Volume 11 | Issue 2 | Year 2008

The problem was a complex one: how to build a domestic company that is capable of delivering packages to all corners of Mexico’s 32 states, inhabited by 100 million people, many living in lightly populated areas with few roads? The network would have to cover everywhere from the jungles of Oaxaca to the northern plains, and in the early 1990s, building such a company probably sounded a little crazy.
But crazy or not at the time, history certainly absolves the founders of Redpack, a company that today presides over the delivery of 30,000 packages and envelopes per day to 850 destinations in Mexico and tens of thousands more around the world through the company’s strategic alliances. Though the problem of building such a network may have been complex, the solution was, if not simple, elegant: bring together all the existing delivery companies in the country into a unified network under a single brand.

Like a co-op for delivery people, Redpack has continued to grow and today operates huge urban hubs and the latest in cutting-edge electronic tracking. This year, the company is expanding its shipping options to include light cargo, as well as aggressively pursuing a greater slice of international shipping to Mexico’s northern neighbors, the United States and Canada.

Redpack today is one of the largest delivery companies in Mexico. The company delivers to 853 destinations, as well as innumerable destinations abroad in 210 countries through its alliance with UPS. The company operates out of 193 offices around the country, and its many Internet and phone connected sites means that the status of all the packages is tracked in real time. The company covers 500,000 km of ground routes with 1,500 vehicles, as well as 30 commercial air routes with two cargo planes.

With 100 percent Mexican capital, Redpack has grown to take up a place in the top 10 delivery companies in the country. Everyday, the company handles 30,000 packages and envelopes, with an installed capacity to handle 80 metric tons daily. The company even has the connections now to ship to 35,000 destinations in the U.S. and Canada – in short, Redpack can deliver from Saskatchewan to the Yucatan.

“We’re still working the way we started,” said sales and marketing director Sonia Bracamontes, “just on a higher level.”

Of course, that doesn’t mean that Redpack has picked up concessionaires in Toronto. As the company has grown, it has taken on more of the characteristics of a traditional delivery company. For example, since its founding, Redpack has bought out 50 percent of its concessionaires and now owns – outright – those smaller service providers. It’s not that Redpack is intentionally seeking to buy out its concessionaires, Bracamontes said. It’s more a matter that as Redpack grows, it needs to offer the face – and the same quality of service – to its customers no matter where. If a concessionaire isn’t keeping up with change, upgrading equipment, and offering good service, Redpack might step in.

“In the beginning, (concessionaires) were the only way to grow,” Bracamontes said.

But these days, Redpack is growing in all sorts of ways, for one by investing large amounts of capital to develop the infrastructure of a traditional delivery company. Redpack now has major hubs in half a dozen Mexican cities. Bracamontes calculated that altogether, the company’s storage and shipping facilities amount to just under 30,000 square meters of space.

The new growth also means Redpack has had to figure out new ways to handle the shear volume of material passing through its doors every day. With a total of some eight million packages per year, that’s no simple task. Fortunately, there are solutions. In the last few years Redpack has invested several million dollars in new technology for its shipping centers, including 23 IBM servers, handheld computers, and scanners.

The new equipment means that, like any of its global shipping competitors, Redpack can keep instant track of where any package is at any time. The new tech also makes it possible to extend an advantage it already had over the competition: customer service.

It’s an important point because the competition in the shipping industry is steep. Redpack has to compete with the likes of local providers like Estafeta and Multipack, as well as transnationals like German shipping giant DHL. The new technology Redpack has installed means it can communicate directly with its customers by making it possible to integrate its shipping system with that of its customers.

That can make a world of difference for Redpack’s big clients in the automotive, publishing, and pharmaceutical industries.

“We know ‘just in time’ exactly when they’re needing to send things,” Bracamontes explained, giving Redpack that hair-thin but crucial time advantage over the competition.

It’s not the only competitive advantage Redpack has either. Remember that at its heart, the company is still a network of guys on motorbikes, fanning out across the country and delivering packages right to the doors of small businesses and individuals in obscure towns. It’s a feat that a German company like DHL can’t hope to replicate.

“We have a lot of regional expertise and we know the different cultures of the Mexican territory,” Bracamontes said, adding: “We still have the advantage (over companies like DHL) in that we arrive to more destinations.”

Over the last three years, Redpack has grown a combined 20 percent, which Bracamontes called “an explosion.” Redpack has plans to continue that which explosion on several fronts, with the goal of growing annually by five points above the growth of the market, which has historically been between 2 and 9 percent.

They plan to continue that growth with a variety of initiatives. For one, there is Redpack USA Inc., the company’s subsidiary located in Laredo, Texas. Bracamontes sees in the U.S. an important niche market as more Mexican immigrants send packages back and forth across the border and need to deal with things like customs requirements, or making sure important documents arrive safely. By next year, Bracamontes expects Redpack USA Inc. to account for 10 percent of the company’s sales.

Second, Redpack just this year expanded its shipping abilities to include light cargo – pallets of materials weighing up to 400 kg. That will appeal to the company’s key customers in, for example, the publishing and autoparts businesses, as well as bring in some new ones.

As Redpack continues to grow, it will also be focus on quality. The company already has ISO: 9000 certification, and last year it won the National Safety Award from the National Private Transportation Association. Redpack, however, is going further. Each of the company’s four management zones will this year beat the bushes to find and eliminate any shipping or service problems the company has seen.

“We’re trying to lower mistakes more and more (every year),” Bracamontes said.

Quality of the product isn’t the only thing Redpack is trying to improve either. By next year, the company will have qualified with the Mexican government as a socially sustainable company, a certification that takes into account quality of life of employees, links with the community, and environmentally and socially safe practices.

“It’s a new movement in Mexico,” Bracamontes explained, and a perfect fit for an innovative company like Redpack.

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