Nearshoring Accelerates C.H. Robinson’s U.S. – Mexico Border Growth
Laredo, Texas USA Site Visits
November 11, 2014
Daniel W. Ryan, Vice President of Global Transportation
Mike Burkhart, Director – Mexico Region
Alex Garza, Manager – U.S./Mexico Cross Border
Jorge Olazabal, General Manager
C.H. Robinson Overview
C.H. Robinson ranks fifth of all 3PLs globally with 2013 gross revenue of $12.8 billion. Its network of 285 branch offices managed by a global staff of over 11,675 based in North America, Europe, Asia, and South America, generated net revenue of $1.8 billion in 2013. With a contract motor carrier base of over 50,000 providers, 76% of C.H. Robinson’s net revenues are domestic transportation related.
C.H. Robinson’s 2012 acquisition of $635 million Phoenix International marked its largest acquisition and greatly expanded its international transportation management capabilities. The acquisition doubled C.H. Robinson’s ocean freight forwarding volumes and added significantly to its air freight tonnage. In 2013, it managed 515,000 ocean TEUs (20’ trailer equivalent units) and 115,000 air freight metric tons. For its U.S. customs brokerage operations, C.H. Robinson has 76 licensed U.S. customs brokers working in 13 different U.S. offices.
In addition to domestic and international transportation management, C.H. Robinson has substantial food sourcing, and supply chain management operations. Its global operating network is shown in the figure below.
C.H. Robinson’s Global Operating Network
Mexican Region Operations History and Overview
C.H. Robinson began operating in Mexico in 1990 when it established C.H. Robinson de Mexico, S.A. de C.V. and has built a strong presence in Mexico to U.S. trade and transportation through C.H. Robinson’s produce business. In 2009, C.H. Robinson added to its cross border capabilities by acquiring Laredo, Texas based International Trade & Commerce, Inc. (ITC). C.H. Robinson worked with ITC for two years prior to the acquisition. ITC had 30 employees, 55,000 square feet of bonded warehouse space, five licensed customs brokers and $7 million in revenue at the time of the acquisition, and according to C.H. Robinson, ITC was a Top 10 U.S. customs broker.
Since the 2009 acquisition of ITC, C.H. Robinson has expanded its Mexico region operational footprint more than doubling its staff from 100 to approximately 220 based in nine operations serving over 200 customers. Its four Mexican operations include Monterrey, Mexico City, Guadalajara, and Queretaro, and its five border operations are in San Diego, Nogales, El Paso, Laredo, and McAllen. The McAllen and Nogales operations shown in the figure below are food warehouses for handling produce destined to the U.S.
C.H. Robinson Mexico Region Operations
Laredo, Texas and Monterrey, Mexico are the largest operations with staffs of 72 and 55 respectively. Its current supply chain management service offering includes over-the-road transportation management, intermodal, air and ocean freight forwarding, customs brokerage, project logistics, and value-added warehousing.
Today, C.H. Robinson manages over 300,000 cross border truckload shipments per year. This represents a 300% increase since 2009. In addition to its U.S. carrier base, C.H. Robinson is working with 500 Mexican carriers. Approximately 70% of the truckloads managed are northbound loads with the most frequent modes utilized being dry van, flatbed, and refrigerated. C.H. Robinson’s northbound transportation management customer base is primarily derived from the Automotive, Consumer, Food & Beverage, High-Tech, and Industrial Manufacturing Industries.
Laredo, Texas Cross Border Operations Review
Customs filings for all Mexico to U.S. shipments are processed by C.H. Robinson’s 14 person northbound Laredo customs brokerage operation. It processes over 100,000 U.S. customs entries annually making it the largest customs brokerage operation in C.H. Robinson’s domestic network. Approximately 40% of all U.S. customs filings are automated and handled by a team made up of one full time and a part time person. The remainder of the filings are processed by three teams segmented by industry/commodity; these include Automotive (60% of filings), produce imports and other FDA controlled commodities (10% of filings), and miscellaneous commodities (30% of filings). To ensure quality, every customs filing made for a new customer is audited for the first two
weeks after implementation. In addition, random checks of 30 to 40 filings are made each day.
