Ferrovalle Innovation Keeps Mexico City’s Railroad Logistics Heart Pumping

Innovation is commonly associated with fresh-faced startups developing brand new ideas that challenge our perceptions of the status quo, but innovation can also emerge from within long-established enterprises, …

Innovation is commonly associated with fresh-faced startups developing brand new ideas that challenge our perceptions of the status quo, but innovation can also emerge from within long-established enterprises, especially those with a passionate, visionary leader at the helm. Nearshore Americas was recently invited to Ferrovalle’s massive railroad and intermodal facility in the North of Mexico City to learn how the company’s CIO, Ruben Castillo, and his team are fixing to alter the face of global railroad logistics.

Ferrovalle (officially Ferrocarril y Terminal del Valle de México) is responsible for the management and operation of the largest railroad logistics territory in Latin America. Located on the northern border of Distrito Federal, Mexico’s capital state, and the State of Mexico, the territory is comprised of around 200 hectares, serving clients such as Hapag-Lloyd, Hamburg Sud, Cemex, Maersk, Mediterranean Shipping Company, Ford Motors, Kansas City Southern, Ferromex, and Ferrosur, all of which use the facility to deliver goods to Mexico City and beyond.

The territory boasts 51 CCTV cameras for security purposes, with 25 Wi-Fi antennas utilizing Beam Forwarding technology. This level of connectivity is vital for Ferrovalle’s intermodal tracking software, which combines RFID scanning with geolocation, IoT, and mobile smart devices to give Ferrovalle and its clients real-time information on all cargo passing through the facility. In fact, the company was the first to develop tracking software for intermodal clients in Latin America, presented as a free, dedicated mobile app that operates under the concept of Zero Distance to Client, which provides real-time information on logistic or financial events.

Central Traffic Control

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One of the two control centers where Castillo’s innovative approach keeps the facility humming along.

Ferrovalle’s Central Traffic Control system (CCT for its acronym in Spanish) is its most mission-critical solution, as it helps maintain the security of train traffic in Mexico City’s northern metropolitan area. The system merges sophisticated database software with real-time communications between the tracks and the control center in order to manage the hundreds of cargo containers entering the complex on a daily basis. The system has helped Ferrovalle detect and diagnose 75-80% of failures since its implementation.

CCT is unique in that it was completely developed in-house by Ruben’s team of Mexican software engineers and mathematicians. “We are proud of our software as it allowed us to achieve independence from our previous software providers, such as GE,” Ruben told Nearshore Americas. Ferrovalle implemented the system in 2006, but is continuously working on updates as technologies and the logistics industry evolve. Since scrapping their third-party systems, the company has reduced costs by around US$20 million, and now intends to open a new department dedicated to the sale of its own software to maintenance, railroad, and intermodal operators across Latin America. “While we originally had to justify developing the software to stakeholders to get it approved, we’re now in a position where, if successful, it will create a new revenue stream, which is pretty good justification,” Ruben smiled.

No matter which country you visit, the import and export industry is littered with different rules and regulations that are dependent on the region. “As logistics services providers, we are bound by these rules,” explained Ruben. “So, we developed our system to send real-time information to Mexico’s government, allowing them to track imported merchandise. The system that the government uses to view this was also developed by Ferrovalle.”

The company’s systems are developed with a mix of programming languages, including Microsoft .NET, HTML5, C#, GeneXus, and several libraries within those. Furthermore, some of Ferrovalle’s internal processes are managed through Oracle, SQL, IBM DB2 400, and Microsoft Dynamics for its ERP necessities.

Choosing Talent with a Shared Vision

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Ruben Castillo (2nd from left) and his dedicated software and infrastructure development management team.

“Our talent needs to grow with the company and all work together under the same objective, which is to sell our software.” Castillo looks for the best engineers that know Ferrovalle’s processes and already understand the technologies the company uses. “Attitude and motivation is very important to me and my team,” he said. “Their motivation must be to think in the same way that I am thinking, so we can work toward the same target. I might have a great engineer, but his vision may be different to mine, so hiring people with the same way of thinking is paramount.”

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Ferrovalle sources its talent from Mexican universities, the most important being IPN, Tec de Monterrey, UDM, ITAM. Although Ferrovalle has an HR area for recruiting talent, Castillo doesn’t think it’s enough. “Several times, I have gone to the universities to give talks or have one-on-one discussions with the students, then select the best recurits for the company. I found two mathematicians who were perfect for the work we are currently doing, whom I only would have found through visiting the universities.” Training at Ferrovalle is achieved through practice, with new hires shadowing experienced members of staff until they are ready to take full responsibility for a process.

Dynamism of the CIO Role

Castillo’s own role of CIO is always changing, so his skills are constantly evolving. “One of the most important skills I have learned at Ferrovalle is the railroad process, because it is entirely different to the procedures within my previous companies,” said Castillo. “If I can understand the process, and I can understand what my friends and partners are working on in other areas, then I can develop applications within their requirements.” Another of his skills have been to create a strong sense of teamwork between his in-house developers. “In the beginning, I had two choices: either bring in ready-made, foreign solutions, or develop our designs and technology in-house. This led me to create special relationships with Dell, Microsoft, IBM, and GeneXus Uruguay, in order to get their help in training my team.”

The most important thing for Castillo now is to consolidate Ferrovalle’s applications in order to sell them, changing the role of CIO and the company itself. Around 70% of all applications in the company were developed in-house by Castillo and his team, but he also employs other Mexican companies to create source codes and other programs, which are then integrated under his own designs. While CIOs are commonly underfunded in today’s business climate, Castillo is convinced that further companies could be brought into the fold for future projects. “We have an open mind for hiring additional Latin American companies to assist with this process,” he said.

“As Steve Jobs once said, “If you work with me, you are going to change the world”, and in our case, we are looking to create a special standard that will allow our software to be used on all railroads in Mexico City. This is my dream.”

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