Exclusive Interview: Juan Cento of Fedex Announces New Commitments To Colombia, Ecuador, Peru, Chile
Fedex (NYSE: FDX), previously known as Federal Express, has been present in Colombia for 25 years, but has not been seen as the dominant player that it is in other markets. Fedex would like to convince us that a change is coming. A delegation of top executives has been in Colombia this week meeting with key customers, and the company is investing heavily into the Colombia and the rest of the Andes. Fedex has opened a refrigerated air-freight facility at Medellín’s José Maria Córdova International Airport, and increased flights to 6 days a week, direct between Colombia and Miami. Fedex also is announcing additional commitments to other Andean countries.
Finance Colombia executive editor Loren Moss sat down with Fedex President for Latin America and the Caribbean Juan Cento (above, left) to better understand these new commitments, and Fedex’s intentions for Colombia and the region.
Finance Colombia: You are here in Colombia today with big news to announce. FedEx already obviously has a presence in Colombia, and in most countries in the world, but I haven’t seen FedEx as necessary the dominant courier, so tell me about this new initiative that you guys have, it seems like you’re now looking to establish more of a presence in the region, but specifically here in Colombia.
Juan Cento: First of all, thank you for your interest in talking to us, this is exciting news, it’s an opportunity for us to penetrate the sector of the business that we have really not been aggressively involved. We started operations in Colombia 25 years ago, and our main focus in Colombia has always been providing Colombian importers and exporters the best and most competitive transit time and competitive prices, so they can get their goods to the markets where they want to do business.
Obviously, we all know that the United States is the largest trading partner for Colombia, but there are other opportunities. As FedEx, we operate in 220 countries around the world, we have the largest air fleet of airplanes, close to 690, and we move 15 million packages a day, connecting all those 220 countries, so from a time sense, the traditional business that FedEx has been involved, we’ve done that in Colombia, we’ve been very successful, we have a significant market share in Colombia, but we always at FedEx are looking for opportunities to understand what the customer’s needs are and how do we address those needs.
Our goal as a corporation is consistent with my goal in Latin America, we want to become the leader in the domestic, international and logistics business both in and out in Latin America, so in order to that, you can’t just say “wow, I have a significant market share in one segment,” I’ve got to be consistent in all of them. We started the domestic service in Colombia in 2011, and we feel that we’re covering certainly the largest cities in Colombia, but the sector of perishables is an area that while we are providing time definite export movements, mostly B2C (Business to Consumer).
For fresh flowers in the United States, we really have not been involved with the cold shipments, which everybody knows that Colombian flowers are the largest air cargo activity that’s performed in all of Latin America.
So, what we have bought in? We take in the flight we have operated for 25 years and we shift it at a time that addresses those needs, those times are not at the time of [typical] business days, 5 or 6 o’clock in the afternoon. Now we’re departing Medellín at 4 in the morning, we’re departing Bogotá at 2 o’clock in the morning, so we fly six times a week, a Boeing 767, operating Miami-Bogota-Medellin-Miami. Why Miami? Because that’s the gateway for flower distribution. That’s really the gateway to Latin America.
But for flowers, that’s where the infrastructure exists, and this airplane allows us to do that. Now it is the first of a few planes we are going to introduce to get a strong presence in the perishables market. The next airplane we are going to introduce is going to serve Quito, Ecuador.
Again, Miami-Quito-Miami, and then the third airplane that we have, I’m just talking over the next twelve months, is going to be Miami-Santiago-Lima-Miami.
So we want to make sure that we have the presence that our customers are asking us to have in the perishable business. Our perishables business, number one, flowers out of Colombia, coffee out of Colombia, textiles.
Finance Colombia: Here in Medellin.
Juan Cento: In Medellin, right. So, actually we were just at ColombiaModa, an event that took place two or three weeks ago, so you know, we’re committed to that, but I think the other, key fact that opens opportunities is the focus that we have given to small and medium businesses.
We all know what important financial contributors to the different economies in Latin America the PYMEs are. [PYME is Pequeños y Medianos Empresas, or Small and Medium Sized Businesses] Well, the traditional PYME, or micro-PYME what do they focus on? I need to start the business, I could be successful in the Medellin market, maybe we should expand to the rest of the country, well maybe you know what, would it be nice if I present my product to my neighbors?
Finance Colombia: Right.
Juan Cento: You know, Peru, Ecuador, Venezuela, any of the other markets, right? Well that’s when it gets a little bit more complicated, when we come in, and we partner with them, to allow them to understand the ease of use for exporting, utilizing us as the reputable global transportation company which gives them credibility, but also utilizing a lot of the tools that we provide them. Just one: I won’t get into all the details, but we allow them to go online, www.FedEx.com, and identify: I’m shipping from here to South Africa, what do I need? Transportation cost, duties and taxes, tracking capabilities, you know you give them all of this, sitting behind a computer, is that simple.
Finance Colombia: And that’s critical, especially because for the small business, a big impediment I think, is either the real or perceived complexity for customers and how to do that, and people don’t understand how that works.
And they don’t understand either the role of a freight forwarder, or when one is needed or not needed, or how to ship things from here into foreign markets. In the 1990s I used to export computer and telecom equipment like circuit boards and memory chips from the USA into Central America and the Caribbean, and I had no idea how to properly ship things: insurance and customs forms and shipping forms, etc. so I just gave up: I put the stuff in a suitcase and flew into Nicaragua or Panamá or wherever…But today its so much easier to do.
What do you need? What are your demands? Let’s work together, tell me what you need, I’ll tell you what I could do, then you can make your own choices.
