In recent years, nearshoring has emerged as a prominent global trend. This surge can be explained by many global events that make companies take the strategic step of relocating their business operations to neighboring countries. In the US, nearshoring is gaining traction as a larger number of businesses are shifting operations from APAC countries to Mexico — a move designed to reduce risk amid significant global volatility.

According to a recent Morgan Stanley study, new nearshoring investments could reach about $46 billion over the next five years, helping to boost Mexico's annual GDP growth to about 3% between 2025 and 2027. This has the potential to accelerate the growth of Mexico’s manufacturing exports to the U.S. from $455 billion to an estimated $609 billion over the next five years, boosting Mexico's economy while delivering benefits to US companies. 

Nearshoring is often credited with helping to reduce geopolitical risks by establishing closer ties with neighboring countries. It also offers compelling advantages for businesses equipped with the right strategy, such as enabling significant shipping and transportation cost savings due to the geographic proximity between manufacturing hubs and consumer markets. Nearshoring can also help companies minimize carbon emissions associated with long-haul transportation routes.

But in spite of these promising opportunities, nearshoring also brings challenges — particularly in the packaging supply chain. Maintaining consistency, quality and continuity across operations in Mexico and the US is critical. Addressing these challenges requires partnering with a packaging company that brings expertise and resources on both sides of the border. 

What is Nearshoring?

Nearshoring is a business strategy of outsourcing processes to companies in nearby countries. Over time, nearshoring to Mexico has gained prominence among US companies due to its many benefits. Reshoring, on the other hand, involves bringing manufacturing, suppliers and other processes back to the domestic market. 

Recent reports indicate the growing traction of nearshoring. According to Bloomberg, 80% of companies in North America were actively considering nearshoring in 2022. Similarly, a 2023 survey conducted by QIMA indicated that 57% of companies worldwide view nearshoring as essential to their supply chain strategy. 

Many geopolitical dynamics have contributed to the rise of nearshoring. The US-China trade war, rising manufacturing costs in Asia and disruptions caused by the COVID-19 pandemic are a few examples of major events affecting global trade. Taken together, these factors underline the risk of poor sourcing diversification, the importance of streamlining supply chains and the need to mitigate risks associated with distant sourcing. The rise of automation has also enabled companies to produce goods closer to home without sacrificing efficiency.

Reshoring offers several advantages as well, including speed and flexibility due to reduced lead times, increased control and compliance with local regulations. It can also potentially offer domestic incentive benefits and lower carbon emissions from shorter transportation requirements. However, domestic wage rates and other related expenses often mean that reshoring comes with higher operational costs. In this scenario, nearshoring can strike a more optimal balance between cost-effectiveness and proximity, making it an attractive option for businesses seeking to optimize their supply chains.

The most common sectors for nearshoring today are automotive, industrial — including medical devices — and electronics. The proximity of manufacturing facilities to consumer markets greatly benefits these industries by enabling faster delivery times, reducing network complexities and avoiding major disruptions. However, nearshoring also raises critical packaging considerations that require an expert partner to navigate. 

Key Packaging Considerations for Nearshoring Operations    

As businesses delve into nearshoring strategies to optimize their operations, it's crucial to recognize the implications this shift has on packaging. Nearshoring not only transforms manufacturing and distribution dynamics but also requires companies to reevaluate packaging strategies to ensure alignment with new operational frameworks. 

Nearshoring operations present several packaging challenges, each requiring careful consideration to mitigate potential risks and ensure seamless supply chain management.

• Lost Sales Due to Packaging Supply Chain Challenges: Inconsistent or inefficient packaging processes can lead to delays in product delivery, ultimately resulting in lost sales and damage to brand reputation. Addressing these challenges requires a robust and reliable packaging supply chain that can adapt to the dynamic needs of nearshoring operations.
  
  
• Limited Engineering Resources: Designing effective packaging in Mexico can be challenging due to the country’s fragmented and restricted engineering workforce. This scarcity of expertise could jeopardize the development of innovative, tailored packaging designs.
  
  
• Quality and Consistency in Packaging Materials: Ensuring quality and consistency in packaging materials is essential for maintaining product integrity and safeguarding against damage during transportation. However, sourcing reliable and high-quality materials in Mexico can be challenging, with the potential to drive up costs and cause production delays or disruptions.
  
  Take treated pallets as an example: These pallets are a critical component of many packaging and transportation processes. Ensuring they are treated to meet international standards is crucial for compliance and product safety. However, finding suppliers who consistently provide treated pallets with the required quality can be a complex task in Mexico's fragmented market.
  
  
• Damage Due to Low-Quality Packaging: Low-quality packaging materials and inadequate packaging design can result in product damage during transit, leading to increased returns and lost sales. Overcoming this challenge requires a strategic approach to packaging that prioritizes durability, protection and sustainability.
  
  
• Negative Impact on Investor Sentiment and Stock Price: Any setbacks or inefficiencies in nearshoring operations, including the packaging challenges mentioned above, can have a detrimental impact on investor sentiment and stock prices. Operational excellence is closely related to investor confidence and competitiveness, and is greatly impacted by your packaging processes.

How the Right Nearshoring Packaging Partner Can Help

At Victory Packaging, we understand the complexities of nearshoring operations and offer comprehensive solutions to address key packaging challenges. Quality brands require quality materials; our priority is to provide packaging solutions that meet the highest standards, ensure optimal performance and create positive customer experiences — not sometimes, but every time. 

Our strong presence in Mexico — 15 well-established locations across the country — provides us with the unique capability to support our clients' packaging requirements across borders. Whether it's breaking down and repackaging products in their US distribution centers or leveraging our expertise in Mexico, we ensure consistency, quality and continuity in packaging solutions. Here’s how.

Packaging Engineering 

We have a dedicated team of packaging engineers in Mexico. This enables us to deliver tailored solutions with the speed and precision your company requires. We leverage this proven expertise to engineer packaging solutions that align with OEM requirements, accelerate time-to-market and mitigate risks associated with nearshoring operations. With Victory Packaging, you get the same unmatched packaging engineering capabilities in Mexico as you do across the US.

Packaging Supply Chain    

Victory Packaging's owned and operated distribution centers are strategically located throughout Mexico, allowing us to provide seamless packaging supply chain management for our clients with the same quality and service levels we deliver in the US.

By leveraging local inventory programs and our extensive network of suppliers, we provide supply continuity for high-quality materials and minimize packaging bottlenecks — regardless of the scale or complexity of your nearshoring operations.

Packaging Logistics

Our extensive fleet, experienced drivers and proven processes enable daily delivery services across Mexico from our distribution centers. Our commitment to reliable, consistent logistics ensures timely product distribution and enhances overall operational efficiency for our clients.

Achieve Nearshoring Consistency, Quality and Continuity With Victory Packaging

Nearshoring can be a compelling opportunity for businesses looking to streamline their operations, reduce costs and mitigate geopolitical risks. However, navigating the challenges of nearshoring operations requires the right packaging capabilities on both sides of the border. 

Victory Packaging is a trusted partner for companies seeking to optimize their nearshoring strategies while maintaining consistency, quality and continuity in packaging solutions. With our unwavering commitment to excellence and our extensive experience in both the US and Mexico, we offer comprehensive support throughout the nearshoring process.

By leveraging our quality materials, packaging engineering expertise, a robust supply chain and proven logistics, we empower our clients to overcome the challenges of nearshoring and achieve sustainable success. Let’s talk about your nearshoring initiatives and how the right packaging partner can help you achieve consistency, quality and continuity.