Reality of production nearshoring questioned

Date Added: 15 November 2023

Reality of production nearshoring questioned

Over the last few years, there has been considerable focus on the concept of nearshoring, where production is brought closer to the consumers, and Davies Turner has been considering how this might impact on the global supply chains that we manage for our clients.

So, we were interested to read some analysis from maritime consultancy, Sea-Intelligence, that appears to question the significance of this trend.

Sea-Intelligence says that a side-effect of nearshoring would be a shortening of supply chains as some production will move closer to the end-consumer, but not so close as to fully eliminate the need for container shipments. It adds that this should show up as a reduction in the average container ship sailing distances.

However, according to container trade volume data from Sea-Intelligence's Container Trade Statistics, the average sailing distances of containers imported into North America and Europe has increased compared to a pre-pandemic baseline, hence giving no support to the notion of nearshoring.

Sea-Intelligence says of the data for imports into Europe, although a marginal decline can be seen early in the pandemic period, this has been reversed and it would be more correct to conclude that over the past year, there has been a gradual increase in the sailing distance for cargo coming into Europe. Furthermore, it finds that intra-Europe container volumes, as a share of total European container imports, have been gradually declining since the height of the pandemic.

Whilst Sea-Intelligence may have overlooked that fact that some of the intra-European movements resulting from any nearshoring to countries such as Turkey and Morocco will have moved to alternative modes such as road and rail, Davies Turner will continue to monitor the situation to ensure that we are offering the optimum shipping services to our clients.

If you have nearsourced any of your production or procurement activities closer to your end markets, please contact us to find out more about out efficient freight and logistics services, or visit the relevant pages of this website.