Morai-Logistics-Blog-TPP-NAFTA-2

Earlier this week, newly inaugurated president Donald J. Trump withdraws from the Trans-Pacific Partnership (TPP). Hence, the U.S withdrawal from the 12-country agreement effectively rendered seven years of negotiations a waste.

Pulling the U.S out of TPP was one of Trump’s campaign promises. Though, aside from the possible global-political ramifications of the action, what many are wondering now is if he’ll do the same to NAFTA and what all this will mean for the logistics industry.

Consequences of the Withdrawal

To say TPP was controversial would be an understatement. Several protests around the world were held throughout the negotiations.

There are many reasons for and against TPP, with both sides passionate about their position. But, the trade agreement would have created a network encompassing 40% of all world trade and affected millions of people across the world. Other global concerns would’ve been impacted as well, including cyber security, environmentalism and free trade.

Fallout of the withdrawal is being hotly debated across the professional and media landscape. So we have detailed the three key concerns that are being discussed:

  • Loss of North American competitiveness — TPP would’ve eliminated more than 18,000 taxes and trade barriers across its member countries. By pulling out of the trade agreement, the U.S and by extension Canada, is losing out on a large section of the global market. Farming manufacturing, and the services and technology sectors will be impacted the most. While Canada and Mexico can still negotiate on their own, they lose a lot of bargaining power without U.S backing.
  • Loss of North American influence over global trade — One notable absence from TPP was China. Some experts theorized the exclusion was intentional. TPP they argue, was an attempt to counter China’s growing economic influence on global trade. China has pushed its own trade pact, called the Regional Comprehensive Economic Partnership (RCEP), which currently has 16 members. By backing out of TPP, Trump may’ve pushed some countries that originally signed to seek other trade agreements, like RCEP.
  • Risk of protectionism — The U.S is not part of the RCEP. If it goes through, experts are worried that it will have tariffs against the U.S. This, along with the shaken confidence of TPP members may raise the number and cost of tariffs.

What Will Happen with NAFTA?

Trump promised Americans to either renegotiate or outright end NAFTA during his campaign. His actions with TPP indicate he’s serious about his promise.

When asked on Monday, White House press secretary Sean Spicer said Trump would rather renegotiate NAFTA rather than tear it up.

“Mr. Spicer said Mr. Trump’s complaint is with “multinational” trade deals because they are more complicated to renegotiate. But he said the President was open to bilateral deals – a sign that he might be willing to keep a deal with Canada, even if he makes good on his pledge to change the terms of NAFTA to make it harder for American companies to move to Mexico” wrote Adrian Morrow, reporter for the Globe and Mail.

Trump will be meeting with Prime Minister Trudeau and Mexican President Enrique Pena Nieto in the coming weeks to discuss a renegotiation.

If NAFTA were to end, it would have serious negative repercussions for the transportation, manufacturing and logistics industries across the three nations.

The end of TPP is already having an impact on offshoring efforts. Thus, the coming weeks will see if nearshoring efforts will be upturned as well.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

Kelli-Saunders-OWIT-Woman-Exporter-of-the-Year-Award-Press-Photo
Nominated during OWIT (Organization of Women in International Trade) Toronto’s Annual Awards Ceremony, where Kelli Saunders of Morai Logistics Inc. wins Woman Exporter of the Year.

Toronto, ON (June 16,2016)

On Thursday, June 9th 2016, Kelli Saunders, President of Morai Logistics Inc., an Authorized Agent of Mode Transportation, was the recipient of The Woman Exporter of the Year Award from OWIT-Toronto (Organization of Women in International Trade-Toronto). Nominees had to have at least 50% ownership of a profitable business registered and operating in Ontario for more than 3 years. Nominees also had to have earned their primary income from the business and must have been responsible for its daily operations. A significant portion of her company’s business had to have come from exporting products or services.

The Woman Exporter of the Year Award honors an outstanding woman entrepreneur who, through her exporting endeavors, is advancing women and the image of Canadian business women in the international community.

Network and Cherish Those Around You.

Kelli was presented this award for her company’s work with major fast-moving consumer goods companies as a third-party logistics provider with expertise in cross-border intermodal logistics in the US and Mexico.

Jim Damman, President of Mode Transportation, said:

We are all very excited for Kelli. She is an outstanding businesswoman, and she and her team do a great job of providing the best export solutions to her valued customers. This award is very well deserved. Her hard work in receiving this award is something that makes all of us very proud.

Kelli’s advice to other women is to network and cherish those around them. Surrounding yourself with energetic high achievers will give you the foundation for a strong, career-long network from which to grow.

Shown above is Kelli’s acceptance speech.

