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

The PMI, the ISM’s index to measure growth fell 0.8 percent to 52.7 (a PMI of 50 or greater represents growth). PMI growth has been at 50 or higher for 31 straight months (with the overall economy growing for 74 months), and the current PMI is 1.7 percent below the 12-month average of 54.4.

The current status of FedEx’ planned acquisition of Netherlands-based TNT-NV and a provider of mail and courier services and the fourth largest global parcel operator for $4.8 billion, which was initially announced in April, remains in flux, with continued actions being taken by the European Commission.

Panjiva said that the 1 percent sequential growth was in line with typically flat growth from May to June, as higher monthly growth typically takes hold in July and August in advance of the holiday season.

Hackett officials described this new offering as a short-term index that offers up “the sentiment for trade at a glance,” akin to other key economic metrics like the PMI and Consumer and Carrier confidence indices, while providing access to specifically see where a group of economic indicators are in relation to trade for the current month, too.

While many industry analysts contend that distribution centers near U.S. East Coast ports will see a surge of new business after the Panama Canal expansion, real estate experts say this phenomena is already underway.

Article Topics

News · Global · Global Trade · Trade · All topics

Comments

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


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA