Gabriel González: A logistics integrator is essential to increase competitiveness

Gabriel GonzalezGabriel González Source: Courtesy

This past 2020 was a year characterized in part by the outbreak of a global pandemic, that captivated the world and shocked the global economy and financial markets. As you turn the page to 2021, it may be helpful to reflect on the lessons learned from such a historic year.

To say that 2020 was a unique year would be an understatement. What started out as an ordinary year quickly became extraordinary. Initial reports in early January indicated that a new virus was beginning to spread, but few at the time could understand how it spread. it would aggravate the situation. In March, the Covis-19 pandemic took over the entire world. So after such a tumultuous year, what have we learned? .

The pandemic has disrupted the global economy and supply chains. Global GDP is expected to have contracted 5.2 percent in 2020. Different logistics subsectors have recovered from previous crises in 12 months, but the form and timing of this recovery, and what type of cargo and track will recover and when, remain uncertain.

As we witness the remarkably determined response of the global health community to Covid-19, we have also observed that actors in all areas of the economy react to the current challenges with innovation.

Global logistics is no exception. It is very likely that the pandemic will affect the world trade deeper and longer than we have seen in other crises in the recent past. He scope of interruption It will vary by commodity, trade route, and mode of transportation, and will be governed by local differences in the severity of the crisis.

The nuanced nature of the crisis creates opportunities for companies in logistics and supply chain: enter new markets, innovate in new service offerings and position itself against the competition.

The transportation industry and US logistics industry.For example, they are pondering what the future holds, amid the impact of the coronavirus, and moving toward the next normal.

Many logistics companies have implemented relatively sophisticated forecasting processes and models. However, the pandemic has increased error range of many of these models and continuing to use them this year could lead to underutilization, loss of revenue or loss of market share.

McKinsey & Company notes that relying solely on internal historical data is no longer useful for forecasting or even creating a reliable baseline. The crisis has also demonstrated the interdependence of different segments in travel and logistics, and to what extent external shocks can have an impact on companies. Taking into account the relevant external variables related to demand and supply allows obtaining more robust models.

Some products, such as non-metallic minerals, ceramics, clay, cement, agricultural and food products, and pharmaceuticals, are likely to grow back faster and more firmly than other products.

In McKinsey’s June 2020 survey of US executives, 44 percent said it was most likely a “silent world recovery”. The coronavirus reappears, growth is slow and GDP does not fully recover until the first quarter of 2023.

Companies must change now; When a company manages to reduce its logistics costs, it can pass on that margin of savings to its clients, by offering them lower prices for services, which allows it to improve its competitiveness in the market. And the area most susceptible to reducing logistics cost is in the transport of goods.

In fact, according to the Deloitte supply chain efficiency report, the main strategy of Mexican companies to reduce their logistics costs is to optimize their transportation, a decision that has generated high profits for 39 percent of companies. organizations.

In P&P Global Logistics We suggest carrying out an exhaustive planning together, client and logistics provider, using technology and being flexible, adjusting the operations of the logistics department to the new economic modality such as the new inerts in the supply chain, infrastructure and service hours.

Strategic alliances with transport service providers that meet demand and integrate as much as possible the supply chain, warehouse, and customs clearance will be important; a single p is essentiallogistics rover to obtain better prices.

In addition, it is important that logistics companies have a combination of transport providers with its own units, in order to cover contingencies for customers and the market itself.

As important data, Mexico has 19 international crossings, among which Nuevo Laredo occupies the first place with 40% of the commercial exchange between Mexico and the United States.

According Bureau of Transportation Statistics, As of October 2020, the top three busiest truck border ports, 46.1% of total cross-border truck cargo, reported: Laredo Texas 16.7 billion dollars; Detroit, $ 9.2 billion; El Paso, Texas 5.4 billion dollars. And the top three trucking commodities, 50.2% of total cross-border trucking, as of October 2020 were: computers and spare parts, $ 13.2 billion; electrical machinery 11.4 billion dollars and vehicles and spare parts 9.5 billion dollars.

In figures for total cross-border cargo compared to September 2020, the United States-Canada increased 1.1%; United States-Mexico se increased by 10.5% and compared to October 2019, the United States-Canada was down 10%; United States-Mexico rises 0.6%.

Total cross-border cargo, 102.1 billion dollars moved by all modes of transport, an increase of 5.8% compared to September 2020 and a decrease of 4.7% compared to October 2019. Most used mode, trucks with 67.8 billion dollars of cargo, 6.9% more compared to September 2020, 0.6% less than in October 2019. Railroads moved 14.5 billion dollars in freight, an increase of 5.0% compared to September 2020, 0.4% less than in October 2019 .

Finally, and as part of the context, the authorities decided to extend to February 21 the partial closure of the border between Mexico and the United States. without affecting foreign trade, it is only for the transit of people due to the Covid-19 pandemic. Both countries will coordinate health measures in the border region that will be in effect until 11:59 p.m. on February 21, 2021.

P&P Global Logistics, with offices in Laredo Texas, provides a diversified portfolio of transportation management services, as well as supply chain management solutions, including warehousing and Mexican customs brokerage. It offers the optimal combination of operational experience and use of technology for greater control of transport operations, merchandise visibility and reduction of transit times.

With sources from P&P Global Logistics, Bureau of Transportation Statistics, McKinsey & Company and Deloitte

The author is Gabriel González, Managing Director at P&P Global Logistics.

Give your opinion:

This is an opinion column. The expressions used here are the sole responsibility of the person signing them and do not necessarily reflect the editorial position of El Financiero.