ABOUT OWIT TORONTO: OWIT-Toronto (Organization of Women in International Trade) is a non-profit professional organization designed to promote women doing business internationally, by providing networking opportunities, export education and global business contacts. Members include women entrepreneurs, service providers and business women involved in international trade.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

Morai-Logistics-Blog-Mexico-Rail

Last Friday, a new international rail bridge between the United States and Mexico was finally operational. The project took 15 years to complete, and had a price tag that ran over $120 million according to an article in the San Antonio Express news.

This new international bridge, of a sort not built in over one hundred years, is impressive but it is only a small part of Mexico’s rapidly developing rail ways and intermodal capabilities.

The combination of recent labor disputes at the U.S. West Coast, and rising costs on goods shipped to the U.S. from China (due to high oil prices and rising wages) has made Mexico very popular for international trade and companies seeking to convert to nearshoring as their logistics strategy.

It should be no surprise then that the aforementioned article quoting census data, writes that in the first six months of 2015, Mexico topped $262 billion in trade.

An excellent InboundLogistics.com article on the topic covers Ferrocarril Mexicano’s success, the country’s largest railroad, as a case study for the growing demand for rail transportation both domestically and between Mexico and the United States. This railroad had its carload volume increase by 6.6 percent in 2011 compared with 2010, and revenues increase by 13.9 percent.

Mexico’s central location, and the country’s commitment to improving security across its entire rail system are the other reasons InboundLogisitcs attributes to the railroad renaissance.

A similar article on LogisticsViewpoints.com emphasizes that Mexico has received a lot of investment from private companies to improve the Mexican rail system (over 5 billion U.S in fact).

This, according to the article, has created a system that is compatible with those of both its northern neighbours: “rail transportation, including bulk, general cargo and intermodal, has been a key factor in the expansion of trade between the U.S. and Mexico”.

Bringing it all back home

Stronger, more secure, and better supported rail ways are not the only things Mexico has to offer. Along the Mexico-Texan border, an area traditionally filled with warehouses, a home for “reshoring” is being created. U.S manufacturing companies are moving back home.

CoStar.com gives the example of the $8.1 billion purchase by IndCor Properties of 18 buildings with a combined 2.13 million square feet in El Paso, TX, as evidence of this. The article also discusses why goods shipped to West Coast ports have declined by 30% thanks in large part to the ongoing labor disputes there (which is because of ongoing labor disputes there).

The best way to conclude this blog post, is to again quote from the InboundLogistics article:

Investments in better processes, connectivity and operations will continue to increase capacity, expand intermodal ramp operations, improve service and increase train speed within the growing Mexican railroad network. This, combined with the improvements made over the past 20 years, are making rail and intermodal a sustainable, viable and long-term transportation solution for both cross border and intra-Mexico supply chains

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

In recent years, the growing trend with many U.S. companies has been to relocate some or even all of their off-shore production back to North America. China no longer holds the sway that it used to, but countries such as Mexico are quickly becoming the much more attractive option. Here are 12 reasons why you should consider near shoring in Mexico.

The Right Time to Consider Nearshoring Strategies to Mexico

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As foreign investment in China stalls, Mexico’s foreign investment continues to grow. As a result, demand for facilities and land is beginning to drive up. Thus, the best time to invest in Mexico for your manufacturing or sourcing potential for your organization is now.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

Morai-Logistics-Blog-Nearshoring-vs-Reshoring

In the past, we’ve written about the benefits of near-shoring over off-shoring. However, something we haven’t discussed in much detail is re-shoring.

A recent article on EBN discussed the findings of Cushman & Wakefield’s 2015-2017 North American Industrial Forecast. In the article, writer Jennifer Baljko highlights the differences between the praise reshoring has gotten in the media versus Cushman & Wakefield’s findings and in doing so, asks an important practical question of manufacturing and logistics companies: “Where will you put your factory?”.

Before going any further, it’s important to properly define the terms re-shoring and near-shoring as they are sometimes used interchangeably despite them having very different meanings.

According to a Forbes article on the topic,

Re-shoring refers to manufacturing that was previous done outside of America and has been moved back to America. Near-shoring refers to manufacturing work that has returned closer to America in countries such as Mexico.

Cushman & Wakefield’s findings, as Baljko points out, makes fining quality and affordable space for factories and warehouses one of the biggest challenges for companies who decide to move back home.
“A lack of quality space remains one of the biggest challenges facing manufacturers in the U.S. Emerging technological advances, such as improved measuring/process control, advanced digital technologies and sustainable manufacturing, have made many older facilities functionally obsolete, opening the door for more speculative construction to take place within the next few years,” the report noted.

How Does Near-shoring compare?

