World Trade - March 2009 - (Page 30) LOGISTICS ity products despite lower labor costs; similar language and culture that makes it easier to communicate; time zone advantages; free trade agreements such as the North American Free Trade Agreement (NAFTA) and Central American Free Trade Agreement (CAFTA) that allow for large duty reductions or elimination; and U.S. side programs such as Customs-Trade Partnership Against Terrorism (C-TPAT), Free and Secure Trade (FAST), and Express Lane that expedite shipments. “We work closely with customers to ensure they have vital knowledge about processes and procedures required to benefit from trade agreements,” Kuehner says. Tony Wilmoth, spokesman for Norvanco International, Inc., a Sumner, WA-based end-to-end outsourced logistics provider, emphasizes that manufacturers and retailers sourcing from Mexico especially benefit from NAFTA. “The tax advantage is certainly the reason to manufacture in Mexico, especially for commodities with high duty rates and/or quota restrictions,” he says. “For the rest of Central America, it comes down to sourcing cheaper labor and reducing costs.” Free trade zones (FTZs) throughout Latin America put in place to attract foreign manufacturers also offer Chrysler LLC advantages by eliminating barA 2008 Dodge Ram 4500 only port in the Western Hemiriers such as tariffs and quotas. rolls off the line at Chrysler sphere—and one of only three in While the principle FTZ in HonLLC’s Saltillo Assembly Plant the world—that scans 100 percent Given the resurgence of duras is located in Puerto Cortes in Saltillo, Mexico. of inbound and outbound conand is operated by the governsourcing in Mexico and ment through the National Port tainers. The port participates in the U.S. government’s Container Authority, privately owned FTZs Central America, Security Initiative (CSI), Megaare being developed in the counports, and Secure Freight (SFI) try. FCI, for example, is located freight forwarders Initiatives. Consequently, Honin Green Valley Industrial Park, a duran and U.S. Customs officials free zone in the northern part of are increasing work side-by-side to completely Honduras. scan each container for radiation. While many suppliers are services there. The critical piece is the locating plants in Mexico’s intepuzzle: transporting freight back rior, freight forwarders find that and forth. maquiladoras, or in-bond factories, continue to have a significant impact on diminishing Multiple advantages barriers to foreign trade. That’s because maquiladoras Given such resurgence of manufacturing facilities in import materials and equipment on a duty-free and Mexico and Latin America, freight forwarders are tariff-free basis from the United States for assembly or increasingly concentrating services there. manufacturing and then re-export the assembled prod“This shorter time-to-market from factory overcomes uct back to the United States. many of the challenges manufacturers face with overseas “U.S. companies continue to realize the benefits of production by reducing transit times from four to six maquiladora production because of their ease of sourcweeks to three to five days,” remarks Lucas Kuehner, man- ing raw materials form U.S. suppliers, short shipping aging director, USA for Panalpina, a worldwide provider time, and low cost delivery,” Kuehner says. of logistics and forwarding services. “This minimizes Mexico, in particular, offers more stable transportaplant downtime due to faster replenishment of low inven- tion costs due to the fact that fuel hikes did not play a tory in instances of lost or damaged freight—or even last factor in rising costs for full-truck-load (FTL)/less-thanminute product/part design changes to meet new speci- truckload (LTL) trucking on the Mexican side. They fications.” are based on the average monthly charges published by Companies also do not need to keep large inventories Petróleos Mexicanos (PEMEX), Mexico’s state-owned of stock on hand in case problems arise in the manu- petroleum company. “This stands in stark contrast to facturing process. “This can also reduce warehousing some of the recent volatility of fuel surcharges on aircosts,” he says. freight from continents like Asia,” Kuehner states. Other advantages are a competent, plentiful and lower cost labor pool; shorter travel distances for technical Forwarders step in consulting and quality control that leads to higher qual- But despite the advantages, these markets present their 30 WORLD TRADE MARCH 2009
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