What types are there and what services do they offer?
The selection of a logistics company in Mexico is not limited to organizations that provide third-party logistics services (3PL). The comprehensive character of this industry means that its main players can cover and specialize in a wide range of supply chain services that have a significant impact on how a product reaches the final recipient.
Familiarizing oneself with the different types of logistics companies in Mexico and the services that they offer is the best way to understand how they can affect one’s business or customers. The information that is provided below is important to consider prior to contracting with any one of them.
Which type of Mexican logistics company best suits my business?
In broad terms, it can be noted that there are logistics companies in Mexico that are specialized in three activity groups:
- Storage – While some companies choose to have their own independent warehouses, many opt to work with third-party logistics vendors. The choice of such a company in Mexico in this case is due to a decision based on financial profitability or business conditions. A company that hires an external service provider to take care of the receipt of goods, as well as warehousing and shipping, eliminates the need to bear the cost and responsibility associated with the management of an entire warehouse on its own. This can be viewed as a flexible alternative that facilitates better control over the expenditures that are associated with this important function.
- Transport: Sometimes the transport of goods may involve a combination of different conveyances that may include trucks, trains, and cargo ships, among others. Intermodal transportation is a complex and constantly changing field. Using a logistics company can simplify the management function and help to avoid problems that are caused by continuous fluctuations in demand, labor shortages, or pressures associated with shipping times.
- Coordination: Ensuring that all of the services and actions performed by each of the individual partners in the Mexico supply chain flow smoothly requires considerable coordination, organization, and excellent time management. Not every company in Mexico has the talent and capabilities to ensure this kind of efficiency. In such cases, contracting with a logistics partner is the best decision. Such companies have the technology, experience, contacts, and professionals that guarantee impeccable customer service and operational efficiency
The trial and error method is not valid in an environment that requires choosing a logistics company in Mexico. Committing costly and avoidable errors can result in loss of positioning in the marketplace and being displaced by competitors. Given today’s ubiquitous use of social media, any negative action or case of company recklessness becomes instantly magnified in online reviews. Therefore, it makes good strategic sense to avoid these situations by contracting with a reliable logistics company in Mexico.
However, when choosing such a firm, it should be noted that not all of the companies that exist in this space have the same service offerings and solutions. Among the different types of companies in Mexico that provide supply chain services to manufacturers are:
- 4PL (Fourth-Party Logistics Provider): This is an association model based on value generation. Typically, this type of logistics company in Mexico is constituted as a supply chain partner and, from this position, offers advanced services ranging from generating and maintaining strategic relationships, making technological capabilities available, or sharing knowledge.
- LLP (Lead Logistics Provider): is a contractual model where risk is shared. Such a logistics company can manage others at lower levels, thus becoming the single point of contact for all of the members of the supply chain. Its main value is technological integration.
- 3PL (Third-Party Logistics Provider): Third-party logistics services enable the outsourcing of transportation or supply chain services. Such companies can be involved in any activities related to shipping, storing, or delivering a company’s Typically, a 3PL provider takes an embedded, strategic approach to managing a client company’s transportation and supply chain.