UPS Americas aims to tap new growth potential in Latin America
04/13/2014 7:00 PM
04/11/2014 9:58 PM
Miami-based UPS Americas — 25 years old this year — is intensifying its efforts in Latin America, seeking to build on the company’s record of success. By investing in new facilities and increasing its services to companies of all sizes, it hopes to ride the tide of increasing international trade and expanding emerging markets, perhaps especially in the medical field.
This division of United Parcel Service is the largest single cargo carrier at Miami International Airport, and it is already a powerhouse: It has nearly 9,000 employees in Latin America and the Caribbean, including 598 in Miami; operates 142 flight segments daily; and has more than 900 ground delivery vehicles. (United Parcel Service in the United States is a separate division.) Last year, UPS moved almost 225,000 tons of domestic and international air cargo at MIA, and it also handles UPS package and cargo business in Canada.
UPS America’s growth has largely been built on quickly and efficiently transporting all kinds of cargo — highly perishable goods, machinery for industry, high-tech items and other fragile materials. The company sends almost 2,000 tons of chicks and eggs to clients in Central America each year. It has transported concert equipment for Shakira, Peter Frampton and Ozzy Osbourne, as well as artifacts from the Titanic shipwreck. Each year, it imports about 40,000 tons of cut flowers from South American growers. In fact, moving cut flowers to its Miami airport hub long has been an important part of the company’s regional business. Miami International Airport receives about two-thirds of all cut flowers imported by the United States. Cut flowers, chilled at their point of origin, must be carried on temperature-controlled flights.
Bill Fernandez, founder and CEO of Miami-based Continental Flowers, has worked with UPS Americas for more than four years. His company imports cut flowers from Colombia and other parts of Latin America for distribution throughout the United States. “I use UPS because they offer better on-time service than some of the other cargo airlines based in Colombia,” he said.
Lately, however, UPS Americas has been turning its attention and resources elsewhere: to winning a larger share of the region’s national and international healthcare market, which includes pharmaceuticals, biotech and medical devices. In doing so, UPS goes head-to-head with DHL, FedEx and many local and regional carriers.
Over time, UPS has moved away from partnering with some regional carriers by acquiring local companies. It has also invested in new infrastructure. Earlier this month, for example, the company said it expanded a new facility for storing and shipping pharmaceuticals and biotech products in Mexico, and that it is building two healthcare product centers in Brazil and Chile.
“The opening of these facilities is part of UPS’s ongoing strategy to expand its footprint in vital markets and continued investment in technology to meet the demands of our customers,” said Romaine Seguin, who has headed the division since 2010.
The millions of Latin Americans who have moved from poverty into the middle class in recent years drive the expanded opportunities in healthcare. “GDP growth in the region is generally very healthy,” Seguin said. In healthcare and other sectors, “we see strong growth potential.”
UPS is building new facilities near airports and key markets in its main regional centers. That way, goods can be shipped to domestic as well as international customers quickly — saving time by avoiding the need to move products from the factory to UPS when orders arrive. (UPS does not release capital investment figures by region for competitive reasons.)
The new healthcare centers are near Mexico City (78,000 square feet), Sao Paulo, Brazil (80,000 square feet) and Santiago, Chile (21,000 square feet), and will serve local, regional and multinational customers. They are specialized warehouses, with temperature and humidity control. Personnel are trained to handle sensitive products and are familiar with government and industry regulations covering pharmaceuticals and biotech products. The centers offer manufacturers advantages such as rapid order fulfillment, shipping and kitting — or on-site assembly of medical devices that contain different parts. All this speeds up the supply-chain process.
James Cartledge, a contributing editor at United Kingdom-based Post & Parcel, a trade publication that covers the international express and mail industry, sees it this way: “UPS appears to be investing in key areas of economic growth with its international rivals, similarly looking to tap the potential in this region.” UPS is “building up their own infrastructure in Latin America and acquiring local courier firms to get the all-important local knowledge in these markets, moving beyond the older strategy of operating via local partners.”
In addition, UPS for years has offered so-called cold-chain services that move temperature-sensitive products Latin America aboard planes that are climate-controlled.
“Latin America represents a strong growth opportunity for healthcare companies and providers who rely on UPS’ network of dedicated facilities, air freight and safety and compliance expertise,” said John Menna, UPS vice president for global healthcare strategy. “These facilities offer greater access to the best-in-class logistics solutions for pharmaceutical, biotech and medical device companies serving Latin America.”
The cost of shipping varies according to the weight of packages or freight, the distance traveled, the type of service (faster is always more expensive) and volume shipped by clients; smaller customers may pay more per item than large shippers. For example, the cost of sending a .5 kilogram package from Mexico to the United States using standard delivery service would be $12.90; for express, it would be $24.
Even as UPS makes a big push in the healthcare field, however, it also courts other sectors.
Large national and multinational firms offer opportunities, Seguin noted. UPS is constantly investing in new technology — including improved online tracking of shipments, fuel-efficient planes and high-tech sorting of packages at processing centers — and it has a portfolio of services “second to none,” she said, that also can help small and mid-size businesses.
For instance, UPS can provide customers getting started in imports/exports with information on markets, regulations, licenses and documentation. In some regional markets, it expanded specialized services like paperless invoices and UPS Quantum View, which allows shippers to collect accounts receivable more quickly.
“We can really help your business grow,” Seguin said.
In Brazil, the largest regional market with about 200 million people, UPS sees opportunity in healthcare, oil and natural gas, mining, infrastructure development and meeting the supply chain needs of importers and retailers. In Mexico — also one of the company’s largest markets — the company is looking at the new demand from the automotive, aeronautic, jewelry and high-tech sectors. Mexico has been a key investment area since it is benefiting from decisions by U.S. companies to move their manufacturing from Asia to closer to home.
And, “as online retail purchases expand throughout Latin America, retailers increasingly need efficient services for delivering merchandise and handling returns,” Seguin said.
UPS Americas has also:• Invested $30 million over the past two years to expand cargo handling facilities at its MIA hub.
• Purchased two Costa Rican companies — one specializing in small-package delivery, the other in brokerage services and freight forwarding — last year, adding a total of 161 employees.
• Opened 10 UPS Express centers in several Mexican cities, added less-than-full container sea-going freight service to Asia (to meet the needs of smaller customers) and launched more economical delivery options for customers with non-urgent shipments.
Join the Discussion
Miami Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.