Definition of Nearshoring
Nearshoring is where a business moves its operations to a nearby country from one of greater distance.
Nearshoring is a term that came out of the practice of offshoring, which is when companies move their product manufactured to a lower landed cost region than that of their native country.
The practice of nearshoring has become a hot topic in today's politically charged world trade environment where countries are increasing tariffs on other countries, thus increasing the total landed cost, to encourage manufacturing out of that country back into the home country or another country for its national benefit.
Top 10 Benefits of Nearshoring
- Allows for more frequent visits to the manufacturing site.
- Improved control of intellectual property.
- Closer proximity can equate to a reduction of cultural discrepancies and language barriers.
- Quite often nearshoring places the facility into similar time zones, which improves communication.
- Quicker transit from manufacturing site to the ultimate customer.
- Greater speed to market.
- Improved control of supply chain.
- Lowers customs and duty charges.
- Provides more oversight and control of the process for a higher quality product.
- Reduces digital disruption
An important note to consider when adapting nearshoring is to ensure that providers have the high-quality technological requirements to make communication the most efficient.
Supply chains are quickly adapting nearshoring in some industries to meet customers' needs and keeping sustainable practices.
McKinsey & Company reports manufacturers (specifically in the apparel industry) are investing in nearshoring and automation to increase profitability and compete with online start-ups.
Outsourcing has been a staple for supply chains, but nearshoring is changing the game in terms of capitalizing in producing out of house.
For more on how to improve your supply chain:
- Logistics and Supply Chain Comprehensive Guide
- Cost of Intermodal Transportation Services (Rates, Fees & Variables)
- Supply Chain Cost Saving Guide
- The Complete Guide to Intermodal Transportation
- Video: Overcoming Logistics and Supply Chain Challenges
If you're ready to take the next step, at InTek Freight & Logistics, we can help. Just tell us what you need and we'll discuss how our expertise can help with the unique shipping challenges your business faces. Rather do a bit more research first? View our Freight Guides for comprehensive articles and eBooks on all things freight and logistics.
InTek Freight & Logistics
