If you’re associated with the logistics industry in any way, it’s highly likely that you have heard the term “Nearshoring.” Do you know what it means? Nearshoring is a strategy in which businesses and companies outsource their operations, such as manufacturing or supply chain management, to their nearest country. This strategy is gaining popularity among all industries, especially trucking and logistics. One popular example of nearshoring is US-Mexico nearshoring. According to the statistics, more and more US-based logistics companies are partnering with suppliers, manufacturers, and supply chain managers in Mexico to optimize their operations and get a competitive advantage. 

What do statistics say?

As per research, Mexico has become one of the largest trading partners in the USA in the past few years. The trading volume between these two countries is persistently increasing with every passing year, offering a favorable environment for US-based logistics businesses to nearshore their operations to Mexico. As per the results of research conducted by Capterra, more than 70% of SMB logistics companies are interested in nearshoring to Mexico. One of the significant reasons why Mexico attracts nearshores is its consistently growing industrial space. 

If you’re associated with the logistics industry in any way, it’s highly likely that you have heard the term “Nearshoring.” Do you know what it means? Nearshoring is a strategy in which businesses and companies outsource their operations, such as manufacturing or supply chain management, to their nearest country. This strategy is gaining popularity among all industries, especially trucking and logistics. One popular example of nearshoring is US-Mexico nearshoring. According to the statistics, more and more US-based logistics companies are partnering with suppliers, manufacturers, and supply chain managers in Mexico to optimize their operations and get a competitive advantage. 

What do statistics say?

As per research, Mexico has become one of the largest trading partners in the USA in the past few years. The trading volume between these two countries is persistently increasing with every passing year, offering a favorable environment for US-based logistics businesses to nearshore their operations to Mexico. As per the results of research conducted by Capterra, more than 70% of SMB logistics companies are interested in nearshoring to Mexico. One of the significant reasons why Mexico attracts nearshores is its consistently growing industrial space. 

What are the benefits of Logistics US-Mexico Nearshoring

Logistics nearshoring is equally beneficial for companies in the USA and Mexico. Here, we have discussed the benefits of nearshoring for both countries separately. 

Benefits of US-Mexico Nearshoring for USA Companies 

Nearshoring to Mexico brings a myriad of benefits to US-based companies. 

• Cost Efficiency

Nearshoring offers cost efficiency in many ways for US logistics companies. For example, labor costs are much lower in Mexico than in the USA, making it possible for companies to save more on their operations. Furthermore, lower transportation costs, cheaper warehousing facilities, and cost-effective inventory management can act as significant contributors to overall operation cost reduction. 

According to a research, the labor cost in Mexico can be as low as 35% than USA. The shortage of employees, drivers, and other supporting staff is also lower in Mexico. 

• Geographical Proximity

As you know, the USA and Mexico share borders, which means both countries are located in close proximity, facilitating robust communication, business cooperation, and supply chain optimization. These two countries also share nearly identical time zones and cultural alikeness, paving the way for effective collaboration. 

• Skilled labor

By nearshoring to Mexico, US logistics companies get access to skilled labor with reliable expertise. This can help them ensure quality control in the supply chain. According to research, Mexico has a massive talent pool that is expanding consistently over time. 

• Strategic Advantages

As Mexico is located in close proximity to the USA, companies can take advantage of its strategic location to expand their operation globally. US-based businesses can have prime access to the global market via an economic gateway through Mexico. 

• Collaboration flexibility

Officials from logistics companies in the USA can travel any time to Mexico for in-person business meetings and collaboration, offering a productive working environment and a comprehensive understanding of operations for all stakeholders. It can also be helpful in faster decision-making to align a business’s objectives and goals with changing market situations. 

• Environmental Sustainability

Shifting business operations to the nearest country means shorter logistics route with fewer delivery trips. This can significantly lower carbon emission, helping to achieve environmental sustainability goals faster.

Benefits of US-Mexico Nearshoring for Mexico

US-Mexico nearshoring can offer Mexico a massive economic advantage. Nearshoring operations and supply chains by US-based companies lead to employment generation, foreign revenue, and economic growth for Mexico.

Challenges facing US-Mexico nearshoring

Where nearshoring offers a variety of benefits for both countries, it’s also facing some significant challenges, such as:

• Regulatory Requirements

Companies involved in nearshoring need to meet regulatory requirements on both sides of the border. These requirements can include Mexican Labor laws, US customs and trade laws, community regulations, etc. 

• Infrastructural challenges

As Mexico is a semi-developed country, some of its regions may not meet infrastructural requirements for nearshoring. For example, some regions don’t have enough supply of energy and logistics equipment, making it difficult for companies in such an environment.

Besides these, companies may have to address certain social and economic issues before starting nearshoring. 

Conclusion

The above discussion can lead us to the conclusion that US-Mexico nearshoring has massive economic potential and can significantly positively impact the economies of both countries. Hiring the services of international nearshoring consultants can mitigate the challenges impeding nearshoring.