Nearshoring Journal

As we approach the 2025-2030 decade, the global business landscape is undergoing a deep transformation. We know nearshoring has been a hot topic in recent years, so companies must prepare for challenges that go far beyond simply relocating manufacturing. 

The global trade order is in the process of reconfiguring, driven by technological advancements, geopolitical tensions, and shifts in economic policies. Let’s explore these complex factors and analyze how businesses can face the upcoming "storms." 

Technological Disruption: A New Industrial Revolution 

Technology is transforming industries at a rapid pace, and this wave of innovation will only intensify. As it was highlighted during the TradeHub Customs & Trade Innovation Summit 2024 where I had the opportunity to participate, the next technological "storm" will have a deep impact on global supply chains and trade operations. Blockchain, artificial intelligence (AI), and the Internet of Things (IoT) are no longer mere buzzwords; they are essential tools to ensure competitiveness and efficiency in customs operations and global trade. 

Specifically, blockchain technology is revolutionizing traceability and compliance in supply chains. Major players like the U.S. Customs and Border Protection (CBP) are implementing blockchain to ensure verifiable traceability of goods, particularly in key sectors like steel and electronics. Companies that fail to adopt these digital tools risk falling behind, facing inefficiencies and penalties. 

Geopolitical Tensions and Trade Wars: The New Normal 

Global trade is also being reshaped by growing geopolitical tensions, particularly between the United States and China. This trade rivalry is not a passing phenomenon but one likely to last for decades. As discussed at the Summit, the trade war, which initially appeared as a partisan issue in the U.S., has garnered bipartisan support. Neither Republicans nor Democrats show signs of easing tariffs or reducing scrutiny on Chinese products. 

Mexico, as a key U.S. trade partner, has benefited from this reconfiguration. In 2023, Mexico captured 22% of the $102 billion in exports that China lost due to trade restrictions. However, the challenge for Mexican companies lies in managing this increased investment while maintaining competitiveness in the face of new regulatory and legal challenges. 

Nearshoring and Regionalization: The New Trade Paradigm 

While nearshoring has been a key trend in recent years, we must understand the broader context in which it is unfolding. Mexico’s manufacturing sector has seen a boom, with significant growth in industrial spaces in cities like Monterrey, where 22 million square feet of industrial space were absorbed in 2022. However, this is not an exclusive story for Mexico. Other countries, such as Vietnam and Southeast Asian nations, have also benefited significantly from the shift of manufacturing from China. 

Nearshoring brings its own challenges. Many companies relocating to Mexico are reinvesting in existing operations rather than building from scratch. While this shows confidence in Mexico’s competitiveness, it also puts pressure on infrastructure, workforce capabilities, and regulatory frameworks. For Mexico to maintain its nearshoring momentum, it is necessary to address these issues by improving industrial parks, logistics capabilities, and customs operations. 

Infrastructure Deficits as a Growth Obstacle 

Mexico’s infrastructure has been a bottleneck for the country’s development. Despite growth in industrial real estate, much remains to be done in terms of modernizing ports, roads, and border crossings. Ports like Manzanillo and Lázaro Cárdenas, for example, face serious congestion issues that delay the flow of goods and increase operational costs. 

The U.S.-Mexico border is another critical area in need of modernization. With over 47 international crossings, existing infrastructure is becoming obsolete. Infrastructure investment, akin to a "boom" like in China, is essential to maintain Mexico’s competitiveness as a nearshoring hub. Without these improvements, companies will face delays and cost increases that will affect their profitability. 

Regulatory and Compliance Challenges 

Companies operating in the global trade environment must also navigate an increasingly complex regulatory landscape. The U.S. and other major economies are placing greater emphasis on environmental, social, and governance (ESG) criteria, as well as stricter customs regulations. For Mexican exporters, this means adopting more sophisticated compliance systems to meet the demands of their international trade partners. 

Automation and AI will play a crucial role in ensuring compliance, but this also requires investment in technology and training. Companies that do not implement advanced compliance tools risk falling behind in an increasingly digitized trade environment. 

The Workforce Dilemma: Age and Skills Gaps 

Another challenge for businesses in the nearshoring context is the workforce. While Mexico has a young and economically active population, with an average age of 29, the situation is very different in other parts of the world. In the U.S., for instance, the average age of workers in manufacturing is 52, indicating an aging workforce that lacks the technological skills necessary for the next wave of automation. 

This presents both an opportunity and a challenge for Mexico. On one hand, the country has a young workforce that can be trained to meet the demands of modern manufacturing. On the other hand, there is an urgent need to improve the skills of this workforce so they can operate the advanced technologies that will define the future of manufacturing. 

Navigating the Perfect Storm 

The next decade will bring unprecedented challenges and opportunities for companies operating in the global trade environment. From technological disruptions to geopolitical tensions and infrastructure deficits, businesses must be proactive in adapting to these changes. 

Nearshoring is just one piece of the puzzle. To succeed, companies must also adopt new technologies, comply with increasingly stringent regulations, and invest in infrastructure and workforce development. 

As we approach 2030, those who navigate these challenges with agility and vision will be the leaders in the reconfigured global trade order.