Latam logistics need to improve for bigger role to US markets, Tabachnik says – FreightWaves

by admin on November 1, 2022

CHATTANOOGA, Tenn. — Reshoring is likely to make Mexico a far more important player than it already is in supply chains into the U.S., according to Jaime Tabachnik, but there are plenty of steps that are needed to be made in the logistics backbone of the business to make it happen efficiently.

Tabachnik is the CEO and co-founder of Solvento, which describes itself as a fintech company focused on the supply chain in Latin America. He spoke with FreightWaves Editorial Director Rachel Premack during a fireside chat Wednesday at F3: Future of Freight Festival.

“The main point is there are so many inefficient processes in order to get payment and it starts with invoicing,” Tabachnik said. He described a system of piles of paperwork, a problem in the U.S. logistics system as well but one that has been the focus of many companies trying to reduce the paper with digital invoices.

Drivers in Latin America continued to get paid on a net 60-day basis, Tabachnik said. Factoring services in Mexico “are not very common and have not penetrated the industry, mainly because of tax regulations.” But he added that large shipping companies are often reluctant to allow third parties to buy invoices — the core activity that begins the factoring process — “so there needs to be some innovation in what we are doing.”

What Solvento is doing, Tabachnik said, is using AI technology to bring more automation to the auditing process in the supply chain “and also giving the option to carriers to collect their money immediately after they deliver the goods.”

Improving logistics in Mexico and Latin America “is all about speed and accuracy, and a big part of that is payment and settlement,” Tabachnik said. But the challenge, as he added, is “sometimes there are so many stakeholders involved in so many operations.”

A successful logistics system needs a “single source of truth,” Tabachnik said. And when that happens, it means that logistics morphs from just being a cost center to “something strategic.”

Latin American “micro” entrepreneurs and owner-operators, according to Tabachnik, rarely have had the tools necessary to operate efficiently. As a result, growth in the larger members of those categories have had lower growth rates than larger competitors and the even smaller companies have lagged behind that.

“In our opinion that’s because of the lack of access to technology and tools,” he said.

What’s at stake is the role of Mexico as a growing supplier to the U.S. as industries look to reshore away from China and Asia for some of their activities. “We think if we plan accordingly, we believe this is a sustainable strategy for the U.S. and Latin American countries to rely on Mexico as a hub for logistics,” Tabachnik said. “So we need to get together and work as a team.”

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