Maersk: Integrated logistics & digitisation – the tech industry’s near-shoring challenges in Latin America

20/08/2021

The near-shoring shift: Maersk released a rather interesting article this week, an excerpt of which can be found below.

Enjoy:

“Companies are increasingly deciding to move their supply chains to countries close to their final markets, considering factors such as the trade war between the United States and China and the rise in transportation costs, which makes it less profitable to have their production processes in the Asia-Pacific region.

In turn, the post-pandemic change in consumer habits saw demand surge for electronic consumer goods, which has become a major challenge for this sector. In this scenario, Latin America has a unique opportunity for economic development through ‘nearshoring’, where supply chain integration and process digitisation become operational pillars.

During the 80s and mid-90s, the large-scale economy model led transnational corporations to relocate production chains (Offshoring), with many of them moving their plants to Asia. This process was mainly driven by low-cost labour and guarantees of access to populous markets such as India and China, among others, thus cutting operating costs and maximising profits.

However, the strong economic development that this model generated in Asian markets made it increasingly less profitable for companies to keep their productive activities offshored. This, according to the Economic Commission for Latin America and the Caribbean (ECLAC), was due to factors such as the growth of the Asia-Pacific economy; increase in wages and the consequent rise in the purchasing power of underdeveloped countries; automation of production processes; increase in transportation costs; price of oil, and the trade war between the United States and China, as well as changes in consumer habits and the IT revolution.

In this scenario, many companies decided to lower their level of operational dependence on the East, either by adding new manufacturing centres in different parts of the world or by moving the assembly processes to locations closer to the destination markets – a practice known as nearshoring…”

The full article can be read here.