Subscribe to our free, weekly email newsletter!

Risk mitigation in Mexico

By Patrick Burnson, Executive Editor
May 03, 2011

As noted in today’s news section, the expected advantages to be gained from near-shoring from Mexico are lower freight costs, improved speed-to-market times and lower inventory costs. Risk mitigation was also mentioned.

According to Russ Dillion, a vice president in the Latin American Manufacturing Practice at AlixPartners, these were the top three reasons cited on average.  Other reasons included “time-zone advantages” for easier management coordination, and improved “cultural alignment” with North American managers.

“In-transit inventory, in particular, was a high priority among those interviewed,” said Dillion, “Obviously, shipping products in from long distances eats up a lot of inventory expense, and that’s something companies would like to improve if possible.”

Here are a few of the survey highlights:
·      46 percent of companies have already engaged in near-shoring or have plans to within 5-plus years

·      For companies considering near-shoring, 63 percent of respondents cited Mexico as the No. 1 destination of choice for near-shoring manufacturing operations (beating out the U.S. by a wide margin at 19 percent)

·      Executives cited “lower freight costs” and “improved speed-to-market” as the top two most attractive advantages of engaging in near-shoring

·      73 percent of companies have already engaged in off-shoring of U.S. operations or have plans to within 5+ years

·      For companies considering off-shoring U.S. manufacturing operations, most (43 percent) cited Mexico as the No. 1 destination of choice for off-shoring (narrowly topping China (No. 2 at 30 percent) and other BRIC nations (India at 14 percent, Brazil at 3 percent and Eastern Europe at 5 percent)

For related articles click here.

About the Author

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

As was the case a month ago, the Global Port Tracker report from the National Retail Federation (NRF) and maritime consultancy Hackett Associates is calling for annual import cargo volume gains at United States ports, as retailers gear up for the holiday season.

More than nine months after saying it was not for sale, Long Beach Calif.-based non asset-based third-party logistics (3PL) services provider UTi Worldwide has apparently changed its tune, with the company saying it has entered into a definitive agreement to be acquired by Denmark-based global 3PL DSV for $1.35 billion and $7.10 per share.

September carloads—at 1,417,750—were down 4.9 percent—or 72,597 carloads— annually, and intermodal—at 1,365,980 trailers and containers—was up 1.2 percent—or 16,272 trailers and containers.

Slowing global trade and a bloated orderbook of large vessel capacity mean that container shipping is set for another three years of overcapacity and financial pain, according to the latest Container Forecaster report published by global shipping consultancy Drewry.

The NRF is calling for 2015 holiday sales to see a 3.7 percent annual gain to $630.5 billion, which comfortably outpaces the ten-year average of 2.5 percent.


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