Management of Global Supply Chains: Mexican Perspective

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Questions and Answers

What percentage of ships around the globe reportedly travel empty?

30%

50%

40% (correct)

20%

Which country was the largest exporter of intermediate manufactured products in 2015?

India

United States

China (correct)

Germany

What was Mexico's Logistics Performance Index (LPI) score?

3.2

3.8

2.5

2.9 (correct)

How much did labor costs increase in China over the past 10 years?

170% Signup and view all the answers

What percentage of global imports of intermediate products came from China in 2015?

20% Signup and view all the answers

Which strategy is linked to multinational firms' Foreign Direct Investment (FDI) decisions?

China + 1 Signup and view all the answers

Which countries ranked first in the World Bank's Logistics Performance Index (LPI)?

Singapore, Finland, Denmark Signup and view all the answers

What change has occurred in global supply chains according to recent trends?

Transition to optimized inventories across regions Signup and view all the answers

What is considered the backbone of international trade?

Logistics and supply chain management Signup and view all the answers

How can logistics improve economic conditions in a country?

By streamlining intermodal transport Signup and view all the answers

Which factor is identified as a challenge in global trade logistics?

Container imbalances in logistics flows Signup and view all the answers

What impact did the pandemic years have on global supply chains?

It caused increases in logistics costs Signup and view all the answers

Which of the following is NOT a benefit of effective logistics?

Reducing the need for foreign investments Signup and view all the answers

What role do logistics clusters play in global trade?

They facilitate intermodal transport Signup and view all the answers

What is a significant cause of global shortages identified in logistics?

Container imbalances Signup and view all the answers

What effect does intermodal transportation have on export/import costs?

It lowers export/import costs Signup and view all the answers

What is the largest solar park in Latin America located?

Puerto Peñasco, Sonora Signup and view all the answers

What is the total wind energy capacity expected in Mexico when completed?

100,000 megawatts Signup and view all the answers

Which of the following statements reflects the US perspective on manufacturing in Mexico?

Security issues are a notable concern for relocation. Signup and view all the answers

What term describes the strategy of moving manufacturing back to the US from abroad?

Reshoring Signup and view all the answers

What factor is primarily driving the US to view Mexico as a sister manufacturing hub?

Proximity and lower labor costs Signup and view all the answers

What is the total length of Mexico's highway network?

171,348 km Signup and view all the answers

Which Mexican port has the highest TEU capacity as of 2019?

Manzanillo Signup and view all the answers

How many international airports are there in Mexico?

8 Signup and view all the answers

What percentage of Mexico's logistics costs are represented by its logistics to GDP ratio in the Americas?

8.2% Signup and view all the answers

Which of the following cities has a transit time of 1.5 days to CDMX from Tijuana?

Merida Signup and view all the answers

Which country has a railway network length exceeding Mexico's 23,380 km?

US Signup and view all the answers

What is the total number of sea ports in Mexico?

117 Signup and view all the answers

Which corridor connects CDMX to a transit time of 8 hours to GDL?

CDMX to Brownsville Signup and view all the answers

What is the truck crossing count to the US from Nuevo Laredo in 2023?

2.9 million Signup and view all the answers

What is the primary reason the components must return to the U.S. after being temporarily imported into Mexico?

To avoid taxes Signup and view all the answers

Which port is the 13th biggest worldwide, located in Mexico?

Manzanillo Port Signup and view all the answers

Which company assembles the circuit board into a seat actuator?

Kongsberg Automotive Signup and view all the answers

What advantage does Mexico have concerning the labor force for manufacturing?

A significant number of engineering graduates Signup and view all the answers

What challenge is mentioned in relation to Mexico's nearshoring processes post-pandemic?

Increased manufacturing costs Signup and view all the answers

What is one of the logistical improvements needed for better nearshoring processes in Mexico?

Enhance transportation safety Signup and view all the answers

What is a potential opportunity for Mexico to diversify its exports?

Expand exports to countries outside North America Signup and view all the answers

Which of the following is NOT mentioned as an advantage of Mexico for nearshoring?

Strong governmental support for businesses Signup and view all the answers

Which industry is expected to see higher manufacturing costs due to new trade agreements like USMCA?

Automotive Signup and view all the answers

What is the estimated investment for Mexico's Transistmic Corridor?

USD 6 billion Signup and view all the answers

Which sector employs the highest number of people in Mexico, according to the provided information?

Agribusiness Signup and view all the answers

In 2023, how much did Mexico export to the US?

475 billion USD Signup and view all the answers

Which of the following is NOT a major export product of Mexican agribusiness?

Wheat Signup and view all the answers

What percentage of Mexico's GDP is attributed to its automotive industry?

4% Signup and view all the answers

Which country is Mexico the largest global exporter of avocados to?

United States Signup and view all the answers

How many aerospace companies were operating in Mexico as of 2020?

350 Signup and view all the answers

What is Mexico's rank as a global producer of light vehicles?

4th Signup and view all the answers

What annual export value does the aerospace sector in Mexico approximate as of 2022?

$8 billion Signup and view all the answers

Which of the following represents a major challenge for Mexico's nearshoring potential?

