USCO Logistics

USCO Logistics Incorporated: The Mexican Proposition

Privately Owned Public Warehouse looked to be a great fit for USCO, but the cost of acquisition was too high. They were ‘‘asking USCO to pay up front into the joint venture company a multiple of the projected profits from his portion of the joint venture.’’ USCO wanted a partner they could share the risk with. Given this scenario, I consider that USCO should partner with Banco Mexicano. “Because they were already in the distribution business, the banks seemed like a good place to begin.” Banco Mexicano and USCO have a similar approach to the market, they could both get mutual benefit from each other. Cost of acquisition is the lowest one amongst other prospective partners. They have the highest willingness to delegate management functions and very good locations. Although their strong point is not in logistics knowledge and with lots more work to do in the long-term, USCO would be able to shape the partnership to leverage it to their advantage.

Privately Owned Public Warehouse’s most valuable attributes to USCO would start off with their existing facilities and operational controls, which requires less work and training. They also have a strong organization, standing out in logistics knowledge, systems knowledge and strong operating managers. Their knowledge of the Mexican market is very good, their initial customer base as well as ability to bring new customers supersedes the other prospective partners.

The most valuable part of the partnership with Banco Mexicano is their lower acquisition cost (overall deal). Additionally, their strong human resource support, the number of facilities and their strategic locations are a plus over the rest prospective partners. Another advantage is that Banco Mexicano is willing to completely change their warehousing operations to international standards, giving USCO the opportunity to increase market share. The financial capacity of the group is also a valuable player.

As with any competitive business, the other potential banks will eventually look for another logistics company to partner with in an attempt to obtain market share. This can be managed by remaining competitive within the market maintaining international efficiency and quality levels, due to an increased knowledge into the partnership and superb financial capabilities. “The first company that can offer quality services, helping its clients become more competitive, is likely to grab a substantial market share.’’

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