Ryder is a Natural in Supporting U.S. – Mexico Cross Border Trade
Nuevo Laredo and Monterrey, Mexico Site Visits
March 31, 2017
By
Evan Armstrong

Key Personnel:
Gene Sevilla – Vice President International
Alberto De la Rosa – Director of Operations
David Contreras Munguia – Director of Operations
Enrique Lopez Casillas – Manager of Northern Zone Operations
Fernando Del Rio – Logistics Manager
Javier Soqui M. – Operations Manager
Juan Garcia – Operations Manager

Ryder Overview
Established in 1994, Ryder Mexico has built an extensive network. Its staff of over 2,500 manage 33 operations including 17 warehousing and 16 customer plant operations. Major Ryder facilities are located in Mexico City, Monterrey, Guadalajara, Ramos Arizpe, Toluca, Silao, Nuevo Laredo and Ciudad Juarez. Ryder manages over 150,000 U.S./Mexico truck border crossings a year and owns 730 dedicated transportation assets (tractors, trailers, straight trucks, etc.).

Dedicated contract carriage in Mexico takes a slightly different form because of Mexican laws prohibiting ownership of trucking operations by non-Mexicans. Ryder leases tractors and trucks to Mexican trucking companies who then contract with Ryder to provide services. About 300 tractors, 50 trucks and 500 trailers are involved in DCC-like transportation management operations. Ryder Mexico equipment is leased to Mexican customers, including Mexican carriers. Some of these carriers dedicate equipment to Ryder and Ryder utilizes it interchangeably for its customers.

As part of our visit, we had the opportunity to review Ryder’s Nuevo Laredo cross border operation, two warehousing operations, and a yard management operation. These are described in detail below, but generally, the warehouses we visited where well laid out, modern facilities with modern WMS (warehouse management systems) and task management through radio-frequency (RF) devices. Most involve pallet and carton picking. A couple have piece picking, kitting, and other value-added services.

Nuevo Laredo Cross Border Operations
Twenty minutes west of the U.S./Mexico border, Ryder operates a 16.8 acre cross border interchange operation in Nuevo Laredo. The operation started in 2009 and has grown to a staff of 220 employees, 13 acres of yard space with the capacity for 384 trailers and 60 trucks. It runs Monday through Friday from 7 A.M. to 11 P.M. and manages 1,300 border crossings per week. It is ISO 9001, C-TPAT (Customs-Trade Partnership Against Terrorism), and NEEC (Mexico’s equivalent of C-TPAT) certified. Security is supported by 108 cameras, including infrared cameras, monitoring all aspects of the operation. The facility is operational 24/7 for non-scheduled operations to handle delays or emergencies.

The basic process flow for Mexico export shipments to the U.S is as follows:

1. Mexican carriers arrive at the Ryder operation with their U.S.-bound export loads.
2. Guards managing the three inbound entry lanes check in the load and assign the trailer to a space in the yard. The carriers then drop the loaded trailers in the yard. Ryder uses Yardview’s YMS (Yard Management System) to manage the trailer yard.
3. Each driver presents the load’s paperwork to Ryder personnel. This includes the commercial invoice, cargo manifest, and the NAFTA (North American Free Trade Agreement) certificate of origin.
4. Ryder personnel access uploaded documents from Mexico customs brokers (pedimento de exportación) using the Ryder DMS (Document Management System) and match them to a trailer inspection report.
5. Ryder personnel then file a customs entry online with U.S. Customs and Border Protection for the goods and receive a U.S. entry number to import the goods into the U.S.
6. Ryder personnel assign a carrier/driver to the U.S.-bound load and give the driver the respective export documents. Ryder uses two dedicated carriers, STIL and AKNA, to take trailers to the U.S. border after interchange.
7. The truck leaves the operation for entry into the U.S. using one of the operation’s two outbound lanes.

While the operation is currently managing 1,300 outbound loads per week, it has the capacity to handle 2,500 border crossings per week.

FINSA Industrial Park Value-Added Warehousing and Distribution Operations
Ryder manages multiple value-added warehousing and distribution operations in the FINSA Industrial park located about 15 kilometers southwest of Monterrey in Santa Caterina.

Tobacco Products Customer
The first operation we visited was a 137,000 square foot dedicated operation for a tobacco products customer at FINSA Warehouse 4. The warehouse has 38’ high ceilings, and 28 dock doors (14 for receiving and 14 for shipping). It is a high-profile facility with in-rack fire control sprinklers, over 50 CCTV cameras, and access control. The operation’s certifications include: C-TPAT, NEEC, and ISO 9001:2008.

Ryder began working with this customer in 2006 to manage finished goods exports to Canada where Ryder manages the distribution and last-mile delivery of cigarettes to retailers. In 2009, Ryder started managing its point of sale materials and then after winning a bid in 2010, it began handling the distribution of finished goods shipments of packaging materials and cigarettes for the domestic Mexico market. Ryder is in the middle of a second three-year agreement with this customer.

The operation is run by a 75 person team. Ryder has made significant process improvements taking what started as a 24/7 operation to one and a half daily shifts running Monday through Saturday. Inventory is managed on a FIFO (first in, first out) basis using the customer’s SAP warehouse management system. The operation manages five to seven outbound shipments of finished goods each day destined to Ryder’s operations in Canada and retail customers in Mexico.

Half of the warehouse is utilized to store over 100 SKUs (stock keeping units) of tobacco leaf which is held as raw materials for production. The tobacco leaf is sourced from multiple countries including the United States, Canada, Mexico, and Brazil. It is held in a bulk storage area comprising 40,000 positions for large corrugated boxes containing tobacco leaf. In addition to the bulk leaf storage, the warehouse also has a 6,000 square foot, 20 degree Celsius conditioned room for menthol capsules, leaf paper, and other materials used in production.