Although Cushman & Wakefield’s study advised caution for companies considering re-shoring their manufacturing, their findings did indicate that near-shoring to Mexico might be a more prudent long-term strategy.

“Major drivers of industrial real estate activity continue to reflect the prominent role of distribution and logistics sectors. They include large renovations, like Kuehne+Nagel’s 341,000 sf at O’Donnell Logistics Park, or expansions, like Walmart’s 132,000 sf at Parque Industrial El Convento” they write.

The reason for this is that is because of the competitive land prices the country offers. “Average industrial land costs range from $638.08 psf to $231.85 psf for private industrial parks sites and raw land respectively” they write in their report.

Manufacotring in Mexico also has other advantages that we’ve written about elsewhere, but according to Cushman & Wakefield’s, “Generally, Mexico is increasingly developing a pool of high-skilled workers and rapidly integrating its manufacturing industries with global production lines. Also, in addition to a successful macroeconomic reform agenda, an ambitious investment program by the federal government is expected to bring further improvements to Mexico’s transport and logistics infrastructure” they highlight in their findings. “Given such factors, Mexico’s industrial real estate market is forecast to continue growing and benefiting from increased demand from a diversified range of industries” they conclude.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

We hope everyone has had a great holiday and we would like to wish all of our readers a Happy New Year! To kick off the year, we have finished compiling our infographic on the top logistics and supply chain facts from the news that we’ve collected throughout last year. As there is a large number of news items spanning the many large topics in the logistics industry, we decided to create our Top 10 by focusing on categories:

  1. Drones
  2. Same-Day Deliver
  3. Supplier Diversity and Women
  4. Sustainability
  5. RFID
  6. World Bank Institute’s Private Sector Platform
  7. Automation
  8. Online Retail
  9. Truck Driver Shortage
  10. Logistics Slow Growth

Each of these topics have some pretty interesting facts and statistics that may have been missed in the hustle and bustle of fellow logistics professionals and enthusiasts. And while we haven’t covered all of the interesting facts from 2014; we felt that these topics helped changes the face of the logistics and supply chain industry in 2014 and serves a good snippet to review the year.

Top 10 Logistics and Supply Chain Facts of 2014

Morai-Logistcs-Top-10-Logistics-and-Supply-Chain-Facts-of-2014

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

2015_new_yearIf you were reading Forbes’ website last week, then you would’ve come across an interesting article concerning predicted trends for the logistics industry in 2015. Sarwant Singh, a Senior Partner in Frost & Sullivan lists a total of 15 likely trends to occur in 2015 with common threads between all of them being Information & Communication technology providing new avenues for production, solutions, and business models; and societal trends transforming the corporate, market, and personal landscapes.

The entire article is excellent and is a must read for anyone curious about the opportunities afforded by the evolving logistics industry. For this blog post, I would like to focus on three key trends listed in the article as, in my opinion; are the biggest deviations from the status quo in the logistics industry.

Moving toward Zero Latency

The world will prepare itself for faster processing speeds and faster response times. The next few years will see a move toward zero latency and human unnoticeable delays providing real-time experiences. This will increasingly be embedded into workflows and other processes.

The collapse in latency times in just the last few years has been astounding. The old expectation of same month delivery from traditional post service evolved to same week. This year saw same-day delivery become the standard for e-commerce companies such as Ebay, Amazon and even Google. However, even this hasn’t been quick enough with Amazon’s same-hour delivery service for its Prime members which it revealed last week.

The move toward zero latency is not only a massive drive for innovation in the logistics industry (such as Amazon’s delivery drones and DHL’s massive pledge of investment into creating more efficient supply chain networks in China), but also a key way in how many supply-side companies are marketing themselves to customers.

Transparency is the New Green

Increasingly pervasive analytics and collaborative platforms would make data and processes more transparent than ever before. Governments, corporations, organizations, communities, supply chains and even individuals will be more accountable and liable for policies, decisions and strategies.

Customer interactions with businesses of years past were very binary for the most part. A customer wanted or required a product, and a business provided it wholly formed. Questions such as where it came from, how it came to be weren’t asked and businesses weren’t forthcoming with the answers. The logistics industry was no different as the levels of supplier tiers, volume of oversee transactions, and technological limitations complicated the matter further for many companies in the industry.

The change in philosophy has been swift and pervasive in the last few years as large international companies such as Starbucks, Levi’s, and even McDonald’s and Amazon have embraced more open business models.

Our post last week focused on this trend, but suffice to say, greater transparency in the industry is good all-around as it offers customers more information, accountability, and ultimately better choices.

Women Focused Strategies

As the policymakers debate and implement policies increasing quota for women in boardrooms in 2015, we will see a lot more women focused strategies across companies in different sectors.

