1. Transporte Internacional & Supply Chain Integration US- Mexico Chamber of Commerce Dallas - Irving - Fort Worth, TEXAS September 2008

2. Business Environment Logistics in Mexico Challenges 2

3. Business Environment Corporate Structure: trends Multinational Corporations & Globally Integrated Corporations 3

4. Multinational Corporations Foreign markets expansion –Product Development: focus on covering the need of the selected local market –Establish individual full operation in foreign markets –Utilize local labor and raw materials as much as possible according to availability –Bring manufacturing processes, supervisors and adjusted original designs to satisfy local needs –Generate changes in local markets 4 Business Environment

5. Globally Integrated Corporations Foreign markets expansion –Product Development: focus on global market demands –Sources, manufacturing plants and raw materials are located in different countries/ regions –Specialization of the Supply Chain participants –Outsourcing –Generate changes on the participants of the Chain Supply 5 Business Environment

6. Multinational Corporation

7. Globally Integrated Corporation

8. Logistics & Distribution Mexico

9. Logistics 206,314 miles of Highways 206,314 miles of Highways 75% of freight is mobilized over the road 75% of freight is mobilized over the road Source: SCT

10. Logistics Source: SCT Ferromex UP KCSM Ferrosur Trans- ístmico Chiapas - Mayab Coahuila - Durango 16,560 Railroad miles 16,560 Railroad miles 17% of freight is mobilized on rail 17% of freight is mobilized on rail

11. Logistics ENSENADA GUAYMAS MAZATLAN MANZANILLO LAZARO CARDENAS SALINA CRUZ VERACRUZ COATZACOALCOS PROGRESO ALTAMIRA TAMPICO TUXPAN Source: SCT 17 Sea entry ports 17 Sea entry ports 7.5% of freight is mobilized by sea cargo7.5% of freight is mobilized by sea cargo

12. CHALLENGES working with GLOBALLY INTEGRATED CORPORATIONS 12

13. Challenges: JIT capabilities Information technology (WMS, TMS, RFID) Transportation Compliance Security Distribution Cultural Diversity Logistics

14. What to look for in a 3th Part Logistic Organization (3PL) 1) Industry expertise 2) Information Technology 3) Infrastructure 4) Alliances with other service providers 5) Specific programs and Logistics Solutions 14 Logistics

15. Foreign Suppliers Program What are the benefits: Safe inventory storage for in-bond shipments Allows Just In Time deliveries Limited Income Tax Exposure (Foreign suppliers without presence in Mexico) Deferment of all Import Duties and Taxes (Until goods are extracted from the in-bond areas/warehouse) Domestic & International Distribution Center

16. Logistics Foreign Suppliers Programs Who benefits: Manufacturing Plants Manufacturers under IMMEX Program Foreign suppliers and distributors without presence in Mexico Mexican importers

17. Logistics Foreign Suppliers Programs Who can provide the service: √ IMMEX certified entity √ A bonded warehouser Level 1 (Almacenadoras) Registered as an Auxiliary Credit Organization before the Secretaria de Hacienda y Crédito Publico (SHCP) Authorized by the SHCP to operate under the Mexican In-Bond Regime (Regimen de Deposito Fiscal Mexicano) Certified by the Mexican Customs Administration Source: SHCP

18. PLANT 2 PLANT 1 IMMEX BONDED WH MANUFACTURER 2 SUPPLIER NEGOCIATE AGREEMENT MANUFACTURER 1 IN-BOND STATUS Logistics 1.PLANT REQUESTS INVENTORY RELEASE WAREHOUSE DELIVERS TO THE PLANT 2.PLANT REQUEST S THE SUPPLIER TO INSTRUCT WAREHOUSE TO DELIVER TO PLANT. DELIVERY TAKES PLACE. THE SUPPLIER MOVES GOODS NEAR BY THE MANUFACTURING PLANT THE IMMEX / BONDED WAREHOUSER IMPORTS GOODS REGISTER GOODS FOR PROPER INVENTORY MANAGEMENT READY FOR “ J I T” DELIVERY TWO WAYS TO EXTRACT SUPPLIES FROM BONDED WAREHOUSE SUPPLIES ARE TRANSFERRED AS VIRTUAL EXPORTS TO THE MANUFACTURING PLANTS INVENTORY DISCHARGE

19. Dallas Office Leopoldo Prendes Business Development Manager - NA 972-281-6274 E-mail: lprendes@accelonline.com

20. Cultural Diversity Corporate –Build strong relationship –Personalized costumer care –Partnership –Flexibility –Long term goals oriented –Participant in the decision making process –Compatible 20

21. Cultural Diversity Ethnic / region –Awareness –Human factor –Auto evaluation –Different region different meaning –Tolerance to other groups –Flexibility –Open to learn 21

22. Case Study : Industry: Design, engineering, testing and manufacturer of auto parts Company profile: Original Equipment Manufacturer (OEM) Operations: Europe, Asia, the Americas Description of goods: 4,000 pound steel coils Origin and destination: Ontario, Canada – Nuevo Leon, Mexico Transportation: Rail (preferred) or truck (secondary)

23. First approach by the manufacturer : Quantity: 45,000 pounds of steel Frequency: weekly Type of service: door to door delivery Transportation: rail or truck (previously by truck) Considerations: manufacturing plant can process maximum of 45,000 pounds a week

24. Landed cost : RAILTRUCK Transportation: USD$ 9,953.00$ 5,820.00 Fuel surcharge: $ 924.00 Included Trans/load Origin: $ 1,425.00 n/a Trans/load Destination: $ 1,500.00 n/a Customs Broker fee $ 500.00$ 500.00 One per week total cost: $ 14,302.00$ 6,320.00 One month total cost: $ 57,208.00$ 25,280.00 Capacity used¼ of a rail carmaximum

25. Review : Plant manufacturing capacity by month = Maximum 190,000 pound aprox. 1 Railcar maximum capacity = 190,000 pounds / 40-45 steel coils JIT delivery required Warehouse cost Simplification of the logistics process Rail cost VS truck cost and capacity Border crossing cost

26. Final proposal : RAILRAILTRUCK Transportation: $9,953.00$ 9,953.00$ 5,820.00 Fuel surcharge:$ 924.00 $ 924.00 Included Trans/load Origin:$ 1,425.00$ 1,425.00 n/a Trans/load Destination:$ n/a $ 1,500.00 n/a Customs Broker fee$ 500.00$ 500.00$ 500.00 One per week total cost: n/a$ 14,302.00$ 6,320.00 Warehouse cost:$ 3,500.00 n/a n/a (Includes space, handling, trans/load & 4 deliveries by truck) One month total cost:$ 16,302.00$ 57,208.00$ 25,280.00 Capacity used97 % of a railcar¼ of a rail carmaximum