One car every minute

The Nissan plant in Cuernavaca relies on Maersk for the reliable delivery of parts to maintain its production of vehicles. What the Japanese company really wants is a company to handle all of its logistics needs, so it can focus on what it does best.

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Inside the Nissan factory at Cuernavaca, Mexico, workers and machines are building small cars and light commercial and pickup truck models – putting the bodywork together, building the structure and turning small pieces of metal and plastic into identifiable vehicles.

Each Maersk container is a step towards delivering a car every minute. 

Inside the Nissan factory at Cuernavaca, Mexico, workers and machines are building small cars and light commercial and pickup truck models – putting the bodywork together, building the structure and turning small pieces of metal and plastic into identifiable vehicles. Keeping the factory ticking over requires not only reliable and efficient deliveries, but also ideally a company that can provide complete logistics solutions. 

“Actually we have many kinds of logistics needs. We receive production parts; we are sending production parts; we are exporting spare parts to other counties. So we have many lines and logistics,” says Eduardo Aquino, Junior Manager for Overseas Logistics at the Nissan plant in Cuernavaca. “We qualify all the suppliers and Maersk has very, very good performance with all our requests.”

What that calls for is a supplier that can cover the whole logistics chain from end-to-end. And that’s where A.P. Moller - Maersk’s Transport & Logistics division comes in with its vision to be the global integrator of container logistics, connecting and simplifying customers’ supply chains.

A fourth party logistics, or 4PL, provider is an integrator that accumulates resources, capabilities and technologies in order to run complete supply chain solutions. Damco is already making its move into this growing area of the industry, also known as control tower services.

“I would like to have a business logistics partner, we call it 4PL, it means you only give the product and you forget about it until delivery,” Aquino says. “You only receive notice when the product arrives in the place you want it to, and on time.”

All about integration

With the new A.P. Moller - Maersk strategy, the businesses in Transport & Logistics have an opportunity to provide synergies, which are highly beneficial to the clients. 

“For example, Maersk Line’s scale and network is complimented by Damco’s third party logistics (3PL) and 4PL, which consist of end-to-end supply chain solutions,” says Klaus Rud Sejling, CEO of Damco.

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Visit the Nissan plant in Cuernavaca, Mexico. 00:48

A truly competitive and world-class inland service is emerging from the three businesses: Maersk Line, APM Terminals and Damco, as a result of their closer cooperation in Transport & Logistics. The inland service addresses what for many clients is a larger cost than ocean freight.

“Today’s leading companies are looking for suppliers with more integrated solutions,” Sejling says. “We have the capacity to launch and develop cutting-edge supply chain solutions as a strategic differentiator for our clients.” 

The eternal spring

About 85 kilometers south of Mexico City, Cuernavaca is a world apart. The drive there goes up and over the mountains that surround the sprawl of the capital, then down a seemingly never-ending slope to the City of Eternal Spring, where the weather is always sunny and warm but not too hot.

Nissan is aiming to produce 1 million cars in Mexico, from Cuernavaca as well as from two plants in Aguascalientes, one of which is due to open in 2018. Mexico is a global top-five automotive producer and other major carmakers such as VW, Toyota, BMW and KIA are present here.

The Nissan plant in Cuernavaca receives 7,200 containers each year through Maersk Line, bringing in spare parts from Japan and Thailand. Many of these pass through the port of Lázaro Cárdenas on the Pacific coast, where APM Terminals has just opened an expansion with an investment of USD 900 million, adding a 1.2 million 20 foot equivalent unit (TEU) annual throughput capacity to Mexico’s existing infrastructure. 

“With what they do here at Nissan every day, they need to have a delivery of products on time and in the right condition as punctually as possible – what we call just in time,” says Carlos Ruiz Velasco, Mexico Automotive Manager for Maersk Line.“We’ve been working with Nissan for more than five years and increasing our business with them, and we now handle 47% of their imports,” Velasco says.

“When our ships arrive in the port with 98% punctuality, it gives them peace of mind, because they know that their parts are arriving in time for them to assemble their vehicles.”

With what they do here at Nissan every day, the delivery of products needs to be on time and in the right condition as punctually as possible – what we call ‘just in time.

Carlos Ruiz Velasco, Mexico Automotive Manager for Maersk Line

Collaboration for growth

For the newly formed Transport & Logistics division in A.P. Moller – Maersk, the focus is on creating growth, says Damco CEO Klaus Rud Sejling. 

The potential for growth can be found in existing products, services and entrepreneurial business ideas that can create a new world-class company, as well as in synergies across businesses that have not been fully utilised in the last few years.

For example, a top-line opportunity of approximately USD 1.5 billion has been identified where Maersk Line sells inland-related services for only 12% of their volume, whereas Damco sells inland-related services for 80-90% of their ocean freight business. 

“Could we achieve a similar success ratio for Maersk Line’s business? Or even half of it? The revenue potential is tremendous. So there are real opportunities here that can accelerate growth,” says Klaus Rud Sejling.

Only 48% of Maersk Line’s transhipment volumes and 32% of its total moves are handled by APM Terminals, so there is plenty of potential for growth there. Similarly, Svitzer can benefit from the relationship with Maersk Line and APM Terminals, and Maersk Container Industry can grow through support from Maersk Line. 

Further in the chain towards customers lie opportunities to enhance their experience and to grow revenue, as in the case of Damco’s 3PL and 4PL solutions featured in the main article. Another opportunity exists in inland services as the three businesses – Maersk Line, APM Terminals and Damco – are developing a truly competitive, world-class service that can be delivered with cost leadership and therefore be deployed on a much larger scale.

“These are ways that we can generate more revenue for the company,” says Klaus Rud Sejling. “Where we will really determine our success is in terms of how we collaborate.”