Nearshoring Presents New Challenges for Transportation Industry

Offshoring. Twenty to thirty years ago, it was an idea whose time had come. To take advantage of numerous potential benefits, many companies decided to move manufacturing operations offshore. It made a lot of sense. Countries like China, India, the Philippines and others could offer significant savings driven in large part by lower labor and production costs.

For many manufacturers, offshoring became a success story. Lower costs more than made up for inconveniences such as time differences, language barriers, and long distance supply chains that required longer lead times and extensive international travel.

Fast Forward to Today

Offshoring was a strategy that did not age well. Wages in China and other popular offshoring locations have been rising rapidly. Tempestuous global oil markets and currency fluctuations have translated into higher production costs. Political instability and environmental disasters from typhoons to tsunamis often had a major impact on supply chain operations. Security of intellectual property became a significant concern. Time differentials became more difficult to overcome.

Once again, a variation of offshoring has become a viable alternative for a growing number of manufacturers.

Hola, Mexico

In essense, nearshoring is offshoring closer to home. Many manufacturers are now looking to move operations to countries that share a common border with the United States. Products originating in Mexico, for example, can reach the U.S. in a week or less versus three-to-four weeks from Asia. 

From being primarily an assembler of products, Mexico has grown into a more sophisticated manufacturer offering many of the benefits of offshoring much closer to home. Large, skilled labor pools offer favorable wage scales. Shorter supply lines reduce the cost of carrying too much inventory. Being located in the same time zones makes communication and oversight easier and less expensive. Favorable free trade policies like North American Free Trade Agreement (NAFTA) also reduce costs significantly.

Nearshoring Challenges

Shipping goods across the border has its own set of issues. Manufacturers want to assure timely delivery across borders and are concerned about issues including customs regulations, load integrity and costly idle time. These same concerns are shared by the border customs agencies who want to facilitate the movement of commerce while also ensuring it is done in a safe, secure manner. 

Smart Transportation

What's the answer? Visibility. Greater visiblity of drivers, vehicles and cargo from the manufacturer and shipper and ultimately to the border security agents. Technology can play an important role in improving the border crossing process and minimizing long wait times, reducing fuel consumption and providing an additional level of assurance that the trailer loads are safe and secure. Technology solutions include: 

  • Wireless local area networks (WLANs), video analytics, advanced data capture and location sensors during the trailer loading process, help ensure accuracy with the manifest and safe condition on the trailer. 
  •  Mobile computers, combined with third-party telematics, use GPS to track vehicles enroute including speed and alerts for any unscheduled stops. 
  •  Onboard sensors monitor and manage interior trailer conditions that can affect load quality, like temperature, humidity and load shifting.

With the right technology, manufacturers can gain maximum benefit from nearshoring in a truckload of ways.

1 comment on “Nearshoring Presents New Challenges for Transportation Industry

  1. DavidHamilton
    September 5, 2018

    isn't this nearshoring thing what Trump is trying to do in America? Bring it all back inland and into the country so that they can control costs and access better. I personally don't see why this is something that needs to be done though, but unfortunately we live in an imperfect world where people just can't work together for mutual benefit because we're all selfish.

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