ALSC Mexico 2024 blog: Discussing nearshoring, digital transformation and cross-border strategies

13th November

End of day 1 and time for some tequilas at the Gala Dinner 

After a full day of insightful discussions and knowledge sharing on nearshoring, cross-boarder transformation, supply chain challenges, security and the future of logistics in Mexico, the 10th Automotive Logistics & Supply Chain Mexico Conference is hosting its Gala Dinner. Christopher Ludwig welcomed industry leaders, decision-makers, and innovators at the beautiful Espacio R. who gathered to celebrate Mexico’s automotive logistics achievements and discuss future opportunities with some tequila, margaritas and delicious food. 

Stay tuned as we bring you highlights and key takeaways from final day tomorrow!

13th November

Final session: Embracing nearshoring opportunities

As businesses increasingly look towards nearshoring as a strategic advantage, recent discussions have shed light on how Mexico is poised to capitalise on its geographical and economic ties with North America, particularly under frameworks like the USMCA. Our chief content officer Christopher Ludwig began the final session by emphasising the importance of addressing investment needs in critical areas such as rail and cross-border systems, while also acknowledging the industry’s resilience amidst uncertainties due to trade and tariff volatilities under USMCA. 

Joining him on stage were Lizette Gracida, senior director of external affairs & trade compliance at Toyota México, Claudia Ávila Connelly, international trade, nearshoring & economic development expert, Francisco N. González Díaz, executive president at Industria Nacional de Autopartes, A.C and Victor Salazar International CCO at Trayecto. 

Echoing Ludwig’s sentiments on the strategic importance of Mexico’s position, González highlighted the benefits of nearshoring, driven by the USMCA and Mexico’s proximity to the North American market. emphasised the necessity for a robust logistical, technological, and governmental ecosystem to leverage these advantages fully. He noted, “To be truly competitive, we need a logistical, technological, and governmental ecosystem that is fully aligned.” 

From the perspective of the automotive industry, Gracida discussed how geopolitical shifts and the stipulations of USMCA influence nearshoring. She highlighted the ongoing shift towards investing in existing facilities (brownfields) rather than new projects (greenfields), pointing out the strategic yet cautious approach businesses are taking. Gracida remarked, “Nearshoring is not a new phenomenon for Mexico nor for the auto industry… the geopolitical situation between the US and China, and the USMCA… promotes a further integration of the value chain in the region.”

Read more: Toyota announces $1.4 billion investment in Mexico

Salazar spoke on the direct impacts of nearshoring on the transportation and logistics sectors, noting significant growth beyond just automotive, extending into electronics and appliances. “It’s real. As a transportation company, we connect the dots… and we have seen how the automotive industry has grown in Mexico,” Salazar shared.

Finally, Connelly brought in the government’s perspective, advocating for a unified vision that includes both private and public sectors to facilitate economic growth and enhance investment security. She urged for continuous dialogue and collaboration to effectively address and capitalise on nearshoring opportunities. “The intention of the government is there, and the big issue is to have the parties get together in an open dialogue, not fighting each other,” Ávila stated.

Ludwig concluded the session with a question to the panel on the nearshoring picture in Mexico and whether they are ultimately an optimist and a pessimist and why. The panel expressed optimism citing future opportunities, benefits of cross-country collaboration and economic interdependency between the U.S. and Mexico as a continuing force for trade.

13th November

It’s time for the second networking break where delegates continued discussing key takeaways from the event and also checked out the sponsored exhibition before we came back for our last session on ’Aligning government and the supply chain for Mexico’s automotive growth’ and head to the Gala Dinner at the Espacio R.!

13th November

Matching a legacy of talent with the latest technology at VW de México

Mexico’s highly educated and talented labour pool gets high praise at every ALSC Mexico event and this was a key topic for VW de México’s head of logistics planning, Bernardo Taboada Cortina.

“Human capital is one of the things that we are focused to get success in our operations,” said Toboada. In logistics VW de Mexico has an average of 16 years of experience and seniority which helps give it stability and robustness in its processes. But it is also important to have a balance of those experienced professionals and the new pool of young talent VW wants to attract, according to Toboada, and that requires that the carmaker clearly identify the merits of the career path available to them, especially when it comes to logistics.

