MEXICO - Transport
Ingo Babrikowski is CEO of Estafeta, a Mexico-based courier company. He has been in the logistics industry since 1995, and worked on the user side until 1998, when he moved to the provider side. He has an MBA.
The most important component underpinning Estafeta’s success is innovation and the search for new offerings to bring to our customers. Some time ago, we were the first company to use tracing and tracking in Mexico. We were the first to offer an overnight service in Mexico via air and also, during the economic crisis, we started to provide freight tracking services with the quality of a courier company. This ensured definitive delivery times, as well as tracing and tracking that other companies could not match. Lately, we have begun to offer a mobile platform for the iPhone and BlackBerry. There are similar services in other countries, but we operate the best one in Mexico, allowing our clients to track and trace their parcels and contact the call center directly to make a claim in the event of a problem. In 2013, we launched a platform for e-commerce, which provides a store for our clients to sell their products online. We realized that many of our clients wanted to sell online, but didn’t know how to do so. They would set up a webpage, but lack the appropriate payment facilities, which actually can be complicated for small companies. This platform was designed precisely for such small organizations to enable online sales nationwide. The second step is to widen our service to the US. Surprisingly, large companies are contacting us for this service, too.
E-commerce is quite young in Mexico, and is growing slowly. One reason for this is the culture; you have to learn to use e-commerce. For example, people do not want to leave their credit card data online out of concerns about fraud. There are many other considerations in e-commerce; collecting at the consignee’s door is very complicated because the driver has to carry change, for example. It’s very important to offer a range of payment options, but we do offer a lot of options, including at convenience stores. The customer makes a purchase online, receives a barcode, and takes that to a shop to make the payment, at which point the parcel is sent. This is a working solution for Mexico that no one else has. One aspect of e-commerce in Mexico is the payment and culture of credit cards; the other is the limited volume of credit cards. Brazil has five times more credit cards in circulation. In Mexico, there is a per capita rate of 0.2, while in Brazil it is one and in the US it is three or more. We observe that among those using the internet, about 50% say they don’t buy online because of the lack of a credit card.
For us, it was more a case of playing catch up with our competition. UPS and Fedex are very strong in this area, so we simply had to offer this service. I think we now offer a very similar quality service. You have to think about who your target customers are. Estafeta is a very effective company for domestic distribution if you work within Mexico. For lots of foreign companies we manage literally everything from sales to imports, warehousing, and distribution. Sales can be done over the internet, so foreign companies do not need extensive infrastructure to sell in Mexico.
The biggest investment has been in the distribution fleet, with a strong investment also made in technology. For Estafeta, it is very important to distribute with its own equipment. That gives us the security of delivering a high-quality service and sustain a respectable corporate image, as represented by our drivers in our uniform, trained by us. Our competition outsources many of their services to third-party transportation companies. Our quality control is thus an advantage that we deliver. In regard to technology, Estafeta offers a quick and easy integration of information. We deliver packages of data on the client’s shipments, which the client can use on his or her applications. Estafeta’s IT systems perform these integrations faster than our competitors. Other useful data includes pricing, postal codes, and shipping guarantees. Moreover, the client need not see the Estafeta logo because their customers do not have to switch pages any more to track their packages.
In logistics, our warehousing side will grow 30% over 2013. It is very important to offer an integrated solution; a one-stop-shop for our clients so that they can have all their logistics needs met by us. The idea is to offer a complete package, and is why we added this business to our product portfolio. Nowadays, we see a huge opportunity that is outgrowing both the economy and Estafeta itself. Our competitors are transnational entities and offer these services, but they cannot offer parcel distribution in Mexico.
I don’t think Mexico has yet understood the potential that its location offers. Mexico, being a neighbor of the biggest market in the world, should use this opportunity much more. Transportation is key. The main hub for distribution if you look at airfreight, nowadays, is Miami for the Americas. I believe that Mexico should play a much more important role in that. This really requires a governmental initiative. Other Central American countries, like Panama, already do this. Of course that country boasts the Panama Canal, but the government has also invested in modern airports. Mexico needs to move forward in this respect.
What we would like to see is an expansion of airport infrastructure. Larger aircraft should be coming to Mexico, but are going to the US instead. You have a situation of freight going down by truck, while Laredo airport in the US moves more airfreight than Mexico City. All freight going there or to El Paso is destined for Mexico, but is currently trucked down. The growth of airfreight today without infrastructure is very limited. For the airlines over 2013, growth has been at 4%-5%, but it is much more about how you manage prices; it is not a question of capacity. At the moment, we are not acquiring many aircraft, for example. It is not about more airports; what Mexico needs is more infrastructure and larger aircraft and airports designed for airfreight, not just passengers.
Overall, 2013 was much more difficult due to slower-than-expected economic growth. GDP growth was projected at 3.8%; however, currently it is below 2%. Estafeta, in 2013, anticipates growth of around 6%, but in 2014 I want to see a 10% print.
I am very positive. The opportunity for transport in Mexico is generally very good; it is a country undergoing development. As people’s wealth increases, they consume more, which in turn fuels the entire transport sector. The biggest opportunity, of course, is e-commerce, the growth rate of which in Mexico is over 35% compared to Europe, where it is about 10%. This will help considerably in developing the entire transport sector, but will take perhaps four to five years to be felt.
Security remains an issue in Mexico, although we have suffered no significant incidents of theft because we have implemented protocols should the undesirable occur; for example, using GPS technology to locate a missing truck.
© The Business Year – December 2013
By sponsoring our events you are able to best participate in the discussions that matter to you, as well as gain unique networking opportunities.