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Outsourcing or Nearshoring?

A decade ago, there was a race to move factories to the cheap labor in the Far East. In more recent years, we see a growing number of cases where globalization simply did not work. As the cost of moving a container from Shanghai to Oakland continues to escalate, the advantage of lower cost Chinese labor can be erased. With petroleum prices at record levels and a growing shortage of truck drivers, it seems clear that shipping costs will increase, and that the rate of increase may even accelerate. In addition to rising costs of ocean shipping, the cost of moving a container from port event tree to an inland destination may increase even more because of driver shortages and the cost of fuel.

Plant locations today may be driven by the need to produce the product closer to its point of consumption. What does this mean for warehouse operators? Don't assume that your customers will stay the same. Some plants will close, and new ones will be open. Distribution centers which filled the need when production was in China will become obsolete as supply chain patterns change. Even if your warehouses are full today, some of the existing customers will disappear. The best warehouse operators will keep looking for new business to replace those who have moved from outsourcing to near shoring.

 

K. B. Ackerman Company
2041 Riverside Drive
Suite 204
Columbus, Ohio 43221
Phone 614-488-3165
Fax 614-488-9243

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