Ongoing logistical challenges surrounding the Red Sea and Panama Canal has supply chain professionals considering alternate solutions—which include nearshoring. This concept has already existed for more than a decade but now it’s trending.

When COVID-19 shut down manufacturing operations in several countries, shippers who relied on sourcing from China found themselves dealing with shortages, congestion, and other disruptions. Even after the pandemic, the industry has continued to face unforeseen disruptions including the Panama Canal drought, the Red Sea attacks, and rerouting around the Cape of Good Hope at the southern tip of the African continent. Shippers are now—more than ever—looking for solutions and if nearshoring can help improve their supply chains by promoting a quicker turnaround, it may be worth the move.

What is Nearshoring?

Nearshoring is a business strategy where a company outsources its processes or services to a location relatively close to the end users within the same region or continent. This allows businesses to reap the benefits of reduced costs and cultural alignment. Geographical proximity allows for simplified collaboration and communication. Businesses are looking to shorten lead times and diversify their supply chains away from China, to minimize the effects of disruption due to ongoing tensions.

The Biden administration pushed to add more incentives for businesses to move supply chains closer to the US and away from China, in 2023. Some examples of these incentives come from updates to the United States-Mexico-Canada Agreement (USMCA) and include updated rules of origin for automobiles and automotive parts, expanded access into the Canadian market for US dairy, poultry, and egg products, and more. Our experts will ensure you’re taking advantage of USMCA’s benefits, determine if your goods qualify, and assist with all your import or export needs.

Many shippers are turning to Mexico, given their location and trade relationships with the United States. In recent years, the industry has seen Mexico grow as a favorable location for businesses to transition their supply chains. For example, Mexico surpassed Canada and China as the largest US trading partner in 2023, increasing by 2.5 percent year over year to $798 billion in exports, other fuels, and imports of passenger vehicles.

It’s clear that shippers are looking for better options and nearshoring is gaining traction. Mohawk Global’s all-in-one cross border service offers a seamless experience from trucking to clearance and last mile delivery. Reach out to Mohawk Global to find the best solution for your business needs.

By Clarissa Chiclana

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