In the wake of global disruptions, from the COVID-19 pandemic to geopolitical tensions and supply bottlenecks, companies worldwide are rethinking the way they structure their supply chains. One of the most significant trends emerging from this shift is nearshoring: relocating production and sourcing closer to the end customer.
While offshoring once dominated as the most cost-effective approach, nearshoring is now gaining traction for its potential to reduce risk, improve agility, and enhance sustainability. In this article, we’ll explore what nearshoring is, why it’s becoming a strategic priority for businesses, and how it’s reshaping global supply chains for the future.
What is nearshoring?
Nearshoring refers to the practice of transferring business operations—particularly manufacturing or sourcing—to countries that are geographically closer to the company’s primary markets. Instead of producing goods halfway around the world, companies opt for regional partners that can deliver products faster, more reliably, and with fewer disruptions.
For example, a European company may choose to move production from Asia to Eastern Europe or North Africa. Similarly, U.S.-based companies are increasingly shifting operations from China to Mexico or other Latin American countries.
Why nearshoring is gaining momentum
1. Reduced transportation time and costs
One of the most immediate benefits of nearshoring is the shortened supply chain. Shipping products from a nearby country drastically reduces transit times and fuel costs. This means businesses can respond more quickly to changing consumer demand, minimize stockouts, and lower their working capital tied up in inventory.
Nearshoring also helps companies avoid soaring ocean freight rates and congestion at major ports—issues that have plagued global logistics in recent years.
2. Improved supply chain resilience
The COVID-19 pandemic exposed the vulnerability of long, global supply chains. With production and distribution hubs scattered across the globe, even a minor disruption in one region could cause delays, shortages, and revenue losses thousands of kilometers away.
Nearshoring builds resilience by:
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Reducing dependency on distant markets
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Diversifying supplier bases
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Enabling faster rerouting and order fulfillment in case of disruptions
It allows companies to be more responsive and adaptable in a volatile global environment.
3. Greater control and collaboration
Shorter geographic distances mean closer time zones, cultural similarities, and easier communication. This improves supplier collaboration, quality control, and real-time problem-solving.
Nearshoring fosters stronger relationships with partners, making it easier to align on innovation, lead times, and compliance—especially in regulated industries like pharmaceuticals or automotive.
4. Regulatory and trade considerations
Global trade is increasingly shaped by shifting tariffs, trade wars, and regional agreements. Companies exposed to fluctuating duties and complex import/export requirements are seeking more predictable frameworks.
By moving production closer to key markets—especially within free trade zones or customs unions—businesses can mitigate trade-related risks and gain access to preferential tariffs. For example, producing in Mexico provides U.S. companies advantages under the USMCA (formerly NAFTA).
5. Sustainability and ESG goals
Today’s customers—and investors—demand more sustainable operations. Long-haul transport contributes heavily to carbon emissions, and supply chains with large environmental footprints can damage a company’s reputation.
Nearshoring supports Environmental, Social, and Governance (ESG) goals by:
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Lowering transportation emissions
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Enabling ethical labor oversight
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Supporting regional economic development
These factors are critical for companies committed to transparency and sustainability in their operations.
Nearshoring in action: Real-world examples
Europe
European manufacturers are increasingly nearshoring production to Eastern Europe, Turkey, and North Africa. These regions offer skilled labor, growing infrastructure, and proximity to major EU consumer markets. For example:
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Automotive suppliers are moving operations from Asia to Romania, Poland, and Hungary to serve OEMs in Germany and France.
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Fashion and textile brands are returning to Turkey and Portugal for faster turnaround and higher quality control.
North America
In the U.S., the nearshoring shift is most apparent in the movement of production from China to Mexico. The benefits include:
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Shorter delivery times to U.S. retailers and distribution centers
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Fewer supply chain disruptions
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Trade advantages under the USMCA
Major industries driving this shift include consumer electronics, automotive parts, and medical equipment.
Is nearshoring right for every business?
Nearshoring is not a one-size-fits-all solution. The feasibility depends on factors such as:
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Industry type: High-mix, low-volume or fast-turnover products benefit more than heavy industrial goods.
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Cost structure: Labor and raw material costs in nearshore markets must still be competitive.
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Infrastructure and capacity: The chosen nearshore region must have reliable transportation networks, warehousing, and supplier ecosystems.
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Technology integration: Real-time data sharing, automation, and digital tools help maximize the benefits of nearshoring.
In many cases, companies adopt a hybrid model, blending nearshoring and offshoring to balance costs and flexibility.
Nearshoring and the role of logistics partners
Transitioning to a nearshoring model requires strategic planning and coordination. This is where experienced logistics providers like Kuehne+Nagel play a critical role. Through services like:
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Regional warehousing and fulfillment
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Multimodal transport solutions
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Customs and compliance support
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Supply chain visibility tools
... businesses can scale their nearshoring strategies with confidence and operational control.
The future is closer than you think
As global supply chains continue to face pressure from unpredictable events, nearshoring is emerging as a sustainable, resilient, and customer-focused alternative. It enables companies to bring production closer to demand, reduce risk exposure, and meet evolving market expectations.
While it’s not a universal solution, nearshoring is proving to be a smart move for forward-thinking businesses that value agility, speed, and transparency.
Now is the time to ask: Is your supply chain built for the future, or still stuck in the past?