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FVL OVERSIGHT COMMITTEE SAYS MEXICO LOGISTICS CAPACITY IS JOB ONE

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AIAG’s FVL Oversight Committee says addressing logistics capacity challenges in Mexico is Job One for the industry right now. The new FVL Oversight Committee is the automotive industry’s sounding board on all things related to logistics, and is comprised of 11 selected individuals from among OEMs, rail, ocean, trucking, service providers, and advisors who represent the voice of the industry and guide AIAG to industry pain points.

“A great deal of the industry’s production is going to Mexico — it’s already at 3.2 million vehicles a year,” says Bill Kerrigan, vice president of logistics for SSA Marine’s Automotive Division, headquartered in Mexico City. “By 2020, forecasts are that it will be at 5.3 million vehicles annually. That’s like adding capacity for six or seven new automotive plants here in the U.S. Can you imagine what it would do to our logistics infrastructure if we added six or seven new plants?”

The challenge for Mexico, Kerrigan says, is that 70 to 80 percent of that production will be exported back into the United States and Canada via rail (roughly 75 percent) or ocean (about 25 percent). “Mexico already has huge infrastructure problems, and their ports are nearing capacity, just as our ports are here in the States,” notes Kerrigan.

To address the challenge, AIAG is hosting a one-day conference themed Mexico Capacity 2020 on September 7, 2016, in Troy, Michigan. The conference will not offer traditional presentations, but rather, it will be designed to engage attendees and experts in problem identification and resolution for the good of the industry.

“We are trying to bring the best and the brightest into one room to figure out the industry’s options,” says Kerrigan.

He points out that while the individuals sourcing logistics know what their ocean and rail capacity is and what the optimum ratio is based on their own needs, we need to take a holistic approach to the industry capacity issue.

“It’s really going to be about cooperation,” Kerrigan says. “We need to know what logistics chains exist where we can help each other.”

Carla Kalogeridis is AIAG’s e-news editor.