Juan Cento: So, obviously that’s a great opportunity for a PYME, it’s that same fear you just described, you know, we meet with them, we talk to them, and say “listen, it’s very simple, think big, think that you can grow your business at a much higher level if you had a broader distribution of your products anywhere in 220 countries, and it’s very very simple.” It takes that fear away of exporting and thinking, “oh I’m too small, I can’t penetrate that,” but now you can.
Finance Colombia: Right, I know somebody who actually works for Deloitte here in Colombia and as her side business, she makes handicrafts, arts and crafts, the kinds of things you would see on Etsy.com back in the states. And she makes these crafts and she is starting to make them in English and you know? There is a person who says, “You know, I’ve got my day job, and maybe I make these things, these really nice things, and I’m selling them,” and that often grows into a successful thriving business! You know, PayPal is down here, and PayPal has gone through different iterations in Latin America. We have Mercado Libre, Mercado Pago, and it’s interesting how these disruptive platforms are evolving.
Juan Cento: Yeah.
Finance Colombia: They are going to need delivery. I had an eBay account for over twenty years back in the states, right? I would sell excess things, my old camera stuff for example, but it’s interesting because that’s just catching on down here now, and so I think that we’re at the beginning of a boom where the small business, the micro business, the micro entrepreneur down here—and Colombia now has the free trade agreement with the USA, and 15 other free trade agreements, and people now are just starting to see their opportunity. The younger generation in Colombia is really growing up with this. They are used to going either to a website or to an app or: “I want to track my package, where is my order?
Juan Cento: So that fear, That fear has been taken away. Our goal is to continue to expand on the business that we’ve got, continue to look at different choices, continue to have the right path and infrastructure to support growth.
You know, it reinforces what we hear from our customers, it reinforces our commitment to the country, it reinforces our commitment to make the right decisions and put this in here to allow more movement of these groups.
We are reinforcing our commitment by bringing this type of aircraft into Colombia; the beauty is that our philosophy at FedEx, our goal is to match the demand with the capacity. When you get 690 airplanes, everything from a 777 to the smaller ones, you know, what do we do? We go into a market, and Eduardo, who is our general manager here might say, “Hey Juan, we are maxed out, can you bring me more capacity?” Give me thirty days and I’ll switch the 767 for a 777.
But the key purpose: What is the customer looking for? How do we provide them a different thing? Now, this is where a lot of our competitors in Latin America and specifically in Colombia that are here only for short terms. What is the key reason why that happens? They operate on their mentality that: I have to max my revenue in every flight, so when the shipment from a flower grower arrives late at the airport, they will feel it.
When there’s any issue in Latin America, any issues that are creating a disruption they modify their schedule.
Listen, it’s very simple, think big, think that you can grow your business at a much higher level if you had a broader distribution of your products anywhere in 220 countries,
Finance Colombia: They don’t have the financial strength, the staying power to survive these disruptions.
Juan Cento: Absolutely. For us, our airplane leaves out of Medellin at 4:05 in the morning. If it’s not full, we’ll deal with that after the airplane leaves, but that airplane has commitments along the way to 220 other countries, and it has to leave on time.
So, that reliability has not been seen. We had an event yesterday in Bogota, and every customer that we talked to said “Am I glad that you guys are now a player in this sector, because with your reliability, with your guarantees,” the security that comes from knowing that you’re with FedEx.
Finance Colombia: I remember those ”absolutely positively” commercials!
Juan Cento: We are extremely excited about this opportunity. We’ve got a great team in Colombia, approximately 300 employees, and this brought in 50% more onto the payroll that I have here, and you know I think it’s just a very strong commitment to the country and to our customers.
Finance Colombia: You know, we’ve got flowers going out of Colombia, coffee and things like that, and I hadn’t noticed this before but they are really starting to export fruit, beyond bananas, avocados are now approved, and there are so many different things, other things that haven’t even been commercialized or exported yet, and things that we don’t even see in the Caribbean, things that you don’t see in the Antilles.
Juan Cento: Right.
Finance Colombia: And it’s interesting, so I wonder flowers…You know, there’s always a market for flowers, but I would imagine that FedEx…
Juan Cento: Valentine’s Day, Mother’s Day…
Finance Colombia: One curious thing, Colombia’s Valentine’s Day equivalent is in September and I figured this is because in February they export all the flowers and this gives them six months to grow them back!
But I wonder, FedEx obviously has a good fleet, is that a logistical challenge? When flowers are going out, are the planes coming down empty or are there lots of imports?
Juan Cento: There’s obviously more coming out than what it is coming in, but again we have 20 years of solid business, we got a lot of businesses connecting from Europe or businesses coming in from the US or the far east that has got to fly through the US, through Miami, so, in that aspect, we’re good. This year, for Valentine’s Day and Mother’s Day we brought in extra airplanes.
Absolutely, we’re already talking to customers and we understand that they have to be making this decision now, so that they can make commitments on space on the airplanes, so that’s what we are doing at this time, what do you need? What are your demands? Let’s work together, tell me what you need, I’ll tell you what I could do, then you can make your own choices.
Finance Colombia: On the ground, locally you know, we think of FedEx and other global couriers as “I go there when I export.” DHL has strong business to Europe especially, but it sounds like what you’re saying is that FedEx is a player on the ground. Is that due to partnership with local or national companies or is the strategy to roll out FedEx on the ground?
Juan Cento: It’s a combination, we got some things that we could do by ourselves, certainly in those 12 largest [Colombian] cities we have our own people there, but in this phase of FedEx, maybe some of that transportation we may contract that out. In today’s world, the physical control of the goods throughout a hundred percent of the process: it’s good but not essential to have, because as long as you got the right partner, as long as you commit to transit time and specific activities, then you’re fine, so, we’ve been successful doing that.
Finance Colombia: Great. Thank you for your time, you’ve been very generous.
Photos credit: Pilar Mejia López, Lapic SAS