“For the last two years, so we have changed more than 20% of the management positions and all of them have been taken by our talented logistics pool,” said Toboada. To support that move, VW has created projects for talent development, such as one called Eagle of Trust. He explained that all of VW de México’s logistics departments sit together at least once a month, including management, with the goal of identifying cross-departmental ideas sharing and personal development that can put those people for on a management career path.

Volkswagen’s Puebla facility has a 60-year history which gives it something of a cult status in the automotive industry, according to Toboada. There is a legacy of logistics expertise there, which supports stability but which is not resistant to the introduction of new technology. In fact, VW de México recognises the advantage of equipping the logistics professional with the latest digital tools that help them preventive disruption rather than simply react to it. As has been discussed previously, the carmaker is using predictive analytics artificial intelligence (AI) to help in the transformation of the supply chain landscape in Mexico.

Toboada also points to 20 years of warehouse automation across two facilities at Puebla that store up to 75,000 small and large containers. According to Toboada, this has given VW de México a lead on the development of in-house processes automation. Combined with its legacy of talent and the encourage of the next generation, the carmaker is well placed to make its inbound flow of material resilient to disruption, something helped by a strong localised supply chain in which 78% of the inbound parts and material volume comes from suppliers within the 30km radius of the plant. That, said Toboada, makes logistics and production flexible and robust when disruption occurs.

13^th November

Accelerating vehicle supply chain dynamics

We are back from lunch to another insightful session with key leaders including Hector Martinez, export sales & CBU logistics department head at Honda de México S.A. de C.V., Carlos Eudave, senior manager, finished vehicle logistics at Nissan Mexicana, Roberto Zavala, vice president Mexico operations atWallenius Wilhelmsen and Kaizad Dalal, head of automotive – Mexico at Maersk who spoke about the pressing need for accelerating the vehicle supply chain and shipping and capacity management. 

Martinez emphasised the critical role of rail transportation in maintaining efficient operations, particularly under pressure. He noted, “Our key driver is the railroad… We need to move vehicles really fast, and rail transportation is where we are having all our shipments.” Martinez also stressed the importance of swift and effective processes, stating, “We need to have fast processes… We need to get support of our purchasing team in order to make everything fast.” This reflects a broader need for speed and efficiency across the industry. 

Eudave detailed the adaptive strategies implemented to handle disruptions in logistics, pointing to the necessity of diverse shipping methods. “We needed to adopt a lot of different shipping ways… to cover the market demand,” he shared, highlighting the dynamic adjustments needed to ensure continuity and capacity in vehicle logistics.

Zavala discussed the resilience built into their logistics network, particularly how they’ve managed increased demand and diversified port usage to improve stability and throughput. “We built resilience into the network and now more volume is going through the network than in 2023,” Zavala explained, indicating a successful strategic shift towards more decentralised port operations.

Dalal introduced innovative solutions, particularly the adoption of containerisation for vehicle transport, which he sees as a growing trend. “Thinking inside the box… Cars in containers is a permanent solution,” he stated, suggesting that such innovations are set to become a standard practice due to their efficiency and reliability.

The focus was clear: embracing digital solutions, optimising infrastructure, and maintaining strong partnerships are crucial for navigating the complexities of global supply chains and leaders and decision-makers are collectively driven towards enhancing the efficiency, reliability, and adaptability of vehicle logistics. 

13^th November

After a set of some insightful sessions and keynotes on nearshoring, supply chain and more about Mexico’s economic growth, we are going to break for lunch sponsored by Ryder.

We will be back soon with some more insights and sessions. Stay tuned!

13th November

Surfs up for Audi’s supply chain in Mexico

Audi Mexico’s senior director of supply chain, Francisco Bravo Gomez followed closely on the heels of his colleague Dieter Braun to explain more about the carmaker’s joined up supply chain strategy.

He pointed out that Audi Mexico had a very complex supply chain operation covering everything from the inbound movement of materials from its warehouse, through to plant logistics and manufacturing, and the shipment of the finished vehicles both domestically and to international markets. It also has responsibility for collecting all of the parts that are sourced in Mexico for shipment to Q5 production in China. On top of that Bravo’s team manages the supply of spare parts to the aftermarket from its consolidation centre at the plant in San Luis Chiapa.

