Mexico’s auto industry used to assemble parts produced north of the border and then re-export finished cars back to the U.S. The North American Free Trade Agreement (NAFTA) and the globalisation of the auto industry changed this dramatically. Giants such as VW, Toyota, BMW and KIA have built state-of-the-art factories in Mexico and logistics have become much more complex.
“A car is not produced in just one place anymore, and carmakers will continue to import and export to enable production,” says Mario Veraldo, Managing Director of Maersk Line’s Middle America Cluster.
“The fact that we have been able to take cost out of the global supply chain for the last many years puts us in an important position. We help them become truly global,” he adds.
Key to pushing competitiveness has been the continuous introduction of larger vessels on the trades from Asia to Mexico, from the 6,700 TEU Maersk Seletar in 2008 to the recently deployed 13,500 TEU mini Triple-Es.
Mexico produced 3 million vehicles in 2015 and is expected to reach 5 million by 2020. Parallel to this, Maersk Line has quadrupled its business with the global automakers of Mexico, seeing the number of containers rise to just shy of 20,000 (FFE) between 2011 and 2015.
For the KIA Motors project, Maersk Line moved 2,000 containers with equipment, a 35-40 day journey from Seoul. The project had an aggressive timeline, which did see challenges, e.g. in terms of weather and other things that cannot be controlled, putting Maersk Line’s team to the test as it worked to keep the project on track:
“Global business is very demanding from a logistics perspective in terms of cost efficiencies, lean processes and of course compliance under the different countries. In order to succeed, we have to rely on shipping companies to take care of all that, and that's what Maersk Line has brought to the project,” says Customs and Logistics
Manager of KIA Motors Mexico, Hugo Aguilera.
“Maersk Line has been a great partner for the project,” he adds.
With the KIA facilities in Monterrey ready to begin production, Maersk Line and KIA Mexico recently entered into a new agreement that will see Maersk Line, starting in May, transport 3,000 containers (FFE) from South Korea to Monterrey to provide parts and other input to the production machine.