The industry of logistics has long been a “Gentleman’s Club”. As outlined in the Morai Logistics Infographic focusing on women in the logistics industry, compared to other industries women still have some room to catch up at all levels in the logistics and supply chain industry.

However, not only have more women been getting into the industry, but women focused strategies overall has been on the rise.

In a past article we wrote about how companies are realizing the benefits of supplier diversity go beyond the “social good.” We are now at an age where companies are starting to find that supplier diversity programs can be fiscally beneficial through ROI, and lead to bridge-building into the untapped force that is women-owned businesses.

All-in-all, 2015 will be an exciting year for the logistics industry.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

Source: Wikimedia Commons
Source: Wikimedia Commons
Last week, the Association of American Railroads reported that Mexican intermodal volume reached a high that has not been seen in the last two years. More and more, Mexican shippers have been turning to rail in order to move their goods. In fact, Journal of Commerce claims that Mexico’s intermodal industry is seen as the industry’s quickest-growing sector. Volume of shipments using intermodal transportation has soared about 31% year-over-year to 14,238 units leading up to last week. Carloads for Mexico also increased by approximately 38%, reaching a total carload of 19,745 units.

We’ve mentioned in a previous white paper that nearshoring to Mexico for North American manufacturing has many advantages, one of them being that cross-border logistics to Mexico, through the efforts of governmental intervention and NAFTA, has been improving heavily especially in intermodal transportation requirements. Combine that with rising ocean transport costs, peak season surcharges, and the rising wages in China and you get a prime contender for a tangible, competitive consideration for nearshoring.

One of Mexico’s largest container port, Lazaro Cardenas, has been showing a steady increase in intermodal demand. Efforts to meet the growing demand is shown in the influx of inextments and developments such as the APM Terminal’s deep water terminal which is expected to become operational by 2016.

By the beginning of this month, Mexico contributed to the overall increase in growth for North American intermodal volume. Of the 13 North American railroads, a total of 347,857 units in intermodal volume was reported (a 5.4% increase in volume compared to the same week last year).

Factors that Affect Mexican Intermodal Business

Intermodal rail in Mexico has some great advantages with regards to cross-border logistics, adding more incentive to nearshore as a strategy for North American manufacturing. Below are some facts that show how both incentives from Mexico and the US governments are leveraging their neighbouring border towards a better solution.

  • With the right documents, clearance can take as little as 30 minutes for a 250-foot container, compared to the two hours it takes for a single-container truck.
  • BNSF Railway launched its first all-rail US-Mexico service in May to help facilitate faster movement between borders by partnering with Ferromex (a Mexican railroad).
  • AMP Terminal is currently developing a new deep-water terminal to launch by 2016.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

This week we’re continuing our infographic series on The Benefits of Nearshoring. We’re focusing more on Mexico and how efforts in both infrastructure have affected how it has developed in recent times. We’ve also taken a look at how the auto industry is ripe for a nearshoring move for American companies.

Mexico and Nearshoring

Mexico has set itself up to being in a good position for the main nearshoring or reshoring target for companies in North and South America, but especially the United States. Companies in the US are in a perfect position, depending on the industry and logistics needs, as Mexico offers an attractive location and cost (due to China’s rising wages) but also more control over manufacturing & delivery schedules when compared to supply chain and logistics operations overseas.

Mexico and the Automotive Industry

Major automotive manufacturers, such as Ford, Chrysler, and General Motors (GM) have already been operating in Mexico since the 1930s. These companies have spearheaded the nearshoring move in the auto industry and other companies like Toyota, Nissan, Honda, BMW, Volkswagen, and Mercedes Benz have followed suit.

Check out our infographic below to see how Mexico is continuing its trend towards being a very real consideration for American manufacturers looking to optimize their supply chain while cutting costs.

Morai-Logistics-Infographic-Nearshoring-Pt-2

 

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

We’re at the latter half of 2014 and geopolitical changes, and factors such as rising fuel costs, are starting to match the prediction let by many logistics professionals. China’s wages are getting close and closer to $6 USD; the point at which researchers at AlixPartners determine will no longer make China cheaper than Mexico’s flat wages.

This week, we’re featuring a white paper that explores Mexico, but this time the focus is on the build-up to what makes Mexico a prime nearshoring option. Mexico has historically been set up to be a prime nearshoring option. We argue that NAFTA was a big part of this change as developments in Mexico to lower trade tariffs has initiated solid cross-border logistics developments within North America. Furthermore, geopolitical developments in Mexico has been setting North American manufacturing up for prime logistics operations there as opposed to China.

White Paper: How NAFTA and Changes in Mexico Have Primed Companies for a Nearshoring Move

Morai-NAFTA-White-Paper-Image

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!