The Nearshoring Boom is Real, Suppliers Say

A recent report in the Sourcing Journal highlighted companies across the Americas embracing the nearshoring trend.

Brands are expanding their sourcing portfolios “at a more rapid rate than they have in recent years,” Sourcing Journal recently reported, driven by “quality, speed to market and the desire to diversify away from China.”  

“I think that some of them want something closer to home,” Jorge Carvajal Arabian, CEO and managing partner at Mexico’s Premium Knits, a Mexican resource, told SJ. “They want shorter lead times, and some of them have expressed concerns about the political situation and the issues that could arise working with Asia.”

He said his company, like many resources, can offer lead times as short as three weeks and MOQ (minimum order quantities) as low as 300 pieces,  Still, “price is definitely a challenge for us,” he said. “It’s always cheaper there, more cost effective,” he said of Asia. “But there’s other advantages that I think we can offer, and for some customers, not everything is about price. There’s also hidden costs on inventory, on planning so far ahead,” he added. Importers, he said, “can react faster, and the commitment is not as big as ordering a full container way in advance, so there’s less risk.”

While head-to-head price comparisons may still favor Asia, at least one South American resource told SJ that importers need to look beyond just cost and see if there are other advantages in working with new resources. “I think one aspect of our offer and our value proposition is that we do things that nobody does, at a premium level,” said Thiago Martini Guerini, international business director for Brazil-based technical fabric mill, Rosset.

“We have different groups of machines which allow us to come up with a collection of 200 articles, including textures with different trendy elements we incorporate into the fabric itself,” he said. “So you can create an aesthetic for your brand and to your consumer and deliver on that. For the brands that need differentiation on a product level, those fabrics work really well for them.”

Nearshoring production in the Americas may never quite match the prices importers are used to seeing from Asia but the advantages are starting to really become equally as important factors.