Usco Logistics Case

1. Based on the information presented we decided that expanding in Mexico is a positive move for USCO, and we have decided to go with a Greenfield Operation. The flow of goods between Mexico and USA has increase because of NAFTA. That has created an open window for the need of storage of imports and logistic operations. We will need to create a strategic partnership with trucking companies, since we do not know the territory and the culture. Also, having a partnership with the Banks will prove beneficial. They will let us handle the warehouse operations while we are offering to update warehousing both technological and structurally, as well as educating and training the employees. This is an advantage to the Banks that want to safeguarding their goods.

2. We have decided not to go with the Privately Owned Public Warehouses because they don't share the same market segment and we would have to give in advance a high cost acquisition. Regarding Banco Mexicano and other banks, we determined not to get a joint venture because they lack an understanding of the logistics (they want out of the logistic business), and it is not their area of expertise. However, doing business with the Banks will prove beneficial in our relations with the Government, and also take advantage of the bonded warehouse services (customs benefits) which will allow Mexican companies to bring only the inventory they need. This Bonded warehouse process makes it easier to process shipments of imported goods and allows customers to differ payment.

3. The existing warehouses would need major upgrades, by partnering with the Banks we can share the expense of upgrading and we can also possibly get low financing for our part of the investment. Both will gain a comparative advantage by bringing the warehouses up to USCO standards, revealing logistical efficiencies, addressing safety concerns, reducing losses, introducing inventory controls and improving supply chain operations. In