Consider that the reshoring of jobs to the United States was up by 52% in 2022, and in January 2023 alone, a total of $2.5 billion in Mexican nearshoring investments was announced. A lot of supply chains are getting shorter.
And no wonder. Disruptions of recent years have left supply chains scrambling to reduce risk. One critical way to reduce potential problems is by shortening supply chains through nearshoring or reshoring initiatives. Of course, anytime significant supply chain changes are made, it is prudent to review your pallet strategy, but we’ll return to that point later in the article.
Simply put, nearshoring is the practice of transferring business operations or processes to companies in nearby countries rather than to more distant locations. Bringing operations closer to home shortens delivery times and minimizes the threat of supply interruption.
Reshoring, also known as onshoring, is a business strategy that involves bringing back business operations or processes previously moved to foreign countries back to the business’s home country. Reshoring, like nearshoring, is a strategy to reduce supply chain risk. It can also be motivated by a desire to have better control over quality and the production process, reduce the risk of intellectual property theft, and the positive attributes of creating jobs in the home country.
Consider some of the recent announcements. According to the Reshoring Initiative, the reshoring of jobs was up by 53% in 2022 compared to 2021, a previous record year. An estimated 364,000 jobs were reshored, bringing the total to 1.6 million since 2010. EV batteries led the way, making electronics equipment the top industry.
As for nearshoring, Tesla CEO recently announced that the company will build a manufacturing plant in northern Mexico, reportedly a $5 billion gigafactory. It will be around a seven-hour drive to Tesla’s headquarters in Austin, Texas. Meanwhile, Chinese automaker Jetour reported that it will invest $3 billion to establish a new production facility in Mexico, to be completed by the end of 2024. It intends to produce electric and gasoline-powered cars for the North American market. Robert Bosch, a Germany-based engineering and technology company, recently reported it will spend over $258 million to expand its plant in Aguascalientes, Mexico. It will provide new automotive brake technologies for several automakers.
Reshoring and nearshoring also have implications for pallet selection and system design. Global supply chains can often dictate against pallets because of cube displacement and weight. Worldwide shippers may feel that the added freight cost outweighs the benefits of palletization at the source. Additionally, where pallets are used, pallet sourcing and quality can be challenging in some parts of the world. By bringing production back to the U.S. or closer to home, it is not only more beneficial to palletize but more reliable sources of pallets can be assured.
Not only that, but shorter transportation lanes increase the opportunity for reusable pallet and packaging systems that deliver even greater benefits. Nearshoring, reshoring, and other supply chain changes can present opportunities to revisit your pallet system, allowing you to save money, improve supply chain efficiency and enhance your corporate sustainability metrics. With our national footprint, PalletOne can be your nationwide local supplier, keeping your costs down and helping you meet sustainability goals. Contact our team today to find out how we can help you.
