How to Shift Your Supply Chain with Nearshoring and Reshoring

Why More Companies Are Nearshoring and Reshoring in 2025

Supply chain disruptions, rising tariffs, and unpredictable global risks are forcing companies to rethink their manufacturing and logistics strategies. Two major solutions have gained traction: nearshoring and reshoring.

What’s the Difference Between Nearshoring and Reshoring?

Nearshoring: Moving production to a nearby country (e.g., U.S. companies shifting operations from China to Mexico).
Reshoring: Bringing production back to the home country (e.g., U.S. firms shifting manufacturing back from Asia to the United States).

Why Is Nearshoring and Reshoring Becoming More Popular?

In recent years, companies have struggled with:

Supply Chain Disruptions: The pandemic, port congestion, and geopolitical tensions have created uncertainty.
Rising Tariffs & Trade Barriers: The U.S. has introduced new tariffs on China, Mexico, and Canada, increasing costs.
Long Lead Times & Logistics Costs: Shipping delays and expensive freight rates have impacted profitability.
Government Incentives: The U.S., Mexico, and Canada are offering tax breaks and subsidies for localized production.

Real Numbers: How Nearshoring & Reshoring Are Changing Supply Chains

Trend	Key Statistic
Nearshoring Surge	Mexico became the U.S.’s top trading partner in 2023, surpassing China.¹
Reshoring Growth	U.S. companies reshored 350,000 jobs in 2022, up 25% from 2021.²
Cost Savings	Nearshoring to Mexico can cut logistics costs compared to China.

Who Should Consider Nearshoring or Reshoring?

Businesses in industries such as automotive, electronics, industrial manufacturing, retail, and pharmaceuticals are actively shifting operations closer to home to:

Reduce dependency on China and other offshore manufacturing hubs.
Take advantage of trade agreements like the USMCA.
Improve speed-to-market and customer satisfaction.

Key Benefits of Nearshoring and Reshoring

Businesses are increasingly turning to nearshoring and reshoring to optimize costs, strengthen supply chain resilience, and improve market responsiveness. Here’s why:

1. Lower Logistics Costs & Faster Delivery

Nearshoring can reduce transportation costs compared to offshore manufacturing in Asia.
Reshoring eliminates long shipping times—cutting lead times from weeks to days.
Shorter supply chains mean fewer risks of port congestion, customs delays, and geopolitical disruptions.

2. Increased Supply Chain Resilience

Reduces dependency on single-region manufacturing (e.g., China) and diversifies sourcing.
Allows businesses to react faster to market changes and disruptions.
Minimizes the impact of global trade conflicts, tariffs, and regulatory shifts.

3. Trade Agreements & Government Incentives

The USMCA (United States-Mexico-Canada Agreement) eliminates or reduces tariffs for businesses that relocate to North America.
Many countries offer tax breaks, subsidies, and grants for companies investing in domestic production.

4. Enhanced Quality Control & IP Protection

Closer proximity to production sites means better oversight and improved product quality.
Reduces the risk of intellectual property (IP) theft—a major concern with offshore manufacturing.

5. Sustainability & ESG Compliance

Shorter supply chains reduce carbon emissions compared to offshore sourcing.
Many countries are enforcing stricter ESG (Environmental, Social, Governance) regulations, making local production more attractive.

Quick Comparison: Why Nearshoring & Reshoring Are Gaining Popularity

Benefit	Nearshoring	Reshoring
Lower Logistics Costs	✅ Yes	✅ Yes
Faster Lead Times	✅ Yes	✅ Yes
Trade Agreement Benefits	✅ Yes (USMCA, etc.)	❌ No
Quality Control & IP Protection	⚠️ Moderate	✅ Strong
ESG & Sustainability	✅ Yes (Lower emissions vs. Asia)	✅ Yes

Challenges of Nearshoring and Reshoring

While nearshoring and reshoring offer numerous benefits, businesses must also navigate several challenges:

