Reshoring isn’t the only change taking place in supply chains, notes Kearney report
Research from consultancy Kearney has found that 96% of CEOs are evaluating reshoring their operations, have already done so, or are considering it. That is up from 78% in 2022. That same report also found that American imports of Mexico-manufactured goods have increased from $320 billion pre-pandemic to $402 billion today.
But it’s not just reshoring that is shaking supply chains today. U.S. companies are increasingly looking to areas other than China for goods—in large part of a supply chain diversification effort to avoid the product shortages that occurred at the height of the COVID-19 pandemic.
Manufacturing lingers in Asia
“Many U.S. companies are reacting to global challenges like sanctions, tech security and pandemic-related disruptions by decreasing their supply chains’ dependence on China and many countries are following suit,” explains Michael Farlekas, CEO of networked supply chain provider e2open. “Amid growing geopolitical tensions, businesses have turned to India, Southeast Asia, South America and Mexico for sourcing, supply and production for labor comparable to China with less supply chain risk.”
Some of that evidence is being seen in declining Chinese exports. In May, China reported a 7.5% decline in exports, partly due to slowing global demand, but also due to more companies moving manufacturing to additional countries, many in Asia. According to many experts, Chinese exports to the U.S. is expected to be below 50% of all exports from “low-cost Asian countries excluding Japan and South Korea.”
That number was almost 70% in 2013, according to Kearney.
“Many companies are diversifying to reduce dependence on China or any one country or region, and nearshoring is part of that trend causing a shift of some goods off the ocean and a decrease in ocean freight,” Farlekas says. “If nearshoring and onshoring efforts continue, we’re likely to see less movement of finished goods from China to the U.S. and more movement of components and raw materials.”
