Economic climate spurs talk of near shoring

Asia - High fuel costs, coupled with a yet