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In the world of logistics several factors can be involved when it comes to producing and moving your goods. Where is the best place to manufacture your products? Should we stay within the county’s borders or go offshore? If so, which country would produce the most cost-effective solution, or produce with a certain level of quality? This month, we’re going to focus on an interesting logistics hub that is sometimes overlooked, but is always at the back of most Supply Chain Officers minds: Mexico.

The Offshore Duel: Mexico vs. China

While there has always been an attraction towards creating logistics and supply chain hubs in Mexico as a means to reduce production costs, among other things, the competition has always been Mexico vs. China with regards offshoring options. For the past decade this has always been the case, but as the US economy creeps to pre-recession levels, American companies have been looking to restructure their supply chain. Companies are bringing their products closer to home and Mexico has become an attractive nearshoring alternative to making products within country in order to keep costs low while maintaining production quality.

According to the Offshore Group’s recent blog post:

Michael Shifter, president of Washington policy group Inter-American Dialogue, told Reuters U.S. manufacturers are shifting their sights to Mexico to be part of the country’s $800 billion goods and services market.

“There’s something happening in the region and the U.S. wants to be part of it,” Shifter said. “Whether there’s a well-thought-out vision or policy remains a question. But there is more of an affirmation of the region and a willingness to engage.”

Mexico’s Logistics Infrastructure

Mexico is aware of these trends and has already taken initiatives in order to attract companies to invest in their logistics hubs. Here are some of the highlights that we find to be the most appealing with regards to being a strong contender as a logistics hub for companies.

Improvements to Mexico’s Railways

According to Railway Track and Structures (RT&S), Mexico is investing in 4 billion pesos (~$318 million USD) to copmlete 12 rail-specific projects underway that will improve routes between Mexico City and Queretaro (a known manufacturing centre) and between Meridia and the Riviera Maya. This plan is said to increase transportation and communications speed; offering attractive intermodal options for many US companies.

Improvements to Corporate Social Responsibility and Sustainability

As US businesses begin to relocate south of the border, considerations to improve Mexico’s corporate social responsibility (CSR) policies and sustainability practices have gone underway. Over half of the 166 publicly traded companies in the Mexican stock market have created a system for managing sustainability related activities, with considerations for improvement in the supply chain included. This is a great start due to the fact that sustainability along all levels of the supply chain is still in its developing stages at the global level. Such an initiative offers a competitive edge towards Mexico’s main offshoring competitor, China, as trends for companies to tackle on green practices have now prioritized considerations on sustainability as a determinant for deciding offshore locations.

For more information about how Mexico is seen as an attractive supply chain location for both manufacturing and distribution, check out this great white paper from Jones Lang LaSalle.

If you liked this blog post and you want to read more of our content, don’t hesitate to subscribe to our blog. Or if you want more logistics and supply chain content throughout the day, follow us on Twitter! If you’re interested in what we do as a 3rd party logistics provider, feel free to check out our core services. Otherwise, we’ll catch you next week!

DictionaryWelcome back to our monthly Logistics Glossary Week post! A couple of weeks ago we posted some great infographics that we found and a lot of them seemed to focus on trucking when we were searching for content. So this month we’re going to focus on the world of trucking. Specifically, we’re going to cover all of the different types of trailers. There are currently about 35 terms for the number of different trailers that is recognized in the American trucking industry. This month we will only be focusing on four types that we think are good to know about!

Dry van

Definition: What you first think of when you think for a truck with a trailer. A dry van carrier is an enclosed non-climate controlled rectangular trailer. It mainly carries general cargo, including food (but the kind that doesn’t require refrigeration). These types of trucks are loaded or unloaded via the rear doors and you would need elevated access for forklifts to put goods into the trailer.

Reefer or Refrigerated Van

Definition: Reefer trailers are truckload carriers that are designed specifically to keep perishable goods refrigerated. This type of carrier tends to be used by the food industry, but can also be used by pharmaceutical companies.

Reefer trailers are particularly important with regards to logistics because of their main purpose: preserving goods. Thus of all types of trailers, reefer trucks can be deemed the most time sensitive. This is apparent in certain governments attempting policy changes specific to the refrigerated vans. For example, India’s National Centre For Cold Chain Development (NCCD) has teamed up with the government to allow refrigerated trucks and vans toll-free access across all states.

Flatbed

Definition: A flatbed is a type of trailer that has no enclosures or doors. Sometimes known as a ‘haul brite,’ flatbeds can be loaded or unloaded from the sides and the top and doesn’t require elevated access for forklifts.

Tanker

Definition: Tankers have the primary purpose of hauling bulk quantities of liquid. They tend to be cylindrical in shape.

Tankers are special trailers that require quite a bit of attention and care as tankers can carry liquids that may be dangerous, for example oil. A fair chunk of accidents in the trucking industry result from tanker type malfunctions or accidents. And even when tanker trucks are being maintained gas leaks from flammable substances such as oil can lead to severe accidents.

We hope you’ve enjoyed our third Logistics Glossary week post. To keep up with our posts, and to see other content related to logistics and supply chain don’t hesitate to follow us on Twitter or subscribe to our blog! If you’re interested in what we do as a company, feel free to check out our services. Looking forward to seeing you in July!

