“For a freight forwarding company like Leschaco, the current deficit of refined fuels in Mexico represents an opportunity because many companies need to import products into the country. Similarly, we still see a huge opportunity to grow the business out of the United States, as the current U.S. government is pushing to increase manufacturing capacity.”
Can you outline the trajectory of Leschaco in the Americas region?
The Leschaco Group was founded back in 1879. In 2018 we celebrated 40 years in our Brazilian organization, 40 years of Leschaco Inc. in the United States, and 20 years of Leschaco Mexicana. We also have an office in Chile and in all other countries we operate through agents. As a global freight forwarder, we are active in several verticals – chemicals is still our main business, and we are also strong in automotive, pharmaceuticals, and consumer goods. The business has evolved very well, and in 2018 we experienced 15% growth in Leschaco Mexicana, with a 15% to 20% expectation for 2019. We are also very optimistic in the other markets within the Americas; particularly in Brazil we see opportunities due to the political change and the expected recovery of the economy.
How are dynamics changing in Mexico, considering the increased import volumes of product?
For a freight forwarding company like Leschaco, the current deficit of refined fuels in Mexico represents an opportunity because many companies need to import products into the country. Similarly, we still see a huge opportunity to grow the business out of the United States, as the current U.S. government is pushing to increase manufacturing capacity. The already signed United States-Mexico-Canada Agreement (USCMA) shall stabilize and strengthen even more the bilateral business between the United States and Mexico.
You also have a tank container operation. How does that fit into your business?
We are the only freight forwarder company that also has a tank container operation, and customers can get more or less everything out of Leschaco when it comes to logistics services. Our competition in this field consists of companies that focus solely on the tank container business. Our tank container operation grows every year; right now we have more than 5,000 tank containers globally, and in the Americas we see a lot of growth opportunity in both Mexico and Brazil. Our fleet is very young and is used in global chemical transportation.
Do you see the chemical distribution business moving toward an ‘Amazon’ digital model where buyers and sellers can connect directly?
This is one of the big questions in the industry and no one knows the real answer yet. We are definitely going to see enormous change in the coming years with digitalization, but this will happen first in the most developed industries. In Latin America, we are still a bit behind when it comes to technological development. I still believe that major organizations will continue to procure their logistics services the traditional way, but definitely we are already preparing for future trends. As a company, we are investing heavily in new technologies and offering digital services for customers who require these.
As the consolidation wave continues in the region, how can a company like Leschaco serve larger and more sophisticated customers?
We are working in a complex and constantly changing environment. This requires an increasing proximity to the market in order to offer customized solutions. There is an ongoing trend of regionalization with our main customers, and therefore we are investing heavily in additional capacities, manpower and technology, with a focus on regional aspects exclusively. In Mexico for instance, we are developing a control-tower logistics team, offering advanced end-to-end visibility and decision-making to our customers across the Americas.
Latin America suffers from an infrastructure deficit. What is the situation in Mexico in particular?
In Mexico there is a lack of highway and railway infrastructure, so we see a strong need for investment. It has been the problem for previous government and it continues to be a problem for the new administration. The issue is where to source the money for this. Another concern we have is a shortage of trucking companies offering services in Mexico, as well as a shortage of drivers. This is becoming increasingly problematic and is extending lead times when it comes to imports or exports.
What are the industry’s security concerns in Mexico?
The security topic has been an issue for many years and it gets worse year after year. We had all-time highs in Mexico in 2018 when it comes to robberies, assaults and merchandise disappearing. The issue is particularly sensitive from Veracruz to Mexico City, with the surroundings of Puebla being very dangerous. We need to wait and see what the new government proposes to do, but I do not expect major changes immediately. This issue is hurting the Mexican economy deeply because the cost is very high for the logistics business as well as the whole market.