Executive Briefings

Lucent, TMA: The Secret Is Dedicated Equipment

A third-party logistics provider and truckload carrier are working together to solve problems of equipment balance and availability in Mexico.

The 3PL, Transportation Management Associates Inc. (TMA) of Mocksville, N.C., relies on the trailer-pool and haulage services of Joplin, Mo.-based Contract Freighters Inc. to move product between Mexico and the U.S.

They operate in a trade that has been marked by equipment shortages, cargo theft, political strife, red tape, and chronic congestion at the border. Even with passage of NAFTA, shippers still face severe challenges in getting goods to market on time. Delays are common in the handoff between U.S. and Mexican carriers at the border.

The situation was worse back in early 1996, when the consumer products division of Lucent Technologies Inc. chose to distribute telephones and answering machines directly from its plant in Guadalajara, instead of moving them through distribution centers in California and North Carolina first.

TMA was given the job of shifting all existing inventories to Mexico. For transportation, it turned to truckload carrier CFI, a specialist in cross-border business. The trucker utilized vans and flatbeds to complete the one-time job.

More work was to come. TMA soon was given responsibility for managing Lucent's outbound program of finished product back to the U.S. It was a critical time for Murray Hill, N.J.-based Lucent, the former Bell Laboratories, which had just been spun off by AT&T Corp. and needed to prove itself as an independent company.

TMA had told Lucent it could do a better job of servicing outbound traffic from Mexico than the previous provider. Now it had to make good on the promise. Essential to the plan were a steady stream of quality equipment and a means of crossing the border with minimal delays.

To ensure the continuous movement of Lucent's northbound business, CFI established a dedicated pool of trailers with a select number of Mexican carriers. Freight would be carried to the U.S. terminals of less-than-truckload carriers or parcel handlers, for next-day delivery to major retailers such as Best Buy, Staples and Office Max.

For the first leg of the journey, CFI chose Mexican carriers with whom it had close ties, says Gary Nichols, director of dedicated fleet services. It helped TMA to select operators with a reputation for punctuality and well-maintained equipment. Further expediting Lucent's freight was a pre-clearance program with U.S. Customs for high-volume goods of a repetitious nature.

Lucent had just been spun off by AT&T Corp. and needed to prove itself as an
independent company..

CFI plays a critical role as intermediary between Mexican carriers and LTL providers in the U.S. "We've got to be at their facilities at a specified time each day," says Nichols. "If we miss, it's a total service failure."

Failures are a rarity. According to TMA co-owner Lee McCulloh, CFI's on-time delivery rate is 99 percent. In what Nichols claims is the industry's first dedicated cross-border service, CFI has contracts with Mexican carriers who assign drivers permanently to the same trucks, and equip them with on-board computers.

As a result, CFI can provide 48 hours' transit from Mexico to Knoxville, Tenn. five times a week, promising deliveries on a just-in-time basis. That translates into three to five days' transit from the manufacturing line in Guadalajara to consumers anywhere in the U.S.

The arrangement continues in the wake of Lucent's sale early this year of its consumer telephone manufacturing business to Hong Kong-based VTech Holdings Ltd. The $113m deal included Lucent's assembly plant in Guadalajara, giving VTech its first factory outside China. And it doubled the size of VTech's telecommunications products business overnight.
TMA sought to balance out Lucent's northbound program with freight moving in the other direction. Through CFI's connection to Tremec, a Mexican producer of automotive transmissions in the state of Queretaro, the 3PL was hired to manage an inbound program. (CFI also participates in outbound movements for Tremec, but not in conjunction with TMA.)
TMA spots CFI trailers at an LTL hub in Indianapolis, which receives parts from Tremec's large vendor base in the U.S. Midwest. From there, CFI moves full truckloads to Queretaro. TMA, in turn, scans invoices and relays shipment data to Tremec over the internet. The carrier's service partners utilize CFI's bilingual website for status information.

Tremec's freight used to be shipped south by multiple LTL carriers at a higher cost. The consignee had no clear idea as to what was in the trailers. With TMA overseeing inventory, Tremec now has full visibility of product on the move, McCulloh says.

TMA manages another inbound program for Xerox Corp., which ships parts for copier machines from the U.S. to a plant in Mexico. A New York-based cartage agent moves the materials over a cross-dock into dedicated CFI trailers for the trip south.

Additional equipment is frequently required to handle peak volumes. "We've tried every other named big carrier there is as a backup," says McCulloh. "But we couldn't do it without CFI."

Security hasn't been a big concern for TMA and its clients. Most high-value freight moves within Mexico in escorted convoys, which have cut down sharply on hijackings. The location and status of CFI's trucks can be pinpointed instantly through satellite tracking.

The state of roads and communications in Mexico's interior leaves much to be desired, although Nichols notes recent improvements. Phone lines for internet-based tracking and tracing are more stable than those for voice, he says, and Mexico's phone system has been upgraded.

CFI's own assets are expanding in line with growth in cross-border traffic. Recently it acquired enough land to double the size of its terminal facility at Laredo. It has also increased operations at El Paso, and has opened a new facility at Otay Mesa, Calif.
The real key to efficiency in the trade - full access by U.S. and Mexican truckers to each other's domestic routes - is still a ways off, if it ever comes. In the meantime, shippers and carriers are pursuing creative solutions that make the border as inconsequential as possible.

A third-party logistics provider and truckload carrier are working together to solve problems of equipment balance and availability in Mexico.

The 3PL, Transportation Management Associates Inc. (TMA) of Mocksville, N.C., relies on the trailer-pool and haulage services of Joplin, Mo.-based Contract Freighters Inc. to move product between Mexico and the U.S.

They operate in a trade that has been marked by equipment shortages, cargo theft, political strife, red tape, and chronic congestion at the border. Even with passage of NAFTA, shippers still face severe challenges in getting goods to market on time. Delays are common in the handoff between U.S. and Mexican carriers at the border.

The situation was worse back in early 1996, when the consumer products division of Lucent Technologies Inc. chose to distribute telephones and answering machines directly from its plant in Guadalajara, instead of moving them through distribution centers in California and North Carolina first.

TMA was given the job of shifting all existing inventories to Mexico. For transportation, it turned to truckload carrier CFI, a specialist in cross-border business. The trucker utilized vans and flatbeds to complete the one-time job.

More work was to come. TMA soon was given responsibility for managing Lucent's outbound program of finished product back to the U.S. It was a critical time for Murray Hill, N.J.-based Lucent, the former Bell Laboratories, which had just been spun off by AT&T Corp. and needed to prove itself as an independent company.

TMA had told Lucent it could do a better job of servicing outbound traffic from Mexico than the previous provider. Now it had to make good on the promise. Essential to the plan were a steady stream of quality equipment and a means of crossing the border with minimal delays.

To ensure the continuous movement of Lucent's northbound business, CFI established a dedicated pool of trailers with a select number of Mexican carriers. Freight would be carried to the U.S. terminals of less-than-truckload carriers or parcel handlers, for next-day delivery to major retailers such as Best Buy, Staples and Office Max.

For the first leg of the journey, CFI chose Mexican carriers with whom it had close ties, says Gary Nichols, director of dedicated fleet services. It helped TMA to select operators with a reputation for punctuality and well-maintained equipment. Further expediting Lucent's freight was a pre-clearance program with U.S. Customs for high-volume goods of a repetitious nature.

Lucent had just been spun off by AT&T Corp. and needed to prove itself as an
independent company..

CFI plays a critical role as intermediary between Mexican carriers and LTL providers in the U.S. "We've got to be at their facilities at a specified time each day," says Nichols. "If we miss, it's a total service failure."

Failures are a rarity. According to TMA co-owner Lee McCulloh, CFI's on-time delivery rate is 99 percent. In what Nichols claims is the industry's first dedicated cross-border service, CFI has contracts with Mexican carriers who assign drivers permanently to the same trucks, and equip them with on-board computers.

As a result, CFI can provide 48 hours' transit from Mexico to Knoxville, Tenn. five times a week, promising deliveries on a just-in-time basis. That translates into three to five days' transit from the manufacturing line in Guadalajara to consumers anywhere in the U.S.

The arrangement continues in the wake of Lucent's sale early this year of its consumer telephone manufacturing business to Hong Kong-based VTech Holdings Ltd. The $113m deal included Lucent's assembly plant in Guadalajara, giving VTech its first factory outside China. And it doubled the size of VTech's telecommunications products business overnight.
TMA sought to balance out Lucent's northbound program with freight moving in the other direction. Through CFI's connection to Tremec, a Mexican producer of automotive transmissions in the state of Queretaro, the 3PL was hired to manage an inbound program. (CFI also participates in outbound movements for Tremec, but not in conjunction with TMA.)
TMA spots CFI trailers at an LTL hub in Indianapolis, which receives parts from Tremec's large vendor base in the U.S. Midwest. From there, CFI moves full truckloads to Queretaro. TMA, in turn, scans invoices and relays shipment data to Tremec over the internet. The carrier's service partners utilize CFI's bilingual website for status information.

Tremec's freight used to be shipped south by multiple LTL carriers at a higher cost. The consignee had no clear idea as to what was in the trailers. With TMA overseeing inventory, Tremec now has full visibility of product on the move, McCulloh says.

TMA manages another inbound program for Xerox Corp., which ships parts for copier machines from the U.S. to a plant in Mexico. A New York-based cartage agent moves the materials over a cross-dock into dedicated CFI trailers for the trip south.

Additional equipment is frequently required to handle peak volumes. "We've tried every other named big carrier there is as a backup," says McCulloh. "But we couldn't do it without CFI."

Security hasn't been a big concern for TMA and its clients. Most high-value freight moves within Mexico in escorted convoys, which have cut down sharply on hijackings. The location and status of CFI's trucks can be pinpointed instantly through satellite tracking.

The state of roads and communications in Mexico's interior leaves much to be desired, although Nichols notes recent improvements. Phone lines for internet-based tracking and tracing are more stable than those for voice, he says, and Mexico's phone system has been upgraded.

CFI's own assets are expanding in line with growth in cross-border traffic. Recently it acquired enough land to double the size of its terminal facility at Laredo. It has also increased operations at El Paso, and has opened a new facility at Otay Mesa, Calif.
The real key to efficiency in the trade - full access by U.S. and Mexican truckers to each other's domestic routes - is still a ways off, if it ever comes. In the meantime, shippers and carriers are pursuing creative solutions that make the border as inconsequential as possible.