehousing, in turn, growing its capacity by 300% in 2020.
If that doesn’t earn Mexico a second look, Luna also points to its recent technology adoption that’s 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 are using such platforms to keep track of each shipment by aggregating GPS, ELD and TMS data, which Vickers said can then be shared with the TMS of an American, Canadian or Chinese shipper client. This ensures that foreign shippers have visibility throughout the Mexican side of their supply chain.
Luna believes that even greater things are on the horizon for Mexico’s freight industry, as a vast array of industries are moving into the country. He describes Saltillo as the “Mexican Detroit” because of the city’s automotive manufacturing facilities from the likes of General Motors, Chrysler and Daimler. In addition, industries such as furniture manufacturing have opened up shop, with Ikea and La-Z-Boy entering the region in the past five years.
This new business means warehousing and transportation needs won’t be in low 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 keep up with the demand.
“Being part of the automotive industry for 16 years has given me a different perspective,” Luna said of his pursuit of shipping the right way. “We create synergies very quickly with shippers and customers because we understand what it’s like on the other side of the desk.”