FREIGHT

Fluidity Engineering
Collective Intelligence in Action

*IMT

Dr. Gastón Cedillo

 AGENDA

1. Some facts
2. Freight Fluidity (automotive case)
3. First results

*IMT

Dr. Gastón Cedillo

 TOP THINGS TO KNOW ABOUT THE MEXICAN ECONOMY

Mexico has a $1.26 trillion economy, making it the 15 largest economy in

the world, and the 11 taking into account power purchasing parity. This
makes Mexico a so-called “middle power”;

Mexico is traditionally seen as a commodities and manufacturing giant. It

has the largest proven silver reserves in the world, and the tenth largest
oil reserves;

Mexico is the OECD country with the second highest degree of economic
disparity between the rich and the poor, behind Chile.

Dr. Gastón Cedillo © World Economic Forum (2016)

© Financial Times (2016)
Dr. Gastón Cedillo © KPCB (2016)
Dr. Gastón Cedillo
 CANADÁ
EUA UE

ASIA NAFTA

RESTO DEL
CA-CARI MUNDO

CAN AMÉRICA
RESTO DEL SUR
MUNDO

MERCOSUR

Dr. Gastón Cedillo

 Automotive free trade agreements as Mexico’s competitive advantage
Mexican Free Trade Agreements

Dr. Gastón Cedillo © Volkswagen (2013)

 Export to markets: chance of diversification
Other manufacturers

Dr. Gastón Cedillo © Volkswagen (2013)

 Light vehicle manufacturing plants in Mexico

PLANTA
PLANTA NUEVO LEÓN
AGUASCALIENTES

PLANTA
SAN LUIS POTOSI

PLANTA
GUANAJUATO
Dr. Gastón Cedillo
 reliability

Dr. Gastón Cedillo

SUPPLY CHAIN FLUIDITY

Specific improvements in delivery times,

transport cost and reliability of transit times,
will increase global trade of Mexico.
SUPPLY CHAIN FLUIDITY

“Effective logistics performance plays an

essential role in the worldwide flow of goods
and services and in the ability of countries to
attract and sustain investment.”
Warren H. Hausman – Stanford University
Hau L. Lee – Stanford University
Uma Subramanian - The World Bank

© Hausman et al. (2013)

Scenario Planning of Future Freight Flows
across the U.S./Mexico and U.S./Canada Borders
 North
American
Supply Chain Fluidity

*IMT

Dr. Gastón Cedillo

 NAFTA Supply Chains

AUTOMOTIVE PRODUCTION
US $ 10 billion
US $ 2 billion
US $ 1 billion

US $ 200 million
US $ 1 billion
US$ 3 billion

Dr. Gastón Cedillo

© Brookings Institution (2014)
 NAFTA Supply Chains
NAFTA Supply Chains

Dr. Gastón Cedillo

© Brookings Institution (2014)
OPPORTUNITY

The opportunity to organize one of the largest regional manufacturing

zones in the world exists (Black and Rodriguez, 2010; Manners-Bell,
2010).

One of the key success factors for the region is to increase cross-border
throughput, which is:
─ “the speed and volume with which products move through
manufacturing processes, transportation and even customs at the
border” (Lawrence, Leon, 2011).

reliability
 LAND BORDER PERFORMANCE MEASURES
U.S. BOUND TRUCK WAIT TIME TRENDS

80

70
Monthly Average Wait Time (in Minutes)

60

50

40

30

20

10

0
07-2012

09-2012
01-2012

02-2012

03-2012

04-2012

05-2012

06-2012

08-2012

10-2012

11-2012

12-2012

01-2013

02-2013

03-2013

04-2013

05-2013

06-2013

07-2013
Month-Year
Bridge of the Americas Colombia International Bridge
World Trade Bridge Pharr-Reynosa International Bridge
Zaragoza-Ysleta International Bridge

© Villa (2014)
 RESEARCH PROJECTS

• Supply chain dynamics and the “cross-border” effect;

• Dynamic impact on global supply chains performance of disruptions

propagation produced by terrorist attacks;

• Supply chain disruptions propagations caused by criminal acts.

*IMT

Dr. Gastón Cedillo

 “cross-border effect”:

Dr. Gastón Cedillo

 CROSS-BORDER EFFECT
Top 10 Ports by Trade Value (Billion of US$) ranked by Total Trade for USA - NAFTA Partner Trade by all Modes:
2011 (RITA, 2012).
Percent of Total Percent of Percent of
Total Trade Exports Value Imports Value
Rank Port Name Trade Value Exports Value Imports Value
Value (by Truck) (by Truck) (by Truck)
(All Land Ports) (All Land Ports) (All Land Ports)

