Los tiempos they are a-changing

Los tiempos they
are a-changing

Luis Tomassi is not the only logistics operator who has had to reshape his entire business to meet new and evolving Mexican market needs. Transportation companies — passenger and cargo alike — are having to rethink their businesses, upgrading their operations to remain at the fore in a constantly changing logistics environment.

Four years ago, Tomassi — educated and trained in logistics — was unemployed, undergoing what he characterizes as an “existential crisis.” Working through his problems led him to reshape not only his lifestyle but to develop a unique approach to conducting business.

“At the time I had a gut feeling that traditional warehousing companies weren't offering services which demonstrated added value to customers,” he remembers. “Besides basic storage of merchandise and inventory control, we saw the need for value-added services such as labeling, handling, delivery tracking, invoicing, and a customer service center.”

Tomassi and several partners founded PROVA (Processes for Value Added) (www.prova.com.mx), a third-party logistics services provider (3PL). The new venture began with eight employees, and now boasts a payroll of 250 workers.

“We didn't focus on Triple-A customers,” he explains. “They're too big for us. Many of them are managed from abroad. In Mexico, trans-national companies have purchased a large number of warehouse facilities. We conduct business on a person-to-person basis, striving for close cooperation with our customers' logistics management groups, becoming an integral part of their operations. We also help them establish closer relationships with other internal departments and operations.”

PROVA is still working with its original customers, notes Tomassi, and has added a messenger division, a transport division and a warehousing division.

The biggest hurdle both PROVA and its customers face is rapidly changing technology. The company stands at both ends of the Mexican technology spectrum. On one hand it serves customers whose cutting-edge technology challenges PROVA to stay ahead of the game. On the other hand some customers need upgrading, leading the 3PL to raise these customers to new operational levels.

PROVA's fleet for local transport in Mexico City is relatively small, at 15 vehicles. The company outsources to a variety of carriers for its other needs.

“Right now, given our financial capacity, we are limited to Mexico City but we are working on opportunities that will allow us to grow our fleet and expand to other cities,” says Tomassi.

Auto Express Tijuana (www.aet.com.mx) is one of the oldest shipping companies along the Tijuana-San Diego border, for 40 years serving as a link between Mexico City and California.

The carrier is a joint U.S.-Mexico capital venture which has been expanding services from full truckload to less-than-truckload (LTL). Recently it has taken advantage of its privileged position in the border city of Tijuana to handle small imports and exports for customers.

Miguel Cesar Gastelum, the company's director general, says that increased demands have forced the carrier to expand its services.

“Six years ago,” says Cesar, “we created a subsidiary called Auto Express Tijuana Inc. (AET). Through it we are offering truckload import/export service without having to unload merchandise at the border. For shipments, we deliver in the Los Angeles and San Diego areas, as well as Arizona.”

AET competes directly with FedEx and other major carriers in these areas. AET is able to win business from its competition, Cesar claims, because of its shorter transit times.

Revenue from AET's import/export of packages and truckload operations now has the company growing at a steady 18% annual rate.

“Our messenger service has given us a boost,” says Cesar, “but since we don't have full national coverage we've struck strategic alliances with partners to supply the service for customers who demand it from us.”

Passenger bus line Estrella de Oro (Gold Star) (www.estrelladeoro.com.mx) has been servicing the Acapulco-Mexico City road for more than 70 years. As part of its service it's long offered depot-to-depot delivery in which customers would pick up their own packages.

Six years ago, in the midst of Mexico's messenger company boom, the company decided to jump on the bandwagon by establishing ES as a regional supplier offering pick up and delivery services.

Regional manager Gabriel Ruiz Carranza says creation of ES was in response to customer demands. “Customers who want to pick up their packages at the depot as they have always done may continue to do so,” he says. “However, we now also offer door-to-door service.” ES has been established as a separate company devoted exclusively to packages.

As a regional company, ES has so far avoided competition from the nation's largest delivery companies, such as MultiPack, Redpack and Estafeta, Ruiz notes.

Expansion for the company is not out of the question, says Ruiz, but that would mean a whole different ball game. “To begin servicing larger cities, like Guadalajara and Monterrey, is a goal, but our aim is to continue to provide consistent service,” explains Ruiz. “To compete as just one more carrier in the pack wouldn't help us a bit.” LT

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August, 2004

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