The Perfect Storm, for a much-needed transition to Nearshoring and Specifically Mexican Manufacturing.
Over the past few years, the perfect storm has been brewing. Making diversifying away from the US and North America’s dependency on Chinese Manufacturers more attractive, if not completely necessary. The ongoing trade war between the USA and China. Causing, in some cases as much as 25% tariffs on Chinese-made products. Rising Chinese wages and soaring energy costs have also lessened the appeal of manufacturing in China.
Throw 2-3 years of an unprecedented global pandemic on top of these issues. Including all the supply chain and logistical issues caused by covid 19. Thus bringing you a perfect storm; Incentivizing companies to insource or Nearshore, more of their overall manufacturing. Not to mention moderate wage growth and lower energy prices, making Mexican Manufacturing and even US manufacturing more attractive.
Key Statistics to consider for Near Shoring to Mexico
- 71% of US businesses are planning to move products from China to nearshore, and most of them are looking south of the border
- The number one obstacle businesses have found is simply finding the MX factories
- In 2021, US importers paid $1.6B in China trade war tariffs. These 25% tariffs are expected to increase if China doesn’t meet US demands.
- Average end-to-end delivery times from China to the US are ~60 days, while average delivery times from Mexico to the US are 5 – 10 days.
- 40′ Container cost from China to the US is currently ~$18K. From Mexico, it’s less than $5K.
- Labor costs in MX are ~15% lower than in China.
What is nearshoring
In its simplest form, Nearshoring is simply looking for manufacturing options closer to your end consumers. Whether that be taking back over your manufacturing domestically, or sourcing good manufacturing partners closer to your company headquarters and end consumers.
In this example, many US and Canadian companies are looking to Mexican Manufacturers. Many of whom have well-developed manufacturing facilities and a much lower labor cost. Not to mention are drastically faster and cheaper logistically, to ship from to North American customers and companies.
Although Mexico has well set up, established factories and economical labor costs, the challenge has been sourcing them. In China there are online services and databases of factories like Alibaba. However, in Mexico, everything is a bit more analog, and relationship-based until now.
How to source Good Vetted Mexican Manufacturers: Zip Fox
We recently teamed up with www.Zipfox.com launching an online directory and Alibaba-style Nearshoring guide for Mexico Manufacturing facilities. Zipfox is literally empowering companies looking to Nearshore with Mexican Factories to:
- Search For Products and Manufacturers of those products or similar
- Request Quotes and Compare Options
- Place Orders and Start Production
- Receive Status Updates during production
- Get Shipping Rates from Mexico to the USA or Canada and ship the order
- Approve the order and release funds
- All through 1 convenient online platform
Benefits of Nearshoring with Mexican Manufacturers
The wide-ranging benefits of Nearshoring with Mexican Manufacturers with Zipfox include.
- Diversification away from Asia/China dependence
- Avoiding significant import duties in excess of 25% because of China /USA ongoing trade wars
- Eliminating supply chain disruptions, long ocean cargo shipping delays, and massive price per container shipping cost spikes during Covid 19 pandemic.
- Replacing 3-6 week ocean transit times for goods coming from Asia, for 2-5 day transit times into the USA and Canada via Over The Road Trucking companies from Mexico
- Easy, online sourcing of Mexico’s best manufacturing facilities, via Zip Fox easy online sourcing platform.
- Supporting our close neighbors to the south and their top-notch manufacturing facilities and well-trained, hard-working workforce.
- Much closer to visit and inspect the process if needed.
- The food and surf is much better…..But that is just my opinion! 😊
If your firm or someone you know is looking to diversify their manufacturing and supply chain. You owe it to yourself to contact Easy Logistics and have a meeting with our partner Zipfox. We make the process easy with our industry-leading, online Nearshoring and Mexican Manufacturing resources. Additionally, we have offices in Monterey Mexico, handling all the day to day outbound logistics processes from Mexico to the USA and Canada. Guaranteeing that your finished goods are in your hands in a fraction of the time with fewer headaches!