Higher Operational Costs: Relocating manufacturing closer to home can lead to increased labor and operational expenses compared to traditional offshoring destinations.
Infrastructure Limitations: Some nearshoring locations may lack the necessary infrastructure to support large-scale manufacturing, potentially requiring additional investments.
Skilled Labor Shortages: Finding workers with the required technical expertise can be challenging in certain regions, necessitating investment in training programs.
Environmental Regulations: Stricter environmental laws in nearshoring destinations can pose challenges, especially for industries like pharmaceuticals that involve complex chemical processes.
Supply Chain Disruptions: Geopolitical tensions and trade policy uncertainties can impact the stability of nearshored operations.

Addressing these challenges requires careful planning and strategic decision-making to ensure a smooth transition and sustainable operations.

How to Implement Nearshoring and Reshoring Strategies

Transitioning to nearshoring or reshoring requires a structured approach to ensure a seamless shift and maximize benefits. Here’s a step-by-step guide to effectively implement these strategies:

1. Conduct a Comprehensive Supply Chain Assessment

Map Your Current Supply Chain: Identify all offshore suppliers, including critical tier 2 and tier 3 vendors, to understand existing dependencies.
Evaluate Risks and Vulnerabilities: Assess potential disruptions, such as geopolitical tensions or natural disasters, that could impact your supply chain.
Analyze Total Cost of Ownership (TCO): Consider all costs, including transportation, tariffs, and inventory holding, to determine the true cost of offshoring versus nearshoring or reshoring.

2. Develop a Detailed Business Case

Financial Analysis: Compare the costs and benefits of nearshoring or reshoring against current operations to justify the investment.
Stakeholder Engagement: Involve key stakeholders, including finance, operations, and supply chain teams, to gather insights and build consensus.
Risk Assessment: Identify potential challenges and develop mitigation strategies to address them proactively.

3. Identify and Evaluate Potential Locations

Assess Infrastructure and Capabilities: Ensure the chosen location has the necessary infrastructure and skilled workforce to support your operations.
Consider Proximity to Key Markets: Select locations that offer logistical advantages and align with your target customer base.
Evaluate Political and Economic Stability: Choose regions with stable political environments and favorable economic conditions to minimize risks.

4. Establish Strategic Partnerships

Collaborate with Local Suppliers: Build relationships with regional suppliers to ensure a smooth transition and maintain quality standards.
Engage with Government Agencies: Leverage incentives and support programs offered by local governments to facilitate the relocation process.
Consult Industry Experts: Seek guidance from consultants with experience in nearshoring and reshoring to navigate complexities effectively.

5. Invest in Technology and Workforce Development

Implement Advanced Manufacturing Technologies: Adopt automation and digitalization to enhance efficiency and offset higher labor costs.
Develop Training Programs: Equip your workforce with the necessary skills to operate new technologies and adapt to updated processes.

6. Plan and Execute the Transition Strategically

Develop a Phased Implementation Plan: Gradually shift operations to mitigate risks and allow for adjustments based on real-time feedback.
Monitor Key Performance Indicators (KPIs): Track metrics such as production efficiency, quality levels, and customer satisfaction to gauge success.
Maintain Open Communication: Keep all stakeholders informed throughout the transition to ensure alignment and address concerns promptly.

Nearshoring and Reshoring Case Studies

Understanding how companies have successfully implemented nearshoring and reshoring strategies provides valuable insights into the practical benefits and challenges of these approaches. Below are notable examples across various industries:

1. General Electric (GE) – Reshoring Appliance Manufacturing

Background: GE decided to bring back the production of water heaters and refrigerators from China and Mexico to its Appliance Park facility in Louisville, Kentucky.
Outcomes:
- Invested $800 million in the facility.
- Created over 1,000 jobs.
- Improved product quality and reduced time-to-market.

