What is nearshoring, and why is it capturing the attention of nearly every manufacturing executive in the U.S.?
With global supply chains facing disruptions, the appeal of nearshoring is stronger than ever.
In fact, about 92% of U.S. manufacturing leaders are actively considering nearshoring to enhance stability, cut transportation costs, and increase flexibility.
But what is nearshoring beyond the buzz?
We will break down what is nearshoring and the why’s and how’s of nearshoring, exploring its advantages and practical steps to make it work for your business.
What is Nearshoring?
Wondering what is nearshoring?
The term nearshoring refers to bringing business operations like manufacturing or warehousing to a nearby country. Outsourcing is often a big part of nearshoring strategies.
The terms nearshoring and reshoring are sometimes used interchangeably, but that’s not necessarily accurate. Nearshoring refers to partnering with suppliers and service providers in countries close by, whereas reshoring indicates that the company is bringing operations back to its region or country.
Nearshoring investments have been growing over the past several years, even before the pandemic, with big companies like Mattel investing huge amounts of resources into bringing their supply chain closer to home.
As more companies have brought their manufacturing back West, warehouses and other logistics waypoints are in high demand in areas like Mexico to account for those companies’ logistics needs.
Why Are Businesses Opting for Nearshoring Companies?
Companies the world over spent years and countless dollars taking operations global, moving manufacturing and other sourcing to less expensive countries.
What would make them change their minds?
Here are just some of the reasons businesses are looking to move closer to home.
1. Shorter Transit Times
On a global scale, transit times have risen by roughly 30%, with overall container journey durations increasing by about 20%.
One of the top reasons businesses are turning to nearshoring companies is to bring their products closer to home.
This shift means shorter transit times, offering greater flexibility in inventory and quicker product lead times.
With consumer expectations rising rapidly, companies are actively looking for ways to keep up—and shorter transit times play a major role in meeting those demands.
By partnering with nearshoring companies for manufacturing or warehousing, products can reach distribution points in the home country much faster.
Newl, backed by over three decades of experience, can help you reduce transit times and stay ahead.
We offer warehousing solutions tailored to nearshoring needs, ensuring efficient storage and streamlined logistics.
2. Shipping Cost Savings
When your products start closer to their destination, whether it’s a local warehouse or the end customer, shipping costs drop significantly.
With reduced miles, fuel, and driver time, companies save big on transport.
Nearshoring also cuts down on shipping complexity, often needing fewer transit methods to reach the final destination. Plus, by shifting operations to trade-friendly countries, businesses can dodge hefty tariffs.
With new Chinese trade tariffs in place, nearshoring is becoming an even smarter choice for companies previously based there.
3. Ease of Doing Business Closer to Home
When you’re working with suppliers or service providers on the other side of the world, the logistics of logistics can get a little hairy.
Opposite time zones, totally different cultures, and other factors can make doing business across the globe more difficult.
Nearshoring allows companies to work with companies that are geographically similar and therefore in closer (or even the same) time zones, and cultures and customs tend to be more similar when countries are close together.
These nearshoring benefits simply make doing business a little easier.
4. Added Supply Chain Resilience
Since nearshoring puts operations closer to home, it allows for more supply chain agility, improving resilience.
It’s a lot easier to bounce back from a setback when the lead time to fix it is shortened as is the case with nearshoring.
Many companies have homed in on resilience as a core value in their supply chains over the past decade, and with good reason.
Resilient supply chains help companies provide better, more consistent service to their customers, winning more business and boosting the bottom line.
5. Reduced Environmental Impact
Transportation accounts for nearly 30% of global carbon emissions.
As sustainability becomes essential, nearshoring Pacific operations is helping companies make a real impact.
With consumers and regulations increasingly demanding greener practices, nearshoring production in the Pacific region is a powerful move.
By shortening the supply chain, companies can significantly reduce the miles their products travel, leading to fewer emissions.
Reducing long-haul transportation not only slashes greenhouse gases but also aligns businesses with modern sustainability goals.
For many companies, nearshoring Pacific operations has become a logical step toward minimizing environmental impact and creating a greener logistics process.
