What are the main supply and demand trends in the Mexican chemical industry that impact your business?
As a logistics provider, there is a positive increase in demand from the chemical industry to import products. However, this is not good news for the chemical industry itself, as it would prefer to have fewer imports and more exports to reach a more balanced business portfolio. We are fairly pleased with the current scenario and see it as a great opportunity to further grow our business within the chemical sector. On the other hand, we also would support more balanced import and export volumes. Leschaco is a rapidly growing medium-sized global player with an own fleet of +5,000 tank containers which we operate on global basis. Right now we have more tank containers being imported than exported which makes the whole operation not always profitable.
Why is there such a lack of production in the country?
The country does not have the infrastructure it needs to meet demand. The government has not given enough support to motivate investment. However, the country is in the first steps of undergoing a transformation. It will take some time to see the fruits of this effort as private investment continues to seep in. Step by step, there is a chance to transform Mexico and strengthen local activities and production. This will imply better times for the chemical industry when it comes to more production and increasing the focus on exports.
What challenges did you encounter when you first entered the market in Mexico?
We entered the market 20 years ago at a point where we already had a wide range of international experience in other markets. Leschaco always had a specific expertise in the correct handling and shipping of chemical products, reason why we also focused on this vertical from the very first beginning. Besides our international transport services, we started to offer door-to-door concepts, including domestic services like customs clearance and inland transportation. Another focus was the development of highly specialized employees as the chemical business requires specific technical knowledge. We believe that our people represent our main competitive advantage, therefore we continue investing heavily in their development and well-being. Right now we are one of the main players in Mexico when it comes to the transport of chemical products. One of the main challenges consists in a fast-changing environment in our business. Digitalization is one of the top issues all around the world, end-to-end visibility is getting more important for all our customers as well. In Mexico, the trucking services are of a mayor concern, involving the lack of equipment, truck drivers and the increasing number of cargo robberies.
What other sectors represent an area of opportunity for your company?
Besides consumer goods and pharmaceuticals, the automotive sector is a big opportunity for us, and we are already doing quite some business in that field. Almost all renowned manufacturers of automobiles and automotive parts operate production plants in Mexico and the new Free Trade Agreement USMCA will strengthen the industry in the region. With regard to new services and products, it is important for Leschaco to expand with contract logistics in the Mexican market. Warehousing and domestic distribution will complete our door-to-door logistics portfolio, becoming a real one-stop shop solution for our customers. In addition, we will invest heavily in manpower and technology to install a control tower functionality in Mexico, offering our customers an advanced level of end-to-end visibility and proactive decision-making.
What should the new administration prioritize when it comes to investing in transport infrastructure?
The new administration needs to take care of inland transportation. As already mentioned, the market faces a lack of truck equipment and truck drivers. Smaller companies can´t afford investments in new equipment, also due to the increasing number of assaults and robberies on the Mexican highways and related higher costs for insurances. At the same time, the railway infrastructure needs a great deal of expansion and investments, something what is not happening. We are not moving enough by rail; if we could do that, we would have less problems with trucks. The new government announced heavy investments in the south of the country, for instance in the so called “Maya Train,” but I personally fear that there won't be enough financial resources to push other, even more important projects. The cancellation of the construction of the new Mexico City airport is also not in line with logistics needs, shipping by air will get more and more complicated in the upcoming years. The port infrastructure has received important investments, the new port of Veracruz will be inaugurated during this year, an important milestone for the expected growth in the Gulf region. On the other hand, we are facing more and more congestion at the Pacific, especially the port of Manzanillo urgently needs a convincing expansion plan.