3 Reasons Why Now is the Time to Localize Your Supply Chain

3 Reasons Why Now is the Time to Localize Your Supply Chain

This year has been a challenge for many companies. The COVID-19 pandemic continues to have a substantial impact on the global economy. Border closures, lockdowns and shipping delays have created much uncertainty for companies with complex supply chains that span the globe. At PMT, we’ve seen an uptick in re-shoring activity for both new and current customers. Supply chain localization remains the priority for many of these companies. From our vantage point on the U.S./Mexico border, we’ve been involved in many re-shoring and localizing activities — and we see how these efforts are helping global companies remain competitive in the current market.

With this in mind, here are three reasons why now is a good time to localize your supply chain: 

1. Transportation costs are rising due to COVID-19 restrictions and shipping increases.

shutterstock_711168088The pandemic situation created a marked increase in shipping requests as people following stay-at-home orders opt to shop online. Costs for transportation and shipping continue to increase across the board, especially for shipments from overseas. Shortening the supply chain and bringing your producers closer to your consumers helps reduce the distance products need to be transported, saving on freight costs.

While it can sometimes be more expensive to manufacture in the United States, many people feel strongly enough about buying American-made that they are willing to pay a bit more. A recent Bloomberg poll stated 78 percent of respondents were willing to pay more for products if the company that made them moved manufacturing out of China. Considering the current freight situation — with its high demand and long wait items at major shipping ports — it is becoming more and more cost-effective to stay within the United States.

2.  Sourcing in the U.S. leads to supply chain security.

In manufacturing, production can only continue if you have the supplies you need. According to a recent Supply Chain Resilience Report, 60 percent of manufacturing businesses have had their supply chains disrupted by COVID-19. From closed borders to new tariffs and increased demands on shipping, manufacturers who moved their supply chain overseas are facing lengthening delays and problems sourcing the materials they need.

Reshoring your supply chain provides quick access to your suppliers. It also means global shipping  disruptions or closed borders won’t affect your ability to procure components. Having quick access to your suppliers also means you can run lean and only purchase materials when you need them. This Just-In-Time method improves profitability and efficiency. For manufacturers in the United States, having those supply lines onshore makes JIT production a reality. 

3. PMT’s Strategic location takes advantage of the USMCA trade agreements

Moving operations to a strategic location along the border allows manufacturers to experience the benefits of being on the border while still being Made in the USA. It also provides businesses with the opportunity to take advantage of the new USMCA trade agreements.

IMG_6775Replacing NAFTA, the USMCA agreement encourages manufacturers to reshore their operations from Asia back to North America. The USMCA provides for better duty-free access to Mexican and Canadian markets. It incentivizes production in North America and helps U.S. manufacturers compete on a level playing field. It also reduces red tape along the border, allowing manufacturers to procure resources and supplies on both sides of the border.

At PMT, we’ve seen an increase in customers and potential clients requesting information on the cost of reshoring components, which makes sense considering our location lets our customers experience the benefits of being on the border while still being Made in the USA. Our proximity to Mexico enables us to provide flexible, efficient, and cost-effective just-in-time delivery to customers with operations in the Borderplex.

In addition, easy cross-border access allows for on-site visits to customer plants and quick and responsive service. PMT’s strategic location makes us an ideal reshoring solution because we can offer competitive prices compared to similar companies in different regions of the United States. 

Contact us to learn more about how PMT can help simplify your supply chain through reshoring.