Subscribe to our free, weekly email newsletter!


Mexico may soon become more attractive as sourcing alternative

According to Anne Landstrom, principal adviser for the commercial group at engineering and construction consultant Moffatt & Nichol, escalating wages and total landed costs are causing logistics managers to look south.
By Patrick Burnson, Executive Editor
March 19, 2012

More evidence that shippers may be “near shoring” in the future surfaced at a maritime conference in Southern California earlier this month.

According to Anne Landstrom, principal adviser for the commercial group at engineering and construction consultant Moffatt & Nichol, escalating wages and total landed costs are causing logistics managers to look south.

“All of Latin America is becoming more attractive,” he said. “But we really feel that Mexico is going to be an area of increased manufacturing concentration.”

While the conference addressed Asia Pacific concerns, Landstrom’s presentation emphasized the advantages of doing business in Mexico.

‘”Quality fade’ has been experienced with other sourcing regions in the past,” she said, “but the scale of global dependence upon China’s exports has amplified the focus on these issues.”

Landstrom recited a series of “notable recalls” in recent years, including fish, toothpaste, toys, pharmaceuticals, and pet food to illustrate her point.

“Noise about near-sourcing has grown in conjunction with high-profile recalls,” she said.

She also pointed out that cost for manufacturers increasingly includes quality (i.e. impact of recalls on supply chain economics and brand value) intellectual property (theft), FX fluctuations and credit terms (length of supply chain).

“The near-sourcing trend is difficult to see in the data thus far, but there’s no smoke without fire,” she said.

A recent LM survey indicated that most logistics managers may not yet be considering alternative sourcing but Landstrom noted that Mexico’s Pacific Coast ports are posting steady growth in volume and container throughput.

“Manzanillo and Lazaro Cardenas are booming,” he said, noting that direct rail serive to the U.S. southeast and Midwest is only going to fuel this growth.

“Surface transportation links and highway systems in Mexico are also rapidly improving,” she said.

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Shippers and other ocean cargo carrier stakeholders should be cheering the announcement made today by The U.S. Coast Guard, as it formally notified the International Maritime Organization through a Declaration of Equivalency that the United States position on SOLAS is that there are multiple methods to submit the combined cargo and container weight (Verified Gross Mass or VGM).

The proposed $4.8 billion acquisition of TNT Express N.V. by FedEx took a major step closer to becoming official today, with the company and TNT announcing today that they have received unconditional approval of the offer from the Ministry of Commerce People’s Republic of China (MOCFCOM).

March shipments at 798,180 trailed February by 12 percent and were down 19 percent annually. For the entire first quarter, shipments were relatively flat annually, rising 0.27 percent to 2,587,988.

OCEMA says it has placed a priority on working with other stakeholders to find operational solutions that will help U.S. exporters, carriers, and marine terminals prepare for the implementation of the SOLAS Verified Gross Mass (VGM) rule.

The first quarter is typically the slowest period of freight demand for LTL carriers. With a few notable exceptions, that was reflected in first quarter earnings reports of the major publicly held LTL carriers.

Article Topics

News · Global · Global Trade · Trade · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2016 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA