The COVID-19 pandemic created a massive crisis in the global supply chain, with new restrictions creating delays and affecting most manufacturers and shipping companies. Due to the health crisis, companies have been rethinking their supply chain strategies to ensure resilience and agility in the face of future shocks. One emerging trend is nearshoring, or the practice of relocating manufacturing operations closer to home.

 

What Is Nearshoring?

Before diving into nearshoring, we’ll first discuss the preferred pre-pandemic method: offshoring. Offshoring is the practice of outsourcing labor and supplies to countries with more advanced capabilities, like India and China. However, the pandemic made it so much harder to manage offshore operations.

Nearshoring has become an increasingly popular alternative to offshoring. In this practice, a company works with manufacturers, suppliers, and other companies near their country or territory. For example, businesses in the U.S. nearshore to companies in Mexico. Since the country is just next door, the company can optimize its supply chain, achieve cost savings and avoid long delays.

Start with a Nearshoring Freight Analysis!

Advantages of Nearshoring to Mexico

For companies in the U.S., Mexico nearshoring is becoming an attractive option instead of offshoring to China or India. In 2022, many international companies have started their expansion to Mexico — and for good reason. Nearshoring in Mexico offers advantages like:

• Proximity to the U.S. and a similar time zone to allow for faster, more cost-effective shipping times
• More stable currency fluctuation that’s favorable for foreign investments
• Mexico has a strong cultural alignment with the U.S., making it easier to maintain effective working relationships
• Better intellectual property rights
• Skilled workforce with diverse capabilities and work ethic
• Ability to ship via truckload versus sea or air freight

 

How to Achieve Success When Nearshoring to Mexico

Nearshoring in Mexico may seem like a great alternative for those who want to avoid the hurdles that the pandemic brought about. However, it may not be the best strategy for some businesses. To succeed in your strategy, you need to:

Investigate and Plan 

Are there potential suppliers in Mexico that could provide your needs? It’s not wise to cut ties with current partners if there’s no guarantee they have what you’re looking for. Choosing the right location is also important, like proximity to your company’s facilities, infrastructure and availability of skilled labor.

Collaborate and Work Closely 

This step applies to building strong relationships with your Mexican partners including suppliers, manufacturers, distributors, logistic providers (3PLs), and government agencies. This involves regular communication, collaboration and a willingness to understand and respect cultural differences.

Prepare Contingencies and Stay Compliant 

You could fall into some common pitfalls when nearshoring in Mexico, so be prepared to adapt and mitigate issues before they become disastrous problems. Also, ensure your business is staying compliant with Mexican regulations, including customs regulations, tax laws, and labor laws.

Invest in Technology

Investing in technology such as a Transportation Management System (TMS) and other supply chain management tools can help improve efficiencies, visibility, and communication throughout your supply chain.

Partner with a Reliable Nearshore Provider

Partnering with a reliable nearshore provider such as BlueGrace Logistics can help you navigate the cultural, language, and legal differences of doing business in Mexico. A good provider can help you manage your supply chain logistics, reduce transportation costs, and ensure compliance with regulations.

 

What the Future Holds for the Supply Chain

As companies try to avoid another supply chain crisis, nearshoring is quickly becoming the preferred practice over offshoring. The efficiency nearshoring promises is also one advantage that’s making more and more companies commit to the shift. For businesses in the U.S., nearshoring to Mexico will be the next trend. Before you jump on this new opportunity, be sure to consult with experts so you’ll make a more informed decision for your situation.

 

Next Steps: Chat with BlueGrace

As you begin your plans to shift to nearshoring in Mexico, you’ll need the right systems, experts, and tools to succeed. Let BlueGrace Logistics help with our data-driven technology and tailored solutions for your logistics needs. Contact us for a complimentary nearshoring freight analysis.