TRAXION: Driving Mexico Forward

traxion logoMexico’s multi-billion-dollar transportation and logistics industry accounts for 6% of the nation’s GDP, and that contribution is growing. Determined to realize the full potential of the country’s key strategic location at the crossroads of two continents, successive Mexican governments have both funded and encouraged outside investment in a number of multimodal transport corridors.

While still works-in-progress, these corridors will ultimately create an interlocking network of roads and railways linking Mexico’s ports to its inland industrial parks and free trade zones.

Mexican transportation and logistics titan TRAXION is in a pole position to benefit as the new roadmap takes shape.

The relentless surge in cross-border trade has boosted interest and investment in Mexico’s air and maritime transportation sectors. But road transportation remains the most lucrative segment. Last year it represented over 90% of the total transportation services industry’s value, and TRAXION is both the fastest growing and dominant player in the sector.

While the industry as a whole has been increasing at a CAGR above 6% over the past several years, that growth is nothing compared to the pace at which TRAXION has been expanding its market share. Since the group was founded eight years ago by Executive President Abby Lijtszain, TRAXION’s acquisition strategy has seen the company blossom into an organization with 15,300 employees serving over 1,000 customers, and generating annual consolidated revenues of more than $600million.

“The idea behind TRAXION was to create a one-stop shop for ground transportation and logistics that could meet all our customers’ requirements,” Lijtszain explains. “I chose the best companies in each market and integrated them into our platform.”

The strategy has been an undisputed success. The modest fleet of 200 trucks that TRAXION started off with is now over 8,000, and by Lijtszain’s calculation, the company has grown 28-fold since its inception in 2011. “We are three times the size of our nearest competitor and we are the only company in the sector listed on the Mexican Stock Exchange with institutional investors as shareholders, and the highest governance and sustainability guidelines” he says.

Today, TRAXION is the one-stop shop that Lijtszain had in mind when he set out. The ‘best in class’ companies that he successfully targeted for acquisition include Grupo Sid, a leading national transportation and logistics company with an excellent 45-year track record and solid customer base. ‘Last-mile’ specialists Redpack, whose fleet of 621 light units offer a range services from next-day delivery to less-than-truckload freight services. That allows its clients to ‘truck share’ and book as much or as little space as they need to transport their goods to every major city in the country. As well as acquiring several other long-established brands as EGOBA, the absolute leader in border transfer trucking with more than 45 years of leadership.

TRAXION is today one of Mexico’s most diversified transportation companies as well as it’s largest. By 2018, According to the IMF, Mexico’s per capita income was approximately$20,600, putting it ahead of Argentina. Yet car ownership in Mexico remains relatively low, and the vast majority of its blue-collar workforce rely either on public transport or company buses to get to and from their place of employment. Through its LIPU subsidiary’s centralized platform, TRAXION provides personnel transportation not just to the large corporations who have historically been the main sponsors of company buses, but also to small companies grouped together in industrial parks and corporate hubs, as well as to resorts and hotels. With the largest and most modern fleet in Mexico which presently amount to more than 5,400 buses, LIPU also provides student transportation to numerous schools and universities across the country.

Lijtszain continues to look for growth opportunities and in 2017 successfully completed a $220millionIPO listing on the Mexican Stock Exchange. Since then, the group has spent a further $370 million on a combination of strategic acquisitions and organic growth. TRAXION has also managed to increase productivity in its cargo operation where kilometre volume increased more than 21% since its IPO, and average revenue per kilometre improved by 10% in 2018 and 6% in 2019.

This streamlining of operations has been achieved by a combination of effective management and the deployment of new technologies, and Lijtszain is not done yet.

“I see enormous opportunities to use disruptive technology to increase our market share even further. We have a five-year investment plan which is already giving us a return.”

There will be plenty more where that came from.