graphic of a globe illustrating offshoring

Why Nearshoring is Reshaping Supply Chains in 2025

Explore the growing trend of nearshoring and its catalysts, benefits, challenges and opportunities. With special attention to nearshoring in Mexico and China, we’ll provide insights on how businesses can capitalize on shifting global supply chain dynamics in 2025.

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Should You Consider Nearshoring?

Explore your options with UPS nearshoring solutions. Our network helps businesses reduce risk, cut shipping costs and improve delivery times - all while staying competitive in a changing global market.

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What’s the Difference Between Nearshore (Nearshoring) vs. Offshore (Offshoring) vs. Reshore (Reshoring) Operations?

Offshoring means to move your business’ operations to another country. This term became popular in the 1970s and 1980s as more and more companies moved their operations overseas to improve efficiencies and reduce their labor costs. For example, moving a manufacturing operation from the United States to China.

Nearshoring is a subset of offshoring, but instead of moving operations to another country, businesses are moving their operations to a country nearby their home country. An example of this is moving the manufacturing operation from China to Mexico, a nearby country of the United States.

Offshoring

Offshoring is when a company moves part of its work to another country, usually far away, to save money or use special skills. This term became popular in the 1970s and 1980s, as more and more companies moved their operations overseas to improve efficiencies and reduce their labor costs. For example, moving a manufacturing operation from the United States to China.

graphic illustrating offshoring

Nearshoring

Nearshoring is a subset of offshoring, but instead of moving operations to another country, businesses are moving their operations to a country near their home country. An example of this is moving the manufacturing operation from China to Mexico, a nearby country to the United States.

graphic illustrating nearshoring

Reshoring

Reshoring, also known as onshoring, is when a company moves work or production back to its home country after having it done in another country. Reasons for reshoring can include rising transportation costs, geopolitical challenges, supply chain constraints or instability and increased labor costs.

graphic illustrating reshoring

Why is Nearshoring Trending?

The US has seen shifts in its foreign trade policies and tariffs in recent years, especially related to China, and there is potential for this to grow in the future. The US incoming administration has indicated plans to focus on reducing reliance on China and other international manufacturing centers as part of its supply chain strategy. This may include implementing higher tariffs on imported goods, with particular emphasis on imports from China1. In response, businesses are likely to explore strategies such as nearshoring to diversify supply chains and minimize potential trade disruptions.

 

Nearshoring in Mexico

In 2023, Mexico became the United States' top trading partner2, and it’s likely to stay that way. For many US companies, Mexico is now a popular choice for nearshoring, thanks to a few key reasons:

  • Proximity Saves Time and Money: Compared to Asia or Europe Mexico’s neighboring location to the U.S. cuts transportation costs and reduces delivery times.
  • Faster Shipping: Fast shipping times are essential for an eCommerce business to meet customer expectations. Nearshoring to Mexico enables faster shipping compared to sourcing products from Asia or other distant regions.
  • Tax Incentives: Since the Section 301 tariffs went into effect in 2018, there has been a big reconsideration for companies shipping from Asia to the United States. By setting up a nearshore solution in Mexico or a close neighboring country, companies can  alleviate the impact of Section 301 tariffs and take advantage of the USMCA free trade agreement between Mexico and the United States.
  • Environmental and Sustainability Goals: Shipping from Mexico uses less fuel than from overseas, contributing to a reduced carbon footprint.

graphic illustrating nearshoring in Mexico

Nearshoring in Asia-Pacific: China Plus One

Another trend in global trade lane shifts is the "China Plus One" strategy. This approach involves companies expanding their operations to an additional country, such as Mexico, while maintaining their existing presence in China. This strategy aims to diversify supply chains, reduce tariffs, and minimize risk.

China Plus One alt text: graphic illustrating

What Are the Benefits of Nearshoring?

Nearshoring continues to be a strategic initiative for many companies. It combines cost efficiency and improved logistics, making it an attractive option for businesses looking to optimize their supply chains.

Things to Consider When Setting Up a Nearshoring Solution

Making a capital investment towards nearshoring is a lot easier said than done. UPS can help you develop that long-term strategy, but for now, here are some things that you might want to consider before exploring a Nearshoring solution further.

Proprietary Nature of Your Product

The proprietary nature of your product is critical when considering Nearshoring. Simple, common processes like machining or injection molding are easier to relocate. Complex products aren’t excluded but need more assessment.

Information and Process Management

Consider how you manage fulfillment. Key factors include criteria for fulfillment decisions (e.g., cost, transit time), ensuring orders go to the right facility, and accurate inventory tracking. UPS can help optimize your Nearshoring network.

Regulatory Provisions and Implications

Nearshoring requires attention to regulatory compliance. If your product uses parts from multiple countries, you must track each part’s country of origin to avoid classification issues. If you don’t have an internal team to handle this, UPS Supply Chain Solutions can help.

Set Up a Nearshoring Solution with the Right Partner

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Nearshoring can be a powerful way to save your company millions, but success requires the right expertise. If you’re thinking of exploring nearshoring solutions for your business, connect with us! We’ll guide you through the entire process to help your business succeed.

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More Nearshoring Resources

UPS Supply Chain Solutions Podcast

Introduction to The Trade Lane Shift

This podcast discusses the factors that led to nearshoring becoming a popular supply chain topic and why this phenomenon has received increased attention in recent years.

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UPS Supply Chain Solutions Podcast

Setting Up a Nearshoring Solution

Listen to Jose Garcia, Vice President of LATAM for UPS Supply Chain Solutions identify what it takes to set up a near-sourcing or near-manufacturing operation.

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Realities of Nearshoring

Listen to learn about the nearshoring trend, its benefits and challenges and what to consider to successfully move your supply chain closer to home.

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UPS Supply Chain Solutions Services

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Ground Freight

Ground freight is an essential part of a nearshoring solution. Trust our reliable less-than-truckload and truckload services to be on time and on budget.

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Warehousing & Distribution

If you are setting up a nearshoring solution for your company, you need a warehousing provider with expertise, facilities infrastructure and supply chain technology to help you achieve your goals.

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Supply Chain Technology

Supply chains are constantly changing. You need supply chain technology that scales with your business, and we have it already ready for you.

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1. Neuffer, Philip. “Trump Is Promising New Tariffs. How Are Companies Preparing?” Supply Chain Dive, 2 Jan. 2025, www.supplychaindive.com/news/trump-tariff-preparation-guide-retail-manufacturing/735822/.

2. Buchholz, Katharina. “Infographic: Mexico Biggest U.S. Trading Partner in 2023 To-Date.” Statista Daily Data, 25 Sept. 2023, www.statista.com/chart/7749/most-important-trading-partners-of-the-united-states/.