Industries that Benefit from Nearshoring
Melton Logistics – 12/27/2024
Nearshoring is the practice of moving production from overseas countries to neighboring countries in order to shorten the distance your goods need to travel. Since 2020, the use of nearshoring has skyrocketed due to evolving global challenges, including increased shipping costs and supply chain disruptions. Moving your manufacturing operations closer to home can have many benefits like increased flexibility and faster delivery time, but which industries are benefitting the most? Here’s a closer look at which industries are making the most of nearshoring.
Automotive Industry
The automotive industry sees a lot of advantages to nearshoring, primarily in the proximity to assembly plants that can make production cheaper and more efficient. Since the establishment of the United States-Mexico-Canada Agreement (USMCA) passed in 2020, investments in automotive production have increased greatly in the U.S. and Mexico. As of 2023, Mexico was the world’s 7th largest passenger vehicle manufacturer, with 88% of vehicles produced to be exported. As the practice of nearshoring continues to grow and more vehicles are produced in Mexico, construction and infrastructure to support the manufacturing plants is struggling to catch up.
Technology and Electronics
With new developments being made in this industry every year, electronics tend to become obsolete faster than other products do. This makes nearshoring very beneficial to tech manufacturers, as it increases flexibility and product delivery times that can stay on top of new technological developments. The CHIPS act passed in 2022 showcases the United States’ pivot to domestic manufacturing of electronics, appropriating over 50 billion dollars in funding for the research and development of semiconductors.
Construction and Building Materials
Oftentimes, construction materials can be heavy and/or oversized, making shipping much more expensive and requiring specialized equipment. By moving the production of these goods using nearshoring, companies don’t have to arrange and pay for overseas shipping and can get materials much faster, making construction projects more efficient.
Pharmaceuticals
The pharmaceutical industry is vital for the lives of millions of people across North America, making the smooth transportation of medicines extremely important. Mexico and Canada have both been rapidly developing in the pharmaceutical manufacturing sector; Mexico’s pharmaceutical market is projected to reach $30 billion by 2025, with the United States being the #1 destination for these exports, and Canada houses the 8th largest pharmaceutical industry in the world. With vital drugs being produced so close to home, consumers benefit from a more resilient supply chain and can overcome shortages faster.
These are just some primary examples of the many industries that have seen benefits from nearshoring, and the practice is only growing more common. If you’re considering nearshoring as an option for your business or are already shipping cross-border, Melton Logistics is here to help. Learn more about the international shipping services we offer here.