2. Boeing – Nearshoring Aerospace Components

Background: To streamline its supply chain, Boeing shifted the production of certain aerospace components to Mexico.
Outcomes:
- Reduced production costs.
- Enhanced supply chain efficiency.
- Maintained product quality standards.

3. Inditex (Zara) – Nearshoring Fashion Manufacturing

Background: Inditex, the parent company of Zara, nearshored a portion of its manufacturing to Morocco and Turkey to respond swiftly to fashion trends.
Outcomes:
- Achieved faster turnaround times.
- Reduced inventory costs.
- Enhanced ability to meet customer demands promptly.

4. Whirlpool – Reshoring Appliance Production

Background: Whirlpool moved the manufacturing of its commercial front-loading washing machines from Mexico back to Clyde, Ohio.
Outcomes:
- Invested $200 million in the Ohio plant.
- Created approximately 100 new jobs.
- Improved coordination between design and manufacturing teams.

5. IT Industry – Nearshoring Software Development

Background: Companies like Cisco and IBM have nearshored software development projects to neighboring countries to access skilled talent and reduce costs.
Outcomes:
- Accessed a broader talent pool.
- Reduced operational costs.
- Improved project turnaround times.

Best Practices for a Successful Nearshoring and Reshoring Strategy

To maximize the benefits of nearshoring and reshoring, businesses must follow strategic best practices that ensure smooth implementation and long-term success.

1. Conduct Thorough Cost-Benefit and Risk Analysis

Assess Total Cost of Ownership (TCO): Factor in transportation costs, tariffs, infrastructure investments, and labor expenses to get a full picture of nearshoring or reshoring costs.
Evaluate Risk Factors: Consider geopolitical risks, labor availability, supply chain disruptions, and compliance with local regulations before making a move.
Example: A study found that businesses often underestimate the hidden costs of reshoring by up to 20% due to supply chain complexities.³

2. Select the Right Location for Manufacturing & Logistics

Infrastructure and Connectivity: Ensure that the selected location has well-developed transportation networks, ports, and logistics hubs.
Labor Market Availability: Choose regions with a strong workforce capable of meeting your production needs.
Government Incentives: Take advantage of tax breaks, grants, and subsidies offered for reshoring or nearshoring investments.

3. Build Strong Partnerships with Local Suppliers and Manufacturers

Vetting New Suppliers: Conduct due diligence to ensure they meet quality standards and reliability expectations.
Leverage Supplier Clusters: Look for industrial zones that specialize in your industry to benefit from economies of scale and supplier synergies.

4. Invest in Automation and Smart Manufacturing

Reduce Labor Costs with Automation: Implement robotics, AI, and IoT to improve efficiency and offset higher domestic labor costs.
Implement Predictive Maintenance: Use AI-driven maintenance solutions to prevent downtime and optimize production.

5. Ensure Compliance with Trade Regulations and Customs

Understand USMCA and Other Trade Agreements: Companies nearshoring to Mexico and Canada must ensure compliance with USMCA rules to qualify for tariff exemptions.
Work with Customs Brokers: Partner with experts who understand the import/export process to prevent costly compliance mistakes.

6. Optimize Logistics and Inventory Management

Implement Just-in-Time (JIT) Inventory: Reduce warehouse costs by streamlining inventory flow.
Use Digital Freight and Visibility Tools: Track shipments in real-time to avoid delays and improve supply chain efficiency.

7. Develop a Skilled Workforce & Training Programs

Reskilling and Upskilling: Invest in training programs to prepare workers for advanced manufacturing techniques.
Collaborate with Educational Institutions: Partner with technical schools and universities to create a steady talent pipeline.

8. Continuously Monitor and Improve Supply Chain Performance

Track Key Performance Indicators (KPIs): Measure lead times, cost savings, production efficiency, and supplier performance.
Leverage Data Analytics: Use AI-powered analytics to optimize supply chain decision-making.

