Worldwide logistics companies have felt the effects of supply chain disruptions. In recent months, the global business community has watched events like the Red Sea crisis unfold. Disruptions in the supply chain can have devastating consequences for a business.
In its latest study, KPMG says the landscape of supply chains serving the US market is experiencing a transformation. It highlights that organizations are focusing on a local approach when it comes to their supply chains.
It also says “nearshoring” has become the most common term to describe this local approach.
KPMG surveyed 250 executives for the study. Respondents were from a wide range of industries, including logistics, agriculture, industrial, manufacturing, and healthcare.
What is nearshoring?
Nearshoring is when a company moves its production closer to its customers to cut costs and avoid logistical problems. Recently, many companies worldwide are considering this strategy to prevent supply chain issues.
Earlier this year, Locate2u reported that Mexico was emerging as a logistics hub. This was back from the Red Sea crisis gaining momentum.
SMART Logistics, an international freight forwarding company, shared a post at the time: “Mexico is currently one of the most promising economies in the Americas and has a logistics sector that is constantly evolving. Its geography offers a notable strategic advantage in the context of nearshoring.”
Base supply chains in the Americas
A staggering 69% of surveyed businesses are planning to base their supply chains in the Americas.
Mexico again put up its hand here with a robust manufacturing base, and favorable trade agreements, such as the USMCA.
What’s the bigger picture? Resilience, faster time to market, and better access to talent are key drivers behind supply chain relocation to the Americas.
Decrease reliance on US and Canada
Respondents point out they will reduce their reliance on the US and Canada over time. The report finds that businesses will lean to Mexico.
While Mexico is a major player in the strategic shoring movement, companies are also exploring opportunities in other parts of the Americas. Brazil, with its rich natural resources and access to key markets, is becoming an important hub for certain industries.
Sustainability a driving shift to America
KPMG’s study shows that sustainability is another critical factor driving the shift towards the Americas.
In a separate report the 2024 Sustainable Energy in America Factbook highlights that North America offers some of the lowest electricity costs globally, with a high reliance on clean energy.
The report highlights in 2023, renewables and natural gas together met 66% of US electricity demand, reducing emissions while supporting industrial productivity.
NOW READ: Amazon unveils fully managed end-to-end supply chain service
Photo Credit: Canva
About the author
Sharl is a qualified journalist. He has over 10 years’ experience in the media industry, including positions as an editor of a magazine and Business Editor of a daily newspaper. Sharl also has experience in logistics specifically operations, where he worked with global food aid organisations distributing food into Africa. Sharl enjoys writing business stories and human interest pieces.
