Are the US and Mexico winning globalization?
The era of globalization could be slowing as companies continue to battle supply chain challenges and reshoring continues to be a trend discussed in all sorts of industries.
Moving production closer to end users in the United States — reshoring and nearshoring initiatives — could make supply chains more resilient by eliminating long shipping routes while also bringing more manufacturing jobs back to North America, said Tasneem Manjra, CEO and co-founder of Caravan.
“Reshoring is huge, and I’m hearing this trend a lot as we talk to potential clients,” Manjra told FreightWaves. “[Companies] want to make decisions about reshoring for a number of reasons — for political reasons, to make sure that the countries that they work with are politically sound. They also don’t want to have the labor crisis that China has, for example, or they want to make sure that they are closer to home for environmental purposes, creating a smaller footprint.”
San Francisco-based Caravan is a vendor relationship platform that aims to streamline and optimize the way manufacturers and retailers engage with their vendors.
Nearshoring often explains when a company moves work to another organization that’s in a nearby region or country. Reshoring is the process of returning domestic product manufacturing from a foreign country back to the home country where the business products are sold.
A recent example of nearshoring is California-based toymaker Mattel, which announced in March it was consolidating all North American manufacturing to its plant in Monterrey, Mexico.
Mattel said it was also investing $47 million to expand the Monterrey plant, where it employs nearly 3,500 workers, becoming the company’s largest manufacturing site. Mattel closed two of its factories in Asia in 2019, as well as plants in Montreal, Canada, and another in Tijuana, Mexico, in 2021, ahead of expansion of its Monterrey factory.
“We believe that Mexico, given its geographical position, has a unique opportunity to position itself as a toy hub in the world. To contribute to the development of this industry in Mexico, we have supported local suppliers and motivated international suppliers to establish themselves in [Mexico],” said Ynon Kreiz, CEO of Mattel, according to El Financiero.
California-based semiconductor manufacturer Intel Corp.’s announcement in January that it was investing $20 billion to build two chip factories near Columbus, Ohio, was a big recent win for the U.S. manufacturing sector.
Construction of the plants is expected to begin later this year, with production coming online at the end of 2025. The two Ohio plants are expected to create 3,000 direct jobs.
Intel, which has a global workforce of 116,000, has more than a dozen research and manufacturing facilities around the world, including the U.S., France, Germany, Italy, Ireland, Poland, Israel, India, Malaysia and Vietnam.
While North America has had recent wins in regard to attracting manufacturing back, U.S. imports of manufacturing goods from low-cost Asian countries (LCCs) actually increased in 2021, according to Kearney’s ninth-annual Reshoring Index.
Kearney’s Reshoring Index tracks trends in manufacturing returning to the U.S. from 14 LCCs and regions where sourcing, production and assembly have been offshored.
Manufacturing from LCCs totaled 14.49% of U.S. domestic gross manufacturing output, up from 12.95% in 2020, according to Chicago-based global management consulting firm Kearney.
However, Kearney officials said that “there are strong indications that attitudes and strategies are changing, thanks to the pandemic, trade wars and tariffs, and ongoing resulting supply chain disruptions.
“American companies are getting more serious about adopting expanded versions of reshoring. Large portions of offshored manufacturing may soon be returning thanks to companies combining their nearshoring production to Mexico, Central America and even Canada, with manufacturing and assembly in the U.S.,” Kearney said.
Manjra said she’s hearing from many clients that the tide may be turning, with companies looking to create a closer-to-home — rather than a lowest-cost — supply chain.
“I just think about that for the last 20 or 30 years, companies were almost rewarded for basically shipping American jobs overseas,” Manjra said. “It was quite harmful for the domestic economy because we have less skilled workers today than we ever had domestically.
“I’m really encouraged when I see manufacturers say, ‘No, we want more jobs here, we want to keep the jobs here, we want to bring back our operations to … America or to Canada.’ I think that’s super encouraging.”
Fleetmaster Express receives first Volvo VNR electric trucks in Texas
Fleetmaster Express recently received two Volvo VNR Electric Class 8 trucks in Texas as part of the company’s plan to transition from a diesel fleet to an electric one.
The Roanoke, Virginia-based carrier said the two electric trucks will be based at the company’s terminal in Fort Worth. Eight additional Volvo VNR electric trucks are scheduled to be delivered by early 2023.
The two Volvo VNR Electrics are the first battery-electric Class 8 trucks in its fleet, and “deploying zero-tailpipe emission Volvo VNR Electrics is the next big step in our effort to create the most sustainable, energy-efficient fleet possible,” said Travis Smith, COO of Fleetmaster Express, in a statement.
Fleetmaster operates more than 300 trucks with 1,000 trailers from 13 terminals across the country. The company offers dedicated hauling, as well as freight brokerage, warehousing and spotting services.
Texas seaport announces new ro-ro service from Asia
Marine shipper Nippon Yusen Kabushiki Kaisha (NYK Line) made its initial call at Port Freeport, Texas, on May 16 to begin a regular service.
Headquartered in Tokyo, NYK Line is a provider of roll-on/roll-off (ro-ro) services, including shipping and vehicle logistics, managing the distribution of cars, trucks, rolling equipment and breakbulk cargo.
“Port Freeport’s proximity and efficiency to regional and global markets combined with room for expansion makes the port a strategic hub for vehicle imports and exports,” Phyllis Saathoff, Port Freeport’s executive director and CEO, said in a release.
NYK Lines’ Opal Leader discharged OEM vehicle units and heavy cargo at Port Freeport. The service will also call ports in Mexico, Panama, Colombia and Brazil and will call Port Freeport monthly.
Port Freeport is located about 60 miles southeast of Houston along the Gulf of Mexico.
Houston multimodal park signs 2 tenants
The Greens Port Industrial Park along the Houston Ship Channel has two new tenants: JD Fields & Co. and ZL Chemicals.
Houston-based JD Fields & Co. is a global supplier of steel products. ZL Chemicals is a Houston-based manufacturer of chemicals used in the oil and gas industry.
The 735-acre, multimodal industrial park is owned by Watco, a transportation and supply chain services company with locations throughout North America and Australia.
Steve Pastor, NAI’s vice president of global supply chain and ports/rail logistics, said operators are looking for locations that help with efficiency. Pastor was part of the team that represented Watco in the transaction.
“Over the past 18 months, logistics tasks as simple as offloading cargo from ship to shore have become increasingly time-consuming and expensive at many ports,” Pastor said in a statement. “For this reason, Greens Port Industrial Park stands out as it offers direct access to [Port Houston], one of the nation’s most important ports.”
Source: Noi Mahoney, Freight Waves.