11 Laredo
Laredo - Texas- Texas 117 54 63 19% 17% 21%
2 Detroit - Michigan 99 58 40 16% 18% 13%
3 Buffalo-Niagara Falls (N.Y.) 62 37 26 10% 12% 9%
4 El Paso - Texas 51 22 29 8% 7% 10%
5 Port Huron - Michigan 48 30 18 8% 10% 6%
6 Otay Mesa - California 33 11 22 5% 3% 7%
7 Champlain-Rouses Point (N.Y.) 24 10 12 4% 3% 4%
8 Hidalgo, Texas 21 9 15 3% 3% 5%
9 Santa Teresa, New Mexico 18 7 10 3% 2% 3%
*IMT 10 Pembina, North Dakota 17 12 5 3% 4% 2%

Total of Top 10 Ports 490 250 240 79% 79% 80%

Grand Total (All Land Ports) 618 315 300 100% 100% 100%
*IMT
1
Dr. Gastón Cedillo
Dr. Gastón Cedillo
 But, what is
fluidity?

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Dr. Gastón Cedillo

 SUPPLY CHAIN FLUIDITY

Supply Chain Fluidity is understood as:

“The capability level to continuously achieve a

reliable, secure, and accurate flow of
products, processes, information and finance
effectively supporting the supply chain goals”.

*IMT
Cedillo-Campos, M. & Cedillo-Campos, H. (2015).
W@reRISK Method: A Tool for Security Risk Level Classification of Products.
Safety Science, Volume 79, November, Pages 358–368.

Dr. Gastón Cedillo

 SUPPLY CHAIN FLUIDITY

Four global KPI’s are measured by the proposed method:

• Travel time;
• Reliability or variability of travel time;
• Cost
• Risk
*IMT

Dr. Gastón Cedillo

 What are the
benefits?
(public, private, academic)

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Dr. Gastón Cedillo

 BENEFITS TO BOTH PUBLIC AND PRIVATE USERS

• Public and Private Sectors;

• Research community;
• Political leaders.

*IMT

Dr. Gastón Cedillo

 BENEFITS TO BOTH PUBLIC AND PRIVATE USERS

• Public perspective – National (“top-down” measures)

 Designing public policies to face challenges and opportunities for
national supply chains;
 Understanding supply chain impacts on economic performance of the
Regions;
 Creating a national logistics system with global reach.

*IMT

Dr. Gastón Cedillo Based on: Alan E. Pisarski, 2015.

 BENEFITS TO BOTH PUBLIC AND PRIVATE USERS

• Public perspective – State, Local (“top-down” measures)

 Integrating local interests and assessing their specific supply chain
challenges;
 Identifying a specific number of key sectors and industries by State.

*IMT

Dr. Gastón Cedillo Based on: Alan E. Pisarski, 2015.

 BENEFITS TO BOTH PUBLIC AND PRIVATE USERS

• Private perspective
 Defining more rational KPI’s to be used by shippers, carriers, 3PL,
Logistics platforms, etc.;
 Creating optimization tools (for transportation fleets, supply chain
optimization, etc.);
 Reducing Bullwhip effect across supply chains;
 Facilitation of just-in-sequence deliveries.

*IMT

Dr. Gastón Cedillo Based on: Alan E. Pisarski, 2015.

 NATIONAL SECURITY

• Defense and Mobilization

 Assessing the level of support provided by supply chains in the movement
and placement of strategic materials.

• Emergency Preparation
 Guiding the scale and scope of civil protection systems.
• Energy
 Designing strategic flows.

*IMT

Dr. Gastón Cedillo Based on: Alan E. Pisarski, 2015.

 INTERNATIONAL COMPETITIVENESS

• Exports & Export Gateways

 Identifying threats and opportunities regarding ports.

• Intermediate Moves to support Exports pre/post Gateway

 Examining middle inputs and outputs feeding final production.

• Imports Supporting Exports

 Ranking imported components which are critical to export-oriented
supply chain operations.

*IMT

Dr. Gastón Cedillo Based on: Alan E. Pisarski, 2015.

 ECONOMIC EFFICIENCY

• Expanded Sources/Inputs
 Support industry and public policy makers in assessing opportunities for
designing more innovative supply chains.

• Private Sector Competitiveness

 The sophistication of modern supply chains is significant, thus, there is
much that decision makers and researchers can gain with greater interaction
(collective intelligence).

*IMT

Dr. Gastón Cedillo Based on: Alan E. Pisarski, 2015.

 COMPONENTS DESCRIPTION SUGGESTED MEASURES

How well are the links/nodes

The components of freight fluidity Mobility (transit-time, total
and logistics network delay)
Performance operating?
Reliability
Where are the bottlenecks in
a certain supply chain? Cost

How well do supply chains

and the logistics system Risk (or resilience)
(infrastructure, users,
agencies) react to
disruptions?
Volume
*IMT Quantity How much freight is moved? Weight
Commodity value

Dr. Gastón Cedillo Based on: Eisele, Juster, Sadabadi, Jacobs and Mahapatra 2015.
 QUESTIONS?

Thank you!

*IMT