To meet the needs of the customer’s plant in downtown Monterrey, Ryder manages a shuttle operation delivering 20 outbound truckloads of materials (leaf, other materials, and approximately five truckloads of packaging materials) to the plant each day. On return, Ryder brings back approximately five to seven truckloads of cigarettes to the warehouse. Ryder has two people on staff at the plant to coordinate logistics with production. Approximately 70% of the packaging materials utilized by the customer are sourced in Mexico. Ryder manages some of the inbound transportation of packaging materials into the warehouse.

Domestic Mexico distribution includes finished goods shipments of point-of-sale materials and cigarettes to Mexico City, Guadalajara, and Monterrey. One hundred sixty SKUs of finished goods products are stored in racks comprising 282 pallet positions. Three outbound truckloads are shipped to domestic customers.

Finished goods products for export to Canada make up the remainder of the warehouse and are stored in four-high double select and conventional racking. The operation’s KPIs (key performance indicators) include inventory accuracy and on-time shipping.

HVAC Systems Customer
Since forming its relationship with a heating, ventilating and air conditioning (HVAC) systems customer in 2001, Ryder has built a significant supply chain management relationship. Its supports four of the customer’s Mexico air conditioner manufacturing operations with a staff of 400 in and around Monterrey. The operation also includes an inbound warehouse, a VMI (vendor managed inventory) operation, outbound distribution center, and large outside distribution yard operation for loading over-sized units destined to commercial buildings.

At a 290,626 square foot multi-client warehouse (number 8) in the FINSA industrial park, Ryder is managing the VMI operation for the customer. The VMI operation has a staff of 44 working in three shifts. Each month, 68 truckloads and 22 full ocean containers of inbound parts and materials from 17 suppliers in the U.S., China, and Malaysia are managed through Nuevo Laredo, and the ocean ports of Manzanillo and Lazaro Cardenas, to Warehouse 8. The VMI operation is run in 66,982 square feet of the facility. Ryder performs a 100% verification of all inbound parts and materials, which average 2,000 units per day. The operation has over 300 SKUs of on-hand parts and materials inventory maintained in approximately 4,300 locations. Ryder fulfills approximately two to three outbound orders per day of parts and materials to the customer’s Plant B. The operation was running at 100% inventory accuracy for 2016 at the time of our visit.

In conjunction to the VMI operation, Warehouse 8 also manages an inbound materials management operation for non-VMI parts and materials destined to the customer’s Plant B. The 20 person, one shift operation is housed in 35,521 square feet of the warehouse and stores approximately 1,200 SKUs of product in 1,280 pallet locations. The operation was performing at 99.9% inventory accuracy and 99.7% shipping accuracy for 2016 at the time of our visit. Combined VMI and non-VMI parts and materials shipments to Plant B run every four hours and total approximately 10 outbound truckloads per day.

In Santa Caterina, Mexico, about a 10 minute drive away from Warehouse 8 and across the street from the customer’s Plant B, Ryder is managing a 240,000 square foot distribution yard in STIVA Park. The yard is utilized to load large shipments of finished air conditioner units onto flatbed trailers for export and domestic distribution. The operation runs Monday through Friday and has a staff of 22. The staff work build load plans, coordinate loading, and manage outbound transportation. On average 30 air conditioner units are loaded and shipped per day; however, peak daily outbound volumes have been as high as 45 units shipped. Large units are loaded via an overhead crane, while smaller units can be loaded with an elongated forklift. Most of the outbound loads are multi-stop truckloads.

Right next to Warehouse 8 in the FINSA industrial park, Ryder manages another multi-client warehousing operation in 215,278 square foot Warehouse 9. Approximately two to three truckloads of smaller air conditioning units are distributed from Warehouse 9 daily.

Other Ryder Mexico Value-Added Warehousing and Distribution Operations
In 4,750 square meters of space in Warehouse 8, Ryder performs warehousing and distribution services for an electrical lighting products customer. Product is received from manufacturing operations in Asia, Europe, Mexico, and the U.S. Approximately 3,800 SKUs are maintained in inventory and are ready to ship to customers including Walmart, Lowe’s, and Soriana. The operation has a staff of 12  working in one shift (1,000 SKUs, returns & salvage). The operation had achieved inventory accuracy of 99.99% at the time of our visit.

An inbound materials management program and finished goods distribution operation for a confectionery products customer occupies just over 75,000 square feet of Warehouse 9. Its staff of 44 work in a three-shift 24/6 operation. Seven hundred fifty SKUs of raw materials are kept on-hand in raw materials inventory. Approximately 40 inbound truckloads are received each day and 20 outbound trailers of raw materials are shipped each day to the customer’s plant in Monterrey. In addition, 20 outbound trailers of finished goods (chewing gum and confections) are shipped from the warehouse each day to its customers. Ryder is managing all of the plant to DC moves and approximately 30% of the total outbound finished goods transportation. Inventory accuracy is running at 99.2% for the operation.

In just under 53,000 square feet of Warehouse 9, Ryder is managing an automotive inbound materials consolidation operation for four OEMs (original equipment manufacturers) with a staff of 19. It has established 19 inbound milk runs of parts and components from Mexican suppliers to Warehouse 9 for consolidation prior to delivery to the OEM plants. The operation cross docks approximately 25,000 pallets per month and 80 million pounds of materials are shipped annually.

Ryder Mexico Operational Summary
Ryder Mexico has grown into a multifaceted, integrated third-party logistics provider within Mexico. It has significant cross border, manufacturing support, transportation management, and finished goods value-added warehousing and distribution capabilities. With more and more manufacturing being re-shored to Mexico, we anticipate that Ryder will be seeing significant growth within its Mexican operations.

Sources: A&A Primary Research, http://www.ryder.com/