Many entrepreneurs around the world started a relocation of their production centres due to the pandemic, the closure and subsequent reopening as well as the rupture that originated in the supply chains, caused in part by the dependence on Asian production.
Nearshoring helps with diversifying risks by bringing production closer to commercial destinations, so that a similar risky situation in the future does not condition or determine the supply in the country.
One and presumably the biggest benefit of nearshoring to Mexico is the shared land border with the US, which enables access to the large US market. Almost 88% of US-bound Mexican exports are transported by road to the US, meaning that the trade between the two countries generally avoids the port- and container disruptions that affected global seaborne trade over the last year.
This can be supported by taking a look at Mexico’s current FDI development, which shows a strong pick up as inflows in H1 2022 were equivalent to the annual average inflow of the last 23 years. Manufacturing accounts for over 45% of Mexico’s total FDI and from that amount approximately 30% goes to transportation equipment, making up the most important part of Mexico’s export economy.
Mexico as a nearshoring opportunity grants great benefits to countries, mainly to the US and Canada and has proven its attractivity over the last years.
Do you have further questions about current economic developments in Mexico? Do not hesitate to contact us!