The nearshoring versus offshoring debate 

Throughout the pandemic, many retailers and brands rightfully started shifting their supply chains to onshoring and nearshoring in the Western Hemisphere, reducing risky forecasting and unreliable deliveries associated with over-stretched supply chains in Asia that have led to exorbitant amounts of unsold merchandise clogging warehouses.

We can’t ignore the facts. There is a global slowdown stemming from the pandemic, broken global supply chains, inflation, and massive inventory issues, but when our industry comes out of this, the Western Hemisphere, which has been on an upward trend in two-way textile and apparel trade, is poised to seize on the moment and be the continued growing solution.

We live in a new era of onshoring and nearshoring, and nowhere is this more evident than in the Western Hemisphere, as supply chains reoriented around sources of supply closer to the US consumer market during the pandemic.

Supporting nearshoring in the Western Hemisphere are investments totalling nearly US$1bn in new textile and apparel production and announced investment in Central America in 2022 alone. In addition, preferential benefits afforded by CAFTA-DR are responsible for $12.6bn in the annual two-way textile and apparel trade, an increase of 37.4% year over year.

Sourcing close to home is a success story. Nearshoring enhances trade for the mutual benefit of the textile and apparel industries throughout the Western Hemisphere while simultaneously expanding the sourcing options for brands and retailers in the United States. It is a win-win for the entire supply chain and an accomplishment poised to continue.

There are clear reasons for the shift, beginning with the desire to move away from unreliable global supply chains, labour abuses, rising freight rates, and continuing pandemic lockdowns. Equally important is the success of the CAFTA-DR free trade agreement and other trade agreements in the hemisphere that have expanded two-way trade between textile and apparel makers throughout the region and in the US.

Trade in the Americas benefits all parties, not just one supply chain segment. For apparel makers in the hemisphere, using US textiles makes sense – it is easy sourcing and good quality at reasonable prices. The rise of nearshoring underscores the importance of maximising trade benefits by leveraging each trading partner’s strengths. CAFTA-DR works, and trade within the Western Hemisphere bolsters the outlook for regional companies while providing brands and retailers with new, reliable, and cost-effective apparel sourcing options.

Sourcing is no longer predicated on a scramble to find the cheapest labour or supply. Instead, as the effects of the global pandemic made painfully clear, overstretched supply chains snap under pressure. In reality, the chase for low prices results in the shock of higher prices caused by delivery delays, lockdowns, and unpredictable freight rates.

Trade agreements like CAFTA-DR help sourcing companies hedge their risks and manage their exposure to the challenges of doing business today. In addition, sourcing closer to home and being closer to customers allows brands and retailers to better meet demand for their products with quick deliveries, shorter and more sustainable supply chains, and overall speed to market.

Textile and apparel manufacturers throughout the Western Hemisphere, provide a resilient, reliable source of supply, and are central to an intelligent sourcing strategy.

The business is changing which is why we must continue to support free trade agreements and their strong rules of origin to continue bolstering textile and apparel manufacturers in the Americas so they can flourish in the years to come.