I had a call with an industry colleague a few days ago who is headed over to China to give a presentation on trade and sourcing issues to a group of Chinese nationals and government officials (as opposed to US multinationals or Chinese/US JVs operating in China). Part of the discussion centered on the overall export environment Chinese companies should expect going forward. I would have been remiss in this discussion had I not pointed out the trend towards near-shoring going on in some areas of manufacturing today. In other words, thanks to reasons of both cost and risk, companies are re-evaluating existing regional options such as Mexico as a source for a range of finished parts and components. While it's clear that China will be a loser in the near-shoring game, who will be the winners? A recent article I came across in the highly targeted publication category, Pallet Enterprise contains some broader takeaways and implications on the issue.
The column argues that in the near-shoring game, the "major winners will be logistics companies located along the U.S./Mexico trade lanes as well as rail and intermodal shippers that can help transport near sourced products". As part of the logistics equation, "look for increasing demand for transportation, customs brokerage, import/export services, and regional warehousing companies in the U.S./Mexico trade lane. Regional third party logistics services have been one of the brightest stars in the supply chain universe for a while and will continue their strategic importance if near sourcing continues." And if we need further evidence of this migration, consider how, "Earlier this year, Bryan Lusby, managing director of global forwarding for the Americas at C.H. Robinson told World Trade Magazine that he has seen 'a migration of both manufacturing and assembly of finished goods from Asian origins back to the Americas' ... [and that] this trend has occurred across all sectors although high cost, high duty goods are on the forefront of the movement."
But before everyone gets South of the border logistics fever and tries to cash in on this supply chain gold rush, we should remember that Mexico introduces a whole new set of complications relative to China -- and its place in the near-shoring or global sourcing pantheon still comes with a few caveats. Ask my wife, for example, about the special characteristics of the made-in-Colombia leather jacket she wears when visiting metals suppliers and client facilities in the border areas (last time she went down, she managed to dodge the decapitated heads lining the Mexican-side of the border-crossing a few days earlier). Hint: the jacket is not from Zara. Until Mexico succeeds in quelling the drug violence -- and getting the police on the straight and narrow vs. on the take -- that has shadowed much of the cross-border trade in recent months, I think we'd all do well to not get too excited about near-shoring, despite the pronunciations of trade pundits. That is, unless we can send our underlings or 3PLs to literally dodge the bullets.