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The advantages of nearshoring have made this outsourcing option very appealing to anyone in the U.S. that’s in the business of importing goods. Given the current state of the supply chain, importing goods from China or any other nation across the Atlantic or Pacific Oceans has become a hassle. Fortunately, nearshoring offers an excellent option for avoiding these challenges.
The Center For Strategic & International Studies has stated that the U.S. has much to gain by using nearshoring. Some of the benefits that you can expect when using this outsourcing option are:
In addition to explaining the advantages of nearshoring, we’ll show you some examples of nearshoring and how to conduct nearshoring operations.
Nearshoring is one of a few different outsourcing options where a business in one country will hire a third party in another nearby country to perform certain business operations. Nearshoring is unique to other forms of outsourcing in that the third party company performing the outsourced work is geographically close to the nearshoring company rather than far.
Some examples of nearshoring include the following:
In each of these examples, the third party performing the outsourced services is in a country that shares a border or hemisphere with the country where the nearshoring company is located at. In the case of the U.S., nations throughout the Americas are becoming more plausible nearshoring partners due to the problems facing the global supply chain. This is due to the close proximity and favorable relations that the U.S. has with these nations.
The table below shows the growth at which certain goods and services have been offshored/nearshored in the past few years.
| 2014 | 2016 | 2018 | |
| Human Resources | 13 Percent | -5 percent | 4 percent |
| Procurement | 17 percent | 5 percent | 4.5 percent |
| Marketing | 15 percent | 7 percent | 4 percent |
The nearshore outsourcing option is very appealing due to the proximity of the third party you're outsourcing business operations to. That said, there are many other advantages that you’ll reap when you nearshore to another country.
One great advantage that comes with nearshoring is the reduced costs to import the goods or services from you outsourced to a third party. There are two specific reasons why nearshoring is cost-effective:
The further away physical goods have to travel from, the higher the fuel costs will be. This inevitably drives up the costs to import goods from another country. However, nearshoring businesses won’t be faced with this problem to the same degree because the company they’re outsourcing to will be much closer to them.
Reduced fuel costs mean that the cost to import will be reduced as well. Another benefit of nearshoring is that the U.S. has great trade relations with Canada, Mexico and most countries in Latin America. This means that regulations to import certain goods and services won’t be as strict.
Some countries like Canada and Mexico are even part of Free Trade Agreements (FTAs) which will apply preferential tariff treatment on certain goods you import. This will also help drive import costs down.
A downside that comes with outsourcing business operations to a faraway country is that you won’t have much control over the business operations that take place there. With nearshoring, however, you’ll be much closer to the third party you’ve outsourced business operations to.
Some of the reasons you’ll have more control are:
While there are plenty of reliable third parties in countries close to the U.S., being able to monitor them during the development process will allow you the opportunity to guide them.
Any third party you outsource certain business operations to will have a specialized team that’s main focus is on the task you’re hiring them for. This means you can expect quality results from the team performing the task. A third party that spreads itself too thin in what it can do might not have the resources to perform the task you want them to complete to the expectation you desire.
Something all business owners, entrepreneurs and importers from all walks of life care about is the protection of their intellectual property (IP). IP is much less likely to be taken from a nearshore country, especially when the nearshore country is part of an FTA like Canada and Mexico. These countries and the U.S. make the United States Mexico Canada (USMCA) FTA.
Under this FTA, Canada and Mexico are required to follow the data privacy laws outlined by USMCA. Another FTA that the U.S. has with other countries in and around the Americas is the Central America-Dominican Republic Free Trade Agreement or CAFTA-DR.
The CAFTA-DR protects IP rights as well. The following countries are included in CAFTA-DR:
If your business is based in the U.S. and you nearshore to another country, chances are your IP rights will be better protected than they would be if you were importing from somewhere else. Our article on U.S. free trade agreements will provide you with more information on the other ways that FTAs can help you.
The time it takes for the goods and services you import from a nearshore country to get to you will be much shorter than if you were to import from a faraway country. In some cases, the freight you import from a nearshore country can travel using rail and truck. These transport modes will allow you to bypass the delays plaguing ocean ports.
The process of nearshoring can be very time-consuming and, at times, extremely difficult. There are a few steps that you’ll need to follow thoroughly to successfully outsource some aspects of your business operations to a nearby country.
Nearshoring is a great service to use, but you must make sure to use it carefully. The best way to do is to determine what you need from the nearshoring team you wish to hire. You can determine what it is that you need by asking yourself if you need the following:
The sooner you can identify what service you need, you can now start honing in on a third party in a nearby country that can perform the services you need.
Finding and vetting a nearshore partner will be your next step to complete. Some of the ways that you can find a nearshore partner to perform certain business functions for you include:
Another way you can establish relations with a nearshore partner is through the International Trade Administration (ITA). The ITA helps U.S. businesses find partners and buyers in other countries to conduct business with. These services could lead you to find a nearshore partner.
Importing from another country, regardless of how close it is, can be a real challenge for any importer. Fortunately, you won’t need to complete this process all on your own. At USA Customs Clearance, we have a team of dedicated individuals and Licensed Customs Brokers that will be able to help you through the entirety of the importing process.
Some of the services that we can provide to help you with importing include:
Each of these services will allow you to import goods into the country with relative ease. If you have any questions about these services or the import process in general, then call our team at (855) 912-0406 for more information.
Our 30 Minute Licensed Expert Consulting Will Personally Guide You.
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