Back in August, we created an Industry Focus Week post on Mexico and how it has the potential to be the new logistics hub for the North American supply chain. Recent North American manufacturing trends on nearshoring and bringing logistics needs closer to home have made Mexico an attractive option for many manufacturers, large companies, and even start-ups looking to solve their supply chain needs.
Mexico is not yet at the point that it can compete on every level with China, the king of logistics outsourcing. It has yet to achieve the manufacturing prowess that China has spent many years building up. But Mexico is becoming seen as a more and more attractive option due to its capable workforce and proximity.
The 3PL Business is Looking Good
Today, the Penske sponsored 20th Annual Survey of Third-Party Logistics Providers CEOs was released. The most interesting report is that North American CEOs are optimistic about their company’s growth (with an expected increase in revenue of 14.6% in the next 3 years).
Survey results have also indicated a growing preference for 3PL providers to migrate towards near-shoring from Asia-Pacific to Mexico. The biggest complaint of CEOs being the rising wage costs in China, causing even Asia-Pacific oriented CEOs to move to lower-priced geographies like Thailand, Vietnam, Indonesia, and Sri Lanka.
Furthermore, a whopping 87% of the North American CEOs interviewed reported providing 3rd party logistics services in Mexico (with and average revenue of 9.3% in the US, projected to increase to 12.5% in 3 years). Joe Carlier, SVP of Sales at Penske Logistics comments that:
As companies begin shifting their product origins to local regions, they will look for a third-party logistics provider that can strategically navigate through the new normal in the supply chain industry… This includes the shift in supply chain length, changes in speed and demand for warehousing and transportation along trade corridors.
Case: Automotive Manufacturing to Offer New Opportunities for Third Party Logistics Providers
Reuters recently released an article on how the Mexican auto industry is about to experience a $10 billion factory building spree. German and Japanese (Toyota, Nissan, Honda, BMW, Volkswagen & Mercedes Benz to name a few) manufacturers have already began developments in Mexico, looking to produce primarily for the United States.
These could potentially open up opportunities ripe for 3PL providers as companies are starting to look to outsourced expertise to provide some insight from companies who know the industry on this side of the globe and to take advantage of their network.
And that’s all for us this week! Hope you have a great weekend! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news! We’ll catch you next week!