Managing that complexity in adverse conditions meant working in supply chain and logistics was a lot like surfing, according to Bravo, because you had to be aware of from which direction the next wave was coming.

Picking up on Braun’s earlier comments about the application of Audi’s global strategy at the local level, Bravo it is very important for the team in Mexico to understand the whole of the supply chain from that global brand perspective and how it is implemented San Luis Chiapa plant – a key location in Audi’s supply chain.

That link in the global Audi supply chain is given added precedence by the fact that Mexico now has free trade agreements with more than 100 countries around the world, which was a major advantage for the Mexico operation according to Bravo.

Bravo highlighted that its operations were supported by the best qualified team, helped by a high level of education in Mexico. “The level of education that we have and the level of specialisation that we have in Mexico is level with the best in the world and we are also working to develop this talent,” he said.

Bravo said that Audi Mexico is helping to define Audi’s global strategy from the local level, providing input on Mexican law and how that impacts operations, as well as informing the carmaker on the specific market conditions on North America.

In managing product complexity Bravo is bringing the Audi strategy to bear in daily operations with direct insight into local production control and programme planning.

He said that with that insight it is possible to analyse the supply chain and find where to reduce complexity to make gains in terms of cost and flexibility as well as identifying opportunities to deliver vehicles to the end customer faster.

In terms of Audi’s sourcing strategy, the Mexico division is providing input to Ingostadt on where supplier localisation can improve competitiveness and resilience. Bravo said that bringing more suppliers closer to the plant, including tier-n, equips Audi with more flexibility to react to the well-documented disruptions familiar to the automotive industry right now. Bravo said a localised supply base enabled it to react faster and in a more efficient way.

13th November

Pushing the limits of innovative and sustainable production at Audi

In the third keynote speech of day one Dieter Braun, head of supply chain, at Audi talked about the transformation to EV production across the industry and drew links between the carmaker’s global strategy and its local approach in Mexico.

The transformation to electrification comes a time of global disruption and Audi, like the rest of the automotive industry, is facing a completely new set of challenges, which that demands a new supply chain strategy with faster reflexes, said Braun. Having a 100 years’ experience developing cars has until now been an advantage to Audi but that legacy of car manufacturing now risks being a disadvantage without a more flexible approach. This is especially important given the speed at which China has adapted to EV production, both on home turf and in its international footprint, which now includes Mexico.

“We have discussions around whether this or that is the right path, but I will tell you one thing, in China the change to electric cars is being executed more quickly than we are doing it,” said Braun.

Braun said logistics was a function of its supply chain organisation that created added value and was key to the success of the company in tune with the local environment in which it is making cars. It has to encompass goals of decarbonisation in order-to-delivery, greater efficiency and cost reduction as well as digitalisation, while at the same time building the knowledge and increasing the resilience of the workforce.

In addition, given the global competition and the different crises affecting the global supply chain, Braun said well-functioning logistics helped secure investment and guaranteeing timely delivery of vehicles to the customer was very important.

As part of its comprehensive Factory360 strategy for production and logistics Braun reiterated Audi’s guiding maxim that it is pushing the limits of innovative and sustainable production. Braun said that over the last five years a lot of new technology has come to market, such as those used in factory and warehouse automation. “We have to apply those technologies quickly in order to be competitive,” he said, adding that Audi’s supply chain strategy had to align EV manufacturing with the supply chains feeding the new materials into its factories. 

For Braun measuring the implementation of the strategies developed to remain competitive in a transforming industry and identifying the results is critical to the success of the company and its transition to an EV future.

13^th November

State of Mexico: A growing hub for automotive logistics Investment

Laura González Hernández, Secretary of Economic Development for the State of Mexico, took to the ALSC Mexico stage to highlight the state’s strong economic and industrial profile, which is grounded in its large population and well-established infrastructure. As Mexico’s most populated state, the region plays a significant role in the country’s economy, contributing 9.3% of national GDP and boasting the highest consumer market share in the country.