Summary: Best Practices at a Glance

Best Practice	Key Action
Cost Analysis	Evaluate hidden costs, total cost of ownership, and financial feasibility.
Location Selection	Ensure strong infrastructure, workforce availability, and trade incentives.
Supplier Partnerships	Vet new suppliers and leverage industrial clusters.
Technology Integration	Adopt automation, AI, and predictive maintenance.
Trade Compliance	Understand USMCA and work with customs brokers.
Logistics Optimization	Use real-time tracking and JIT inventory strategies.
Workforce Development	Invest in training programs and partnerships with schools.
Continuous Monitoring	Use KPIs and data analytics for ongoing improvement.

Following these best practices will help businesses successfully implement nearshoring and reshoring strategies, ensuring long-term resilience and competitiveness.

Future Trends in Nearshoring and Reshoring

As global supply chains continue to evolve, nearshoring and reshoring are poised to play pivotal roles in manufacturing and logistics strategies. Understanding these emerging trends can help businesses anticipate changes and adapt accordingly.

1. Increased Adoption of Automation and Industry 4.0 Technologies

Automation Integration: The integration of robotics and automation is making domestic manufacturing more cost-competitive, reducing the reliance on low-cost labor markets.
Smart Manufacturing: The adoption of Industry 4.0 technologies, such as the Internet of Things (IoT) and artificial intelligence (AI), is enhancing efficiency and flexibility in production processes.

2. Emphasis on Supply Chain Resilience and Risk Mitigation

Risk Diversification: Companies are restructuring supply chains to mitigate risks from geopolitical tensions and global trade uncertainties.
Regionalization: There’s a growing trend toward regionalizing supply chains to enhance resilience against disruptions.

3. Impact of Government Policies and Trade Agreements

Incentive Programs: Governments are offering incentives to encourage domestic manufacturing, influencing reshoring decisions.
Trade Policies: Changes in trade policies and tariffs are prompting companies to reconsider offshore manufacturing strategies.

4. Labor Market Dynamics and Workforce Development

Skilled Labor Demand: The need for a skilled workforce is increasing as manufacturing returns to domestic markets, leading to challenges in filling positions.
Training Initiatives: Companies are investing in training programs to equip workers with the necessary skills for advanced manufacturing roles.

5. Environmental Sustainability and ESG Considerations

Eco-Friendly Practices: Nearshoring and reshoring are contributing to reduced carbon footprints by shortening supply chains.
ESG Compliance: Companies are aligning manufacturing strategies with environmental, social, and governance (ESG) goals to meet stakeholder expectations.

Key Takeaways on Nearshoring & Reshoring

How do I decide between nearshoring and reshoring?

Consider factors like cost, trade agreements, labor availability, and infrastructure. Nearshoring offers lower logistics costs, while reshoring provides greater quality control and IP protection.

Which industries benefit most from nearshoring and reshoring?

Automotive, electronics, industrial manufacturing, pharmaceuticals, and retail are among the top industries shifting production closer to home.

What government incentives exist for nearshoring and reshoring?

Programs like the USMCA, tax breaks, and grants in the U.S., Mexico, and Canada offer financial benefits to companies investing in local production.

How long does it take to transition to nearshoring or reshoring?

Timelines vary by industry, but most businesses experience a transition period of 6-24 months, depending on infrastructure needs and supply chain complexity.

Is nearshoring or reshoring worth it in 2025?

With rising tariffs, supply chain disruptions, and government incentives, businesses that adapt now can gain long-term competitive advantages.

Why overpay for visibility? TRADLINX saves you 40% with transparent per–Master B/L pricing. Get 99% accuracy, 12 updates daily, and 80% ETA accuracy improvements, trusted by 83,000+ logistics teams and global leaders like Samsung and LG Chem.

Start Free Trial Contact Us

Prefer email? Contact us directly at min.so@tradlinx.com (Americas), sondre.lyndon@tradlinx.com (Europe) or henry.jo@tradlinx.com (EMEA/Asia)