Business that went overseas is coming home.

Ship in Port

Supply chains are becoming more continental and regional as soaring transportation costs outweigh relative labor costs worldwide.

This is the result of several factors:

1. Transportation

Transportation (fuel) costs have become a larger factor than cheap labor. It is more economical to have suppliers re-locate near manufacturers and to invest in more numerous, smaller distribution centers than to chase low cost labor to distant locations.

An article on the front page of June 13, 2008 Wall Street Journal read:
Stung by Soaring Transport Costs, Factories Bring Jobs Home Again

Shipping cost per container has increased by 300% since 2000

Transit times are tied to inventory

2. Security

Security concerns (paperwork and inspections) regarding imports are radically slowing shipments, resulting in increased cycle times and therefore the need to increase inventory.

3. Infrastructure

Infrastructure of U.S. ports, rail and trucking is old and congested which also results in slowing the movement of goods, increasing cycle time and higher inventory requirements.

4. The Greening of business.

Your supply chain is your carbon footprint.
Locating suppliers near manufacturers and scattering smaller distribution centers near customers reduces the distance traveled by each component part and also the final product, thus reducing the total carbon footprint (with significant savings on transportation)

  1. Manufacturing/Production
  2. Warehousing/Storage
  3. Packaging
  4. Transportation

Opportunities for Small Manufacturers

Suppliers need to identify manufacturers that are moving back to America from overseas and find a way to supply their needs. Commercial real estate brokers, Chambers of Commerce and Distribution companies often get wind of these moves early so check them out.