Hello everyone! We hope you’re enjoying your summer so far. This week we’d like to focus on increasing awareness about the logistics industry as a whole. There is a growing number of people outside of the logistics and supply chain industry who are now trying to become more aware of where their products are coming from and the entire process behind getting it delivered to your doorstep. So we scrounged the web to find you not just one online video series on logistics, but three!

1 – Introduction to Supply Chain Management

Arizona State University’s (ASU) W.P. Carey School of Business has released an open online video series on supply chain management in an effort to “inspire a new generation of supply chain management professionals across the country and around the world.”

2 – Supply Chain Brain’s Video Series

The folks over at Supply Chain Brain and Kinaxis have teamed up to create an online video series during their annual Kinexions Conference. They completed a set of video interviews with customers, analysts, and executives. While the videos mainly focus on attendees and people over at Kinaxis, they offer great insight from thought leaders in the industry and give a great overview on some specific topics in the logistics and supply chain industry.

3 – The Supply Chain Academy

The Supply Chain Academy is a special case for this list because it’s more than just a video series, they offer a series of massive open online courses (MOOCs) that grant you certificates by Dr. Simon Croon. He started this with colleagues at Warwick University in the hopes of providing a dynamic, engaging, and focused course series about the supply chain. The current course schedule is for sustainability and the global supply chain, but registration is now closed. Here’s the introductory video though:

Registration will open in July for the Fall 2013 class titled “The Management of Supply Chain Costs.” So if you’re serious about learning about the logistics and supply chain industry, we highly recommend registering and taking advantage of this free online course (you do get a certificate upon passing!).

We hope these videos provide you with a better grasp into the complex world of logistics and supply chain; getting products from point A to point B can be a very complex process! If you want to know what we do as a third party logistics provider (3PL) check out our core services. If you haven’t already check us out on Twitter (@MoraiLogistics), give us a follow or a @mention, we’re looking forward to engaging with you. Otherwise, stay tuned for next week’s post on our monthly Logistics Glossary Week series!

Oil Rail Train
Source: Geograph
Last month we took a look at the retail industry and how its supply chain is affected with regards to recent news. We’re continuing the series this month by exploring the crude oil industry. If you have been keeping up with recent news, last Saturday the town of Lac-Mégantic experienced an unexpected tragedy when 73 black rail tankers carrying pressurized containers of crude oil was derailed.

The train was parked for an overnight shift change, the tankers decoupled from their locomotives for an unknown reason (as of yet) and rolled downhill without any drivers into the town centre, derailing and setting off a series of explosions. The explosions caused fires that lasted for hours; about 30 building were destroyed and a death toll of at least 15 with dozens unaccounted for.

This tragedy has given light to concerns of the logistics behind crude oil transport and below we will take a look at how development in the crude oil supply chain has changed with regards to the modes of transportation and the factors that affect crude oil costs.

Crude Oil Transport Shifting to Rail

The revival of oil trains in North America stemmed from the Bakken shale in North Dakota due to fracking (i.e. hydraulic fracturing) creating a huge amount of product that needed to be moved without too many options with regards to the pipeline. This led to the oil industry turning to rail to move crude oil to refineries at the East and West Coasts as well as the Gulf Coast. This growth led to huge shipments of oil. For example, in Canada’s railroads alone rail transport for crude oil has gone from 500 carloads in 2009 to a predicted 130 000 to 140 000 this year, according to the Railway Association of Canada.

Apart from being a highly efficient mode of transport for crude oil, costs for train transport can also be lower due to the crude oil in trains being made entirely of tanker cars of oil. This effectively creates an above-ground pipeline and is more cost-effective than traditional the traditional mixed cars of boxcars, flatbeds, etc. (a.k.a. ‘manifest trains’).

Supply Chain Factors that Affect the End Cost of Oil

We’d like to finish this off with a look at two main factors, with regards to the logistics and supply chain aspects of oil transport, lead to changes in cost for the end user.

Mode of Transportation – As discussed above, consumer end cost rises if we limit train movement. If you change the cost from intermodal/rail to truck transport, costs will increase. Equipment shortages can also affect the prices of oil as in order to supply the demand, companies will have to seek alternative modes of transportation in order to meet consumer needs. Disasters along the supply chain can have a devastating impact on the price of oil, something we have already been made aware of in 2010 when the BP oil spill on the Deepwater Horizon rig happened.

Supply & Demand – Obviously one of the biggest factors that affect the end cost of oil is how much we have available to distribute and how much we need. There are also global oil inventories that affect pricing. Global oil inventories exist to balance the supply and demand. When production exceeds the demand for oil, the excess oil is stored. This way, when consumption exceeds the current supply of oil, the oil inventories can be tapped to meet the demand but could end up increasing cost for the end user.

We hope you enjoyed this month’s industry focus on the oil industry. If you liked this blog post and you want to read more of our content, don’t hesitate to subscribe to our blog. Or if you want more logistics and supply chain content throughout the day, follow us on Twitter! If you’re interested in what we do as a 3rd party logistics provider, feel free to check out our core services. Otherwise, we’ll catch you next week!