Inbound Logistics | May 2024

PARTNERS LEAD THE WAY IN MEXICO

Share of Announcements of New Nearshoring Investments in Mexico by Market, 2024-2026

Shippers also are less likely to confront lengthy port delays and container ship logjams, and the risk of losing cargo due to geopolitical concerns is lower. “Everything is thousands of miles closer to where it needs to end up,” he adds. Components and end products can be manufactured and shipped cross-border via existing road or highway networks, Colvin says. It’s also much easier to move personnel when needed for site visits, training, and the like, he adds. There’s also “an under-appreciated element of cultural and operational familiarity from six-plus decades of global business practices being adopted by the Mexican industrial manufacturing sector,” Rodríguez says. This, along with similar time zones and work hours, facilitates communication and collaboration between U.S. companies and their Mexican counterparts, he adds.

Monterrey

Source: CBRE Research with public company data and internal CBRE information, 2024

vice president of sales and solutions for Penske Logistics. This helps in addressing the labor challenges in the United States, he adds. According to CBRE research, companies that relocate to Mexico from the United States can save between

70 and 80% of payroll costs, including employee benets. Nearshoring’s potential benets ultimately enable companies to provide their customers with more predictable, quality service, says Chip Barth, managing director of the global supply chain practice with TBM Consulting. Along with boosting customer satisfaction, this helps in better managing cash ow. These benets of nearshoring also are driving demand for industrial real estate, which increased 5% between late 2022 and 2023, CBRE research found. Most of the demand was driven by expansion in the automotive, electronics, and household appliances sectors, CBRE also found. Overcoming Nearshoring Challenges While the benets of nearshoring are real, so are several challenges. The infrastructure is generally not as developed as it is in China, Barth says. For example, a company might be able to send a part with a business card to a Chinese manufacturer and receive a call back within one week from a vendor saying they can make the product for, say, $5 per unit. Finding suppliers with the appropriate technical capabilities and human

Gaining Access to a Talented Labor Pool

“Many manufacturers have found a great pool of labor and talent in the Mexican workforce,” says Andy Moses, senior

Providing warehousing, co-packing, nearshoring, and cross-border transportation solutions, GP Logistics optimizes cross-border operations and supply chains through its warehouses situated along the U.S.-Mexico border.

72 Inbound Logistics • May 2024