Customs employees performance is measured in four major categories: accuracy, filings per hour, entry compliance, and financial integrity.
To support its operations, Laredo is using C.H. Robinson’s proprietary “Navisphere” transportation management system, which has built in functionality for customs processing and freight forwarding. Navisphere also has a customer portal which allows the customs teams to view customers’ documents which are automatically uploaded into the system upon customs release.
C.H. Robinson is managing over 450 truckloads to and from Laredo each day. The Laredo northbound freight brokerage operation has six brokers and two salespeople. The majority of the truckloads are cross border moves where a Mexico based carrier picks up a trailer at a shipper and hauls a load to the U.S./Mexico border. From there, C.H. Robinson can manage the U.S. customs filing if requested by the customer and coordinates the transportation from the border into the U.S.
Laredo’s seven person southbound customs brokerage and freight forwarding team works with U.S. customers exporting goods to Mexico and other countries. The U.S. to Mexico southbound business is one of C.H. Robinson’s fastest growing service lines; approximately 40% of the volume comes from Automotive suppliers. All southbound freight handled by the Laredo office is transloaded from U.S. motor carriers to Mexican carriers using a collocated, C-TPAT certified, 47,000 square foot warehouse.
The 18 person Laredo branch warehousing operation operates 9 A.M. to 8 P.M., seven days per week. It has 19 dock doors and an outside dock which is utilized for a Mexico beer keg returns operation.
“Section One” of the warehouse is 12,000 square feet and is dedicated to consolidating LTL (less than truckload) export shipments into truckloads. It takes approximately three days to process LTL orders. All customer paperwork must be received for each order and items are picked and palletized if needed. Then each shipment is inspected to verify product quantities and harmonized tariff product classifications for Mexico customs prior to shipping.
In the 27,000 square foot “Section Two” of the warehouse, cross border truckloads are cross docked and transloaded. Trailer seals on each northbound load are verified, photos are taken of the loaded trailer and the load’s documents are scanned prior to transloading goods on a U.S. carrier’s trailer. Once loaded on a U.S. carrier’s trailer, photos are taken of the load prior to the trailer being sealed.
The remainder of the Laredo warehouse is utilized for specialty northbound products and C-TPAT customers.
CWS “Millennium 1” Warehouse
Including its collocated Laredo branch office warehouse space and locally contracted space, C.H. Robinson is managing 461,000 square feet of warehouse space in Laredo. We had the opportunity to meet with one of its warehousing contractors, CWS (Crossdocking and Warehouse Systems, Inc.) and tour its Millennium 1 Warehouse.
C.H. Robinson and CWS began working together in 2004. The relationship started with C.H. Robinson utilizing 40,000 square feet of space and has grown to 160,000 square feet today.
C.H. Robinson contracts with CWS to support customers who need space in Laredo to store and consolidate northbound products for U.S. distribution.
The 110,000 square foot Millennium 1 Warehouse has a staff of 12 and operates from 8 A.M. to 8 P.M. five days per week. It has 40 dock doors and is managed with CWS’s proprietary warehousing management system (WMS).
C.H. Robinson Mexico Region and Laredo Operations Summary
Over the past ten years C.H. Robinson has significantly expanded its global supply chain management capabilities. While Phoenix International was a major acquisition, C.H. Robinson has made many more “tuck in” acquisitions such as ITC in Laredo to support its strategic growth. With combined transportation management and customs brokerage capabilities, the Laredo operation provides customers with north and southbound border crossing solutions. In addition, through its relationships with local warehouse providers such as CWS, C.H. Robinson is meeting customers’ needs for value-added services which reduce transportation costs and improve inventory management.
Sources: A&A Primary Research, http://www.chrobinson.com/