In March, Sao Paolo-based Emergent Cold LatAm appointed Juan Pablo Benitez as its Managing Director in Mexico. In the role, Benitez will oversee the company’s aggressive expansion plan there. Late last year, ECL announced a $500 million Latin America investment pool that includes temperature-controlled logistics giant Lineage among others. The company said it will use the capital for acquisitions, greenfield projects, and expansion of existing facilities.
Benitez recently took part in a Q & A with AJOT where he discussed the USMCA four years later and his view of Mexico’s cold chain.
Benitez: The passage of the USMCA four years ago has positively impacted the Mexico/U.S. cold chain, particularly with increased trade flow. We’ve observed a significant rise in southbound shipments of animal protein and northbound shipments of frozen fruits, vegetables, juices, and specialty meat cuts like swine.
Mexico plays a strategic role for the U.S., and nearshoring trends have further boosted trade flows. When effectively implemented, international trade facilitation agreements like the USMCA positively impact the economies of involved countries and foster industry development.
Both the United States and Mexico are major food producers and exporters. The facilitation of cross-border movement and rising demand have necessitated that cold chain suppliers scale up to support this growth, enhancing the overall efficiency and capacity of the cold chain in the region.
AJOT: Are value-added food products fueling any of the growth?
Benitez: Yes, value-added food products are definitely fueling growth, especially with nearshoring. Companies prefer to add value to their products in Mexico because of the cheaper and skilled labor. Many have invested in temperature-controlled processing areas near the main borders for processes like deboning, IQF (individually quick freezing), freezing, injection, and packaging.
We believe a key driver of continued growth will be the export of animal protein, especially beef.
AJOT: In a release on the announcement of the company’s expansion project in Apodaca, you said it “is just the beginning of our ambitious expansion plans in Mexico.” Can you give some details as to what is driving the aggressive expansion?
Benitez: Mexico is key to our strategy in Latin America because of its proximity to the U.S. and strong trade flows between the two countries.
Nearshoring is also a big help for Mexico. Many companies are moving their operations closer to the U.S. to save on costs and improve efficiency. This shift means that more companies are adding value to their products in Mexico, such as processing and packaging, before shipping them to the U.S. This trend is creating a higher demand for temperature-controlled facilities and logistics services in Mexico.
We aim to serve customers in all 11 countries where we operate, and we are the only company in Latin America that can offer this advantage. Additionally, we can support our customers on the U.S. side of the border through our collaboration with Lineage Logistics, the largest temperature-controlled company in the world. Our strategy is to offer capacity on both sides of the border and facilitate trade flows.
The growing domestic market is also a crucial driver of our growth. We plan to be present in the main ports (both maritime and border crossings) in Mexico, as well as in major metropolitan centers. Being close to our main customers and production areas in the country allows us to provide efficient and effective services. This strategic presence helps us meet the increasing demand for storage and transportation of food products, both for cross-border trade and within Mexico.
AJOT: How is new cold chain technology either at the warehouse or in transit helping the marketplace? Any specific examples?
Benitez: New cold chain technology is greatly improving the marketplace, both in our warehouses and during transit. Here are some highlights:
Edge Advanced Certification: Our new buildings receive this certification, which means they are designed to reduce water and power consumption and use more environmentally friendly construction materials.
Water and Energy Efficiency: In areas of Mexico where water and energy are scarce, we use technologies that almost completely eliminate water usage. We also install solar panels to reduce power consumption.
Retrofitting Existing Facilities: We are retrofitting almost all of our existing facilities and implementing solar panels to make them more environmentally friendly.
We realized that being environmentally friendly is not an option; it’s our way to go. But more than just the technology, our biggest contribution to the market is operational efficiency and the reach of our network. We use what we call the “Emergent Way” in our operations, which standardizes processes and increases efficiency. This ensures our clients get the same high-quality service in all 11 countries where we operate, from Mexico to Paraguay.
AJOT: Is current capacity sufficient?
Benitez: If we look at the current Mexican market, we see that the storage and transportation infrastructure for temperature-controlled food is still not sufficient, especially when considering the necessary quality standards. This situation alone justifies our investment plans in the country.
The 3PL (third-party logistics) market in Mexico, like in other emerging markets, has not yet reached its full potential. Many customers are now moving from private warehouses to outsourcing to companies like ours. In the U.S., according to data from the Global Cold Chain Alliance (GCCA), over 80% of the cold storage capacity is managed by 3PLs. In Latin America, the data is less precise, but it’s estimated that only 35% to 40% of cold storage capacity is handled by 3PLs. This indicates a significant opportunity for growth in these regions.
When we add international trade to the domestic context, the need for expanding capacity becomes even greater. Food consumption is growing, and Mexico is one of the biggest food exporters in the world. Coupled with the increasing need in the domestic market, this presents a strong opportunity for expanding capacity. Therefore, our plans to increase capacity in Mexico are crucial to meet both domestic and international demands.
AJOT: There is an effort to ship more temperature-controlled goods from Mexico to U.S. by rail (intermodal)... Do you see rail as a growing/efficient option?
Benitez: We are committed to temperature-controlled logistics, with our primary focus on building warehousing capacity and integrating it with transportation to ensure the highest level of service and quality for our customers.
Currently, we emphasize road transportation to provide flexibility and responsiveness. However, we acknowledge that rail transport is an efficient and cost-effective option for moving large volumes of temperature-controlled goods between Mexico and the United States. The trade between these two countries is of immense importance, and we cannot avoid being a part of this critical supply chain. The rail infrastructure between Mexico and the United States significantly enhances cross-border trade, providing a reliable means for transporting perishables and other temperature-sensitive cargo.
While our immediate focus remains on expanding our warehousing and trucking capabilities, we are actively exploring the potential opportunities that rail transport can offer. This includes understanding how integrating rail services could add value to our customers by potentially offering a complementary solution that leverages the strengths of both trucking and rail logistics.
We recognize the prevalence of intermodal rail in the U.S. and are mapping out how this could benefit our operations and ultimately enhance our service offerings for our clients.
AJOT: Will healthcare/pharma be part of the Mexico/U.S. cold chain? Will there be growth in any other types of temperature-sensitive goods?
Benitez: There is certainly potential for development in the cold chain as a whole; however, our growth focus is on the storage and temperature-controlled transportation of food.
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