Inbound Logistics | January 2025

FOCUS ON: NEARSHORING

REALITY CHECK To nearshore or not to nearshore is a question a lot of companies are asking these days. SAP recently released a best practice guide to help companies that are evaluating this question. The decision, SAP notes, should factor in switching costs, available resources, data-sharing with partners, and more. Here are five critical realities businesses should consider when adopting nearshoring or reshoring strategies: 1 Cost savings aren’t guaranteed. While nearshoring can reduce transportation costs, factors like higher labor rates and infrastructure investment may oset savings. Companies must weigh upfront expenses against long-term operational benefits to determine true cost-eectiveness. 2 Supply chain complexity doesn’t disappear. Moving production closer doesn’t eliminate supply chain challenges like managing diverse suppliers or ensuring raw material availability. Companies must build robust local supply networks to avoid new disruptions. 3 Reshoring requires significant investment. Shifting operations back to domestic markets often demands capital for facilities, technology, and workforce training. Businesses need a clear plan for addressing these financial and operational hurdles. 4 Skilled labor shortages may persist. Finding a qualified workforce can remain an obstacle, even with reshoring. Investing in automation and employee training programs is essential to mitigate labor shortages. 5 Global risks still influence local decisions. Despite nearshoring, businesses remain aected by global market fluctuations, geopolitical tensions, and trade regulations. Maintaining a diversified strategy can help balance these risks.

MEXICO BEEFS UP INDUSTRIAL DEVELOPMENT Mexico is doubling down on its moves to position itself as a nearshoring hub with an ambitious plan led by the Mexican Association of Private Industrial Parks (AMPIP). Over the next six years, AMPIP aims to develop 128 new industrial parks across the country, significantly increasing Mexico’s current total of 435 parks . These parks will be strategically located in key regions such as the Bajío, northern Mexico, and along the Pacific corridor, areas already known for their robust manufacturing and logistics sectors ( see map above ). This initiative seeks to attract foreign investment, strengthen supply chain resilience, and meet the growing demand for manufacturing spaces driven by companies relocating operations closer to North America, according to AMPIP. The new industrial parks will enhance Mexico’s infrastructure and aim to solidify the country’s position as a critical link in global supply chains. With companies looking to avoid disruptions and reduce costs, these parks are poised to become a cornerstone of Mexico’s nearshoring strategy, oering state-of-the-art facilities and proximity to the U.S. market. AMPIP’s vision aligns with Mexico’s broader economic goals, making the country a key player in the shifting dynamics of global trade and manufacturing.

As nearshoring gains momentum in reshaping supply chains and revitalizing domestic manufacturing, Hyster-Yale Materials Handling is stepping up to meet the moment. The company, HYSTERYALE COMMITS TO BUILDING AMERICAN

maker of Hyster and Yale brand industrial trucks, has announced a strategic commitment to align with the Build America, Buy America (BABA) Act requirements. This initiative aims to bolster American manufacturing by meeting domestic production standards for electric container handling and forklift equipment used in federally funded infrastructure projects. The company plans to expand its U.S. manufacturing operations with a focus on high-capacity electric models that cater to BABA-compliant infrastructure needs. Eorts include identifying optimal production locations, fostering domestic supplier partnerships, and enhancing the development of electric power options for its equipment lineup. In addition, the company is strengthening its partnerships with domestic suppliers and identifying optimal U.S. production sites. Tony Salgado, chief operating o cer, Hyster-Yale, emphasizes the company’s commitment to delivering innovative and durable material handling solutions: “Beyond compliance, we are evolving to better support our customers with industry-leading design, durability, and performance standards synonymous with our brands worldwide.”

26 Inbound Logistics • January 2025