Need Help
close button

How can we help?

Select One:

The Not-So-Sudden Rise of Nearshoring

16 Aug 2023
Category: Blog
Author: David Vidri
Shape

Onshoring, offshoring, and nearshoring describe where businesses house their manufacturing or operations. If these terms are new to you, check out the definitions on the image below.

Hover to reveal term definition.

Offshoring

When a business runs
operations or manufacturing
far from its home country.

Onshoring

When a business runs
operations or manufacturing
in its home country.

Nearshoring

When a business runs
operations or manufacturing
near its home country.

Why All The Nearshoring Buzz?

Nearshoring in Mexico has dominated the headlines recently and for good reason — with global tensions and economic uncertainty running high, many U.S. businesses are seeking opportunities to avoid potential supply chain disruptions that could impact their operations and bottom line.

So far, nearshoring in Mexico appears to be a winning strategy, and the early implications of its growing popularity are already coming into focus.

Earlier this year, The New York Times reported that U.S. imports of Mexican goods have increased by over one-fourth since 2019. Mexico also exported $382 billion worth of goods to the U.S. during the first ten months of 2022 — a year-over-year increase of more than 20 percent.

U.S. and international investors are also spending more in Mexico than ever, with the country’s assembly plant sector anticipating a capital injection of up to $18 billion in 2023 compared to $11 billion in 2022.

All the buzz and business potential around nearshoring begs the question: Did the boom really just begin, or has it been brewing for some time?

How We Got Here

Answering that question starts with understanding the history of offshoring. This practice was popularized in the late 1970s when U.S. businesses began outsourcing production to India and China to cut costs and improve margins.

For decades, these countries offered an abundance of affordable labor and solid port infrastructure that helped keep shipping costs low enough to make producing goods and moving them stateside quite lucrative for U.S. businesses.

The Rise The Nearshoring

However, conditions in China and India today are not as advantageous as they once were. And in the wake of the 2018 trade disputes with China, the COVID-19 pandemic, and several other significant supply chain disruptions in recent years, U.S. companies have been turning to nearshoring to shorten the distance between a product’s production origin and final distribution destination.

As investments into production facilities and cross-shipping infrastructure grow, nearshoring in Mexico offers shippers several advantages in addition to mitigating disruption-related risks:

  • Lower freight and insurance costs: With limited modes and rising shipping costs, transporting goods to the U.S. from Mexico is far more cost-efficient compared to Asia.
  • Shorter lead time and more flexibility: Shorter lead times mean goods reach the end user significantly faster, which is critical in today’s customer-first, on-demand market. At best, transit times from China to the U.S. range from 20 days to six weeks, whereas running a load from Monterrey, Mexico, to Detroit, Michigan, takes just four days or less.
  • Lower labor costs: Preliminary data from consulting firm ECA International showed that the wage gap between the U.S. and China continued to close in 2022 and will likely contract further in 2023. Meanwhile, last year’s average monthly manufacturing wage in Mexico was $480 (USD) compared to $840 (USD) in China.
  • Policy incentives: The USMCA, which incentivizes North American manufacturing, especially in the automotive sector, and the Biden Administration’s executive order calling for increased domestic production and closer cooperation with our allies have both legislatively reinforced the importance of North American trade.
  • Crisis response: Managing production is much easier when plants operate within the same time zone and are only a short flight away. So whether it’s a minor issue at the factory or a significant supply chain disruption, the proximity nearshoring offers is priceless.

What’s Next For Nearshoring?

It’s hard to predict how big the nearshoring boom will get or if Mexico will become a manufacturing superpower on par with China and India. But given the growing list of benefits for U.S. businesses and businesses that want to serve the U.S. market, it seems certain that this is only the beginning of the nearshoring movement.

Our cross-border experts will be tracking the nearshoring movement and its implications for shippers and carriers, so subscribe to the Arrive Monthly Market Update and follow us on LinkedIn to stay up to speed on this and other critical freight market news.


Tim Denoyer,
VP and Senior Analyst at ACT Research

As VP and Senior Analyst at ACT Research, Tim analyzes commercial vehicle demand and alternative powertrain development (i.e. electrification), and authors the ACT Freight Forecast, U.S. Rate and Volume Outlook. He previously spent fifteen years in equity research focused primarily on the transportation, machinery, and automotive industries, and co-founded leading equity research firm Wolfe Research.

Contact Us

"*" indicates required fields

Subscribe to receive freight market updates​​

"*" indicates required fields


Quick Apply

"*" indicates required fields

Max. file size: 50 MB.