She said the state’s location is a strategic advantage for automotive logistics, with a central position and proximity to Mexico City, and two international airports; Felipe Ángeles (the biggest cargo airport in the country) and Mexico City International. This provides a logistical advantage by reducing costs for the transportation of goods both within Mexico and internationally, Hernández said. The state also has extensive infrastructure, with 16,000km of roads, 733km of railroads, and three customs offices, making it a key logistics hub.

Aside from its location, she said the State of Mexico has industrial investment appeal, having secured $7.4 billion in foreign investment in the past year and placing it among Mexico’s top five destinations for foreign investment. Primary trade partners include the US, China, Germany, and Canada. The state is also equipped with energy infrastructure, featuring 75 generator plants, 77 substations, and a robust network of gas pipelines to support industrial needs.

Hernández said the state has nine assembly plants, design centres and engineering centres, with established automotive OEMs and logistics firms including Stellantis, Daimler, Volvo, GM, Ford and Nissan.

”Most importantly, in the government of the State of Mexico, you have allies, you have partners and you have the support of this government that will always walk along with companies,” she added.

13^th November

We are now heading for our first networking break where speakers and delegates will discuss trends while having a hot cup of tea/coffee. We will also be checking out our sponsor exhibition to learn more about how they are preparing for the future and current challenges! 

And finally, we will be filming some Red Sofa videos with some speakers in the meantime too (stay tuned!)

13^th November

Mexico & North America: Vehicle production growth and EV outlook

Gerardo Gómez Gálvez, senior director and country manager, Mexico at data analytics company J.D. Power took to the stage this morning to tell delegates the latest production and sales forecasts for Mexico and North America. 

Galvez said the industry is expected to hit 100m units by 2032, delayed slightly by a slower recovery post-pandemic. In North America, Mexico remains a production hub, nearing 4m units in 2024, with potential for further growth given an installed capacity of 5.8m units.

Domestic sales in the Mexican market are projected to reach around 1.5 million annually, with exports, especially to the US, remaining strong due to production surpluses. Additionally, Galvez said Chinese and US manufacturers are considering expanding operations in Mexico, following the recent trends of nearshoring.

“Mexico is still a key production hub for the North America region. We have a big chance to continue growing,” he said. “There are other Chinese brands that are considering building more factories here, and other US brands that are considering expanding capacity here as well.”

Chinese brands have also grown in market share in Mexico. Of course, under a new government in the US, everything has been placed under even more uncertainty – particularly for Chinese OEMs and nearshoring in Mexico. 

Read more: US-Mexico automotive trade faces new challenges amid shifting policies, labour costs and Chinese investment

Galvez said that last year Chinese brands closed with about 10% of the market share, with around 130,000 units. In the year so far, the Chinese brands account for 110,000 units, about 8% higher than the same period last year – and that’s not including new brands that are not reporting yet, which Galvez said could add an additional 50,000 units.

“In the last four years, more than 30 Chinese brands have entered the [Mexican] market,” Galvez said. “There are more than 300 Chinese brands that could come anywhere at any moment, and they have a big, big opportunity, and this could come basically on pricing and everything. There’s a big opportunity just to increase our market in terms of volumes as well.”

In the EV market, Galvez said Mexico is lagging behind the global rise of hybrids and EVs, which are projected to reach 60% of all sales by 2030. In Mexico, however, adoption is slower due to limited infrastructure and incentives, with EVs and hybrids comprising only 18% by 2030.

13^th November

“We need more investments in port and rail”

We kicked off the first session with some insightful discussion with Chris Styles, Vice President, Supply Chain Management, North America from Nissan, Helen Quirke, Vice President Supply Chain & Business Development from Canadian National and Tom Kretschmer, Vice President of Sales from Ryder System Inc on Vehicle production and market dynamics in Mexico, nearshoring, partnership and collaboration and capacity management. 

Chris Styles shared insights on maintaining logistics stability despite the current unstable environment. He noted, “There’s a number of key focuses but I guess I would start with just continued focus on capacity confirmations with all of our logistics providers.” He underscored the need for predictability and partnership in navigating the challenges. ”We’re really trying to shift our relationships with all of our logistics partners. Moving away from the traditional kind of transaction-based types of agreements to more of partnership-based agreements, agreements, longer-term agreements where we get the opportunity.”