Infrastructure inadequacies Signup and view all the answers

Study Notes

EGADE Business School, Tecnológico de Monterrey

Located in Monterrey, Mexico
Mission: Challenge the present, shape the future
Website: egade.tec.mx

Management of Global Supply Chains: Logistics Challenges and Opportunities (Mexican perspective)

Presented by Dr. Eric Porras
Date: November 2024
Focus on Mexican logistics perspectives
Agenda items include:
- Importance of logistics for global trade
- Mexico's international logistics performance
- Domestic and international logistics infrastructure
- Nearshoring and competitive landscape of supply chains in Mexico

Why Logistics Matter

Key element in international trade
Improves export/import costs via intermodal transport
Enhances customer service through logistics clusters
Strengthens global and domestic supply chains
Boosts countries' competitiveness by fostering foreign investment

Logistics Challenges in Global Trade

Intermodal transportation creates a global network for efficient and safe international trade
Includes trucking, rail yards, rail, and shipping.
Port congestion due to pandemic disruptions increases supply chain delays and logistics costs
Significant impact on global freight costs due to port congestion during pandemic

Possible Causes of Port Congestion and Shortages

Vessel imbalances in international trade hinder supply chains
Container imbalances contribute to global shortages
Approximately 40% of ships travel empty, impacting shipping costs which particularly affect commodity trade

How a Global Disruption Impacts Global Supply Chains

China's role as a major exporter of goods
Around 20% of global imports origination from China in 2015
Asian supply chains depend heavily on China's intermediate goods
Supply chain exposure is bigger in Asia (~40%)

Reshaping Global Supply Chains

Shifting from global networks to regional supply chains
From global JIT to optimized inventories across regions and DCs
China + 1 sourcing strategy, a key factor in multinational firms' FDI decisions

International Merchandise Flows

International trade within regions surpasses cross-regional trade
Global trade flows are visualized, showing leading exporters and their trade

Mexico's Logistics Performance

Mexico's global logistics performance
The World Bank's Logistics Performance Index (LPI) ranks Mexico in 15th place out of all measured economies
Shows input and output aspects of logistics.
Important metrics in the index include customs procedures, transport infrastructure, and logistics quality

Mexico's Logistics Infrastructure

Railway network: 23,380 km in length in Mexico (compared to 12,500 km in Turkey and 29,213 km in France, or +200,000 km in the US)
Sea Ports Network:
- Total 117 seaports
- Mexico's seaports handle major volumes of trade, with significant port operations like Manzanillo and Veracruz
Highway Network:
- Total highway network is 171,348 Km
- Toll (10,560 Km) and Free (160,788 Km) highways
Airports System:
- 12 domestic and 64 international airports

Mexico's Main US-Mexico Trade Crossing

Nuevo Laredo - Laredo crossing:
- Crucial trade route with three bridges and a railway bridge
- Represents 40% of the total US-Mexico trade
- High volumes of trucks crossing the route

Mexico's Competitive Supply Chains

Mexico's position as the top US trading partner in 2023. Total exports = 798 USD, and Imports = 323 USD billion.
Top sectors of interest include automobiles, aerospace, and agribusiness

Mexico's High-Potential Sectors

Automotive industry:
- Crucial sector in Mexico (4% of GDP)
- Exports dominate, with significant international significance (largest light vehicles exporter, amongst top global producers of autoparts).
Aerospace industry:
- Significant potential, with more than 350+ companies
- Holds position 14th among the largest global aerospace suppliers
- Exports of $8 billion annually (2022) and is a strong potential for Mexico

Mexico's Advantages for Nearshoring

Demographic advantages. Young workforce (median age of 29.3) and significant labor force talents (130,000 engineers per year).
Incentives for FDI
Low freight/shipping costs to the US
Low total landed costs for global supply chains
Time zone advantage and proximity to the US
Trade agreements with many countries (USMCA, CPTPP)
Strong manufacturing base

Mexico's Challenges and Opportunities for Nearshoring (Post-Pandemic)

Better logistics planning (efficiency, safety, transit time)
Higher manufacturing costs (USMCA)
Competition from other low cost countries
Diversification of exports to new markets
Resilience practices (national & company level)
Adoption of new technologies (automation & analytics)

Mexico's International Competitiveness for Nearshoring Investments

Comprehensive scores in key areas (political effectiveness, FDI policy, etc.) compare to other LatAm economies

Mexico's Renewable Energy

Key renewable energy measures, with notable solar power, like Puerto Peñasco's largest solar installation in Latin America and other promising projects
Demonstrating a commitment in Mexico to expanding its investment and generation capacity.

Automotive Supply Chains (Interconnectivity)

Interconnectivity between US and Mexican supply chains.
Example: a Michigan-based company, Firstronic, dealing with automotive components that travel across the border for manufacturing

Conclusion

Mexico's strong potential as a nearshoring hub, with advantages and challenges.
The emphasis on diversifying exports to other markets outside North America.
Overall a strategic overview of Mexico's economic landscape and challenges.

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Description

This quiz explores the logistics challenges and opportunities in global supply chains from a Mexican viewpoint. It covers key topics such as intermodal transportation, Mexico's logistics performance, and the impact of nearshoring on supply chains. Test your knowledge on how logistics shapes international trade and enhances competitiveness.