Arrive Carrier Requirements

Please have the following info ready to complete registration

  • MC, MX, DOT, or state reg #
  • Tax ID & W9 info
  • Cert of Insurance: $100k cargo, $1M Auto, & $1M commercial general liability coverage
  • Active Common or Contract Authority (365+ days)
  • Safety Rating of at least Satisfactory (or None)

Use of Cookies

We use cookies to enhance your browsing experience, serve personalized ads or content, and analyze site traffic. By continuing to use this website, you acknowledge and consent to our use of cookies as detailed in our privacy policy.

Fraud Prevention

Freight fraud continues to impact our industry. We encourage shippers and carriers to reach out to Arrive immediately if there is ever a shipment in question that may be subject to fraud. Arrive Logistics registered email domain is @arrivelogistics.com. Our 24/7 phone number is 888-861-0650 and our leadership team can also be reached at feedback@arrivelogistics.com

Get Access to the Shipper Portal

Current Customers

Already shipping with Arrive?

Connect with your representative to get access to your ARRIVEnow Shipper Portal. Can’t connect with your rep? Use this form to reach out.

New Customers

Not shipping with Arrive yet?

If you’re not an Arrive customer, please join our network to access the portal.

Carrier Scorecard Feedback

Scott Sandager,
Chief Administrative Officer 

Scott Sandager is the Chief Administrative Officer at Arrive Logistics. He joined Arrive in 2018, bringing over 14 years of logistics and brokerage experience, with expertise in project and change management, organizational design, talent development and customer satisfaction. Scott previously held many diverse roles of increasing responsibility with AFN, a Chicago-based freight brokerage.

Barry Conlon,
CEO & Founder at Overhaul

Barry Conlon is the CEO and founder of Overhaul, the global leader in active supply chain risk management and intelligence. With a remarkable career spanning over 30 years in supply chain security, he is widely regarded as a trailblazer in modern-day supply chain security standards and best practices.

Matt Pyatt, Chief Executive Officer

Matt Pyatt is the Chief Executive Officer of Arrive Logistics. He co-founded Arrive with President Eric Dunigan in 2014 after building his career at Command Transportation. As CEO, he is responsible for overseeing the company’s financial health, strategic vision and culture, as well as building a scalable leadership team to support Arrive’s growth.

Eric Dunigan,
President & Co-Founder

Eric Dunigan is the President of Arrive Logistics. He began his career at Command Transportation before co-founding Arrive with Matt Pyatt in 2014. As president, he is responsible for driving revenue and growth, as well as leading the Strategic Partnerships team — a veteran group of supply chain experts who work with Arrive’s customers to reimagine their shipping strategy.

Arrive Logistics VP of Market Intelligence David Spencer Headshot

David Spencer,
VP of Market Intelligence

David Spencer is the Vice President of Market Intelligence at Arrive Logistics. David joined Arrive in 2017 after spending six years at AFN focused on business intelligence. His department provides critical market data and expert analysis to internal teams and publishes monthly market updates for shippers and carriers under the Arrive Insights banner.

Andrew Clarke, Board Chair,
Arrive Logistics and Global Critical Logistics

Andrew Clarke is Board Chairman for Global Critical and DCLI, Inc., and a board member for Arrive Logistics and Element Fleet Management Corp. His 20 years of global transportation and logistics experience include time as CFO of C.H. Robinson, CEO of Panther Expedited Services, Inc. and SVP and CFO roles at Forward Air Corporation.

Dean Croke,
Principal Analyst
at DAT Freight and Analytics

Dean Croke is a Market Analyst at DAT Solutions, where he focuses on freight market intelligence and data analytics. His 35 years of experience with data analytics, transportation, supply chain management, mining and insurance risk management include time as co-founder of FleetRisk Advisors and in a number of other high-level roles with FreightWaves, Spireon, Lancer Insurance, Omnitracs Analytics (formerly Qualcomm) and more.

Asanka Jayasuriya,
CTO and Partner at 8VC

Asanka Jayasuriya is the CTO at 8VC. He is an accomplished engineering and product leader with 20+ years of experience in the cloud. He has a strong background in enterprise SaaS, PLG products, infrastructure, and security. Notably, he served as CTO and SVP of Engineering at SailPoint, leading their successful transition to the cloud and successful exit event. He also held senior leadership roles at InVision, Atlassian, and Amazon, driving growth, operational excellence, and innovation. At 8VC, Asanka works with the entrepreneurs and leaders in our portfolio as a virtual CTO supporting their growth.

Chad Eichelberger,
President at Reliance Partners

Chad Eichelberger is the President of Reliance Partners. Since 2015, he’s leveraged his extensive experience in risk management, compliance, best practices and contracts to lead the company’s logistics and truck insurance strategy and operations. Chad was previously the President of Access America Transport, where he led the company from $8M to over $600M in revenue.

Download this Report

"*" indicates required fields

Add me to the monthly distribution