Nearshoring vs Offshoring: What’s the Difference?
Nearshoring vs offshoring is a key decision for companies looking to optimize their supply chain.
Both involve relocating business operations, but they have distinct differences.
Nearshoring definition talks about moving operations closer to home, often in a neighboring country, while offshoring typically involves relocating to a faraway country, often overseas.
Nearshoring offers shorter transit times and easier collaboration due to closer proximity, which can lead to faster response times and greater supply chain flexibility.
In contrast, offshoring may offer lower labor costs but can involve longer lead times and more complex logistics.
Choosing between nearshoring and offshoring depends on your priorities. Nearshoring brings greater agility and speed, while offshoring focuses on cost savings.
Both have unique benefits, and the best choice depends on your business goals and market needs.
How Can Companies Begin Their Nearshoring Journey?
Starting the nearshoring journey can seem complex, but with the right steps, it becomes manageable and rewarding.
For companies asking, “What is nearshoring and how do we begin?” The process starts with research, planning, and partnering with the right logistics support to bring operations closer to home efficiently.
Here’s how to take those first steps toward successful nearshoring.
1. Educate Yourself on Nearshoring Options
Research potential nearshoring countries, including their regulations, trade agreements, and import costs.
Evaluate various locations to determine which region aligns best with your business needs and goals.
2. Consider a 3PL Service Provider
Hiring a 3PL (third-party logistics) provider is an efficient way to begin nearshoring without large capital investments.
3PL providers can manage logistics, allowing you to bring products closer to home without setting up local infrastructure.
They handle labor and logistics operations within the nearshore country, making it ideal for companies new to the area.
3. Find and Evaluate 3PL Partners
Identify 3PL providers with services and geographic reach that match your company’s requirements.
Look for local 3PL providers with global connections that can support your nearshoring logistics.
Conduct interviews, check references, and choose the provider that best fits your operational needs and budget.
Remember, the cheapest option may not always deliver the required quality.
Nearshoring Made Simple with Newl
Starting your nearshoring journey can bring serious advantages, like shorter lead times and closer control over your supply chain.
Nearshoring shifts your operations to a neighboring country, reducing the complexity of long-distance logistics. But making it work requires smart planning and the right logistics partner.
That’s where Newl comes in. With over 30 years of logistics expertise, Newl is set up to simplify nearshoring with powerful tools designed for efficiency:
What we Offer
1. Smart Warehousing
Newl places your inventory closer to where it’s needed, cutting lead times and helping you respond to demand faster.
With streamlined storage and quick access, we keep your products ready to go.
2. Seamless Logistics Flow
We connect warehousing and transportation, so your products move fast and efficiently from storage to delivery.
No delays, no extra steps—just smooth, reliable logistics that keep you ahead.
Considering nearshoring? Reach out to Newl. We’ll design a tailored logistics solution that brings your operations closer to home with simplicity and speed.
Final Thoughts
Nearshoring can be a powerful move for companies looking to bring operations closer to home, improve supply chain efficiency, and reduce transit times.
By positioning production or warehousing nearby, businesses can respond faster to market demands, enhance collaboration, and streamline logistics.
As you explore nearshoring options, focus on finding the right partners and locations that align with your needs.
Nearshoring is more than just a logistics strategy—it’s an opportunity to build a more flexible, resilient supply chain that keeps you connected to your core markets.
Frequently Asked Questions
1. What is an example of nearshoring?
A typical example of nearshoring would be a German company working with development teams in nearby countries like Spain or Poland.
Similarly, a U.S.-based business might choose to outsource certain operations to companies in South or Central America.
2. What are the objectives of nearshoring?
Nearshoring is a strategy where businesses move parts or all of their supply chain closer to their main market.
This proximity brings benefits such as cost savings, faster production cycles, and better alignment with the market.
By keeping operations nearby, companies can reduce logistics costs, improve response times, and tap into nearby markets more effectively.
3. What is an example of a nearshore company?
A great example of a company that nearshores is Microsoft, which has chosen to place some operations in neighboring countries like Mexico and Canada.
It allows Microsoft to maintain close connections to its North American market while benefiting from regional advantages in cost and logistics.