Styles made a note on the need for more investment in ports and rail. ”We are seeing it with our railroad partners but you know, to me finding ways to go ahead and increase the fluidity and increase the flows,” he said.

Helen Quirke pointed out the absence of CN infrastructure in Mexico but stressed the role of partnerships in managing logistics effectively. “Our access to Mexico is through our partners. We connect with other railroads to get into Mexico over land and we also come via rail ferry,” she explained. ”It’s working very, very closely with our railroad partners to deepen those relationships at all levels. From the operating folk right up to the CEOs to make sure that we’ve got a really clear agenda on how we’re servicing our customers and what product are we selling,” she said. 

Tom Kretschmer discussed how Ryder is preparing for growth through strategic investments in people and space. “We are seeing some new activity as it relates to nearshoring… we’re investing in the startup teams and really what that is is people that their sole job is to start up operations,” Kretschmer shared.

This engaging discussion shed light on the operational tactics but also the strategic adjustments companies are making to leverage nearshoring trends while addressing logistics challenges. As companies like Nissan, CN, and Ryder recalibrate their supply chain strategies, partnerships and advanced planning emerge as central themes in navigating the future of automotive logistics in Mexico.

Stay tuned for more updates from ALSC Mexico 2024!

13th November

Welcome to Day 1 of the 10th Automotive Logistics & Supply Chain Mexico Conference!

We are live on day 1 of the ALSC Mexico 2024 conference! Today, attendees will engage in a dynamic program of keynote speeches, panel discussions, and interactive workshops exploring topics critical to our industry—from cross-border logistics and decarbonising transport to digital transformation, AI and electric vehicle supply chains.

Our chief content officer Christopher Ludwig opened the conference with a welcome note and gave us a quick rundown of the current automotive logistics landscape and the unpredictability in future. “2024 will be a record production year, surpassing pre-pandemic levels. We will see strong exports, investments in nearshoring and EVs, the domestic market has grown and changed in terms of import and export market,” he highlighted. 

He highlighted that there will be questions about the present and future with potential changes in compliance and policies.

Additionally, we also ran an opinion poll with the audience on the challenges and future of Mexico’s automotive logistics landscape, nearshoring and the impact of the new US government. Stay tuned for the results!

Come back for more as will continue to bring you live updates, insights from industry visionaries, and highlights of the key innovations driving competitive advantage in automotive logistics.

13th November

Navigating growth, trade shifts and logistics challenges

As the opening drinks reception kicked off at Automotive Logistics & Supply Chain Mexico 2024, industry leaders gathered to discuss the future of nearshoring, trade and growth. Christopher Ludwig, chief content officer of Automotive Logistics, shared some key insights into the pressing issues facing the industry. “We’re seeing new ports develop, new players entering the market and production levels exceeding pre-pandemic levels,” he noted. However, Ludwig emphasised that the logistics challenges that accompany this growth – such as capacity constraints and cross-border issues – remain a critical hurdle. “We’re still seeing a lot of logistics issues that need to be addressed if nearshoring and localisation are to increase.”

The conference agenda promises to dive deeper into these topics, with discussions on how Mexico can expand its production capacity amidst surging demand, and how evolving trade policies between Mexico and the US could impact the automotive supply chain. Stay tuned for more updates as the event unfolds. 

Watch the drinks reception wrap up!

12^th  November

Kicking off with networking and insights on automotive supply chain growth

We are gearing up for an action-packed event on the 13th and 14th for our 10th ALSC Mexico conference happening in Mexico City. But before that, we will be kicking the event off with a Cocktail reception for a networking evening with our speakers and delegates! 

Tomorrow, we will begin with sessions and keynotes with over 600 logistics and supply chain professionals, including leaders from North American and global carmakers, component suppliers, logistics providers, tech innovators, regulators, and key stakeholders who will share insights and build connections that will pave the way for collaborative discussions on Mexico’s role in automotive logistics and supply chain growth. Stay tuned!

We still have our registration open if you would like to join the conference!

12^th  November

US-Mexico automotive supply chain facing new uncertainties following election

The recent US presidential election is sure to be a hot topic both on and off stage at ALSC Mexico this year. 

Following the announcement that Donald Trump has won the 2024 US presidential election, the North American automotive supply chain has been plunged into further uncertainty and unpredictability.

Mike Wall, executive director, automotive analysis at S&P spoke to Automotive Logistics about the upcoming changes to expect in legislation and tariffs, and the USMCA review due in 2026.

Read the full article herE!

8^th November

Mexico records vehicle production and export increase 

Mexico’s National Institute of Statistics and Geography (Inegi) has reported that vehicle production between January and October this year has reached more than 3.4m vehicles, with 2.9m of that figure exported, an increase in exports over 2023 of +6.8%. Light trucks accounted for just over 76% of total production.  

The 12 major automakers with manufacturing plants in Mexico produced the largest volume of vehicles since 2005 and plant capacity stood at 95%. That is supported by a booming localised tier one supplier sector that contributes to the automotive industry accounting for almost 22% over overall manufacturing GDP. 

The Mexican Association of the Automotive Industry (AMIA) said it anticipated reaching the historic export record of 3.45m vehicles set in 2018 if the trend held to the end of the calendar year.  

In October, 122,051 light vehicles were sold in Mexico, which represents an increase of +7% compared to the same month in 2023, while exports were up by +5% in the month to 332,356 units. 

Between January and October domestic sales hit 1.2m vehicles.  

Inegi has collected information from 23 companies affiliated with the Mexican Association of the Automotive Industry (Amia), as well as four non-affiliated companies. 

“October’s export figures are the strongest since 2005, and we anticipate potentially reaching the historic export record of 3.45 million vehicles set in 2018 if current trends hold through November and December,” said Odracir Barquera, director general of Amia. 

GM led the production increase with an output of almost 746,400 vehicles in the first ten months of the year, followed by Nissan, Stellantis and Ford (see table).

However, there were sizable production losses for Audi (-17.5%), BMW (-14%) and Toyota (-15%). 

Chinese carmaker JAC made more than 20,000 vehicles in Mexico over the period, an 11.9% increase over January-October 2023. 

Top ten vehicle makers in Mexico Jan-Oct 2024
GM	746, 393 (+22%)
Nissan	575, 366 (+9.8%)
Stellantis	358 481 (-9.8%)
Volkswagen	340 205 (+13.6%)
Ford	336 139 (+9.3%)
Kia	225, 900 (+4.3%)
Toyota	201 670 (-15.4%)
Mazda	176, 787 (+4%)
Honda	166 683 (+19.6%)
Audi	126,518 (-17.5%)

8th November

We recently wrote about how the US election could affect Mexico’s automotive logistics and supply chain, particularly in light of the USMCA (United States-Mexico-Canada Agreement).

The USMCA’s stricter rules of origin are meant to encourage more manufacturing within North America. However, potential changes in US trade policies might disrupt Mexico’s key role in this ecosystem. For instance, the prospect of tariffs or stricter import requirements could push manufacturers to reconsider their production strategies.

A key concern is how these potential shifts would impact nearshoring efforts. As one industry expert notes, “Mexico has become a crucial player in nearshoring for North America, and any changes to trade agreements will have far-reaching consequences on production and logistics strategies.”

Additionally, automakers such as Tesla have delayed expansion plans in Mexico, citing uncertainty around future trade regulations. This uncertainty underscores the broader concern that the upcoming US administration might reshape policies in ways that affect investment and logistics operations in Mexico’s automotive sector.

Read the full article!

Experts from Toyota, BMW, Nissan, Volkswagen, Audi, GM, and more will gather at the Hotel Marquis Reforma in Mexico City to discuss key topics in inbound logistics, finished vehicle distribution, service parts, warehouse management, plant logistics, and more. The event will also address the broader impact of the US election on supply chain dynamics, the rise of nearshoring, and the ongoing growth of the automotive industry in Mexico.

Stay tuned for real-time updates on critical trends, speaker insights and actionable strategies to help businesses navigate change and build resilience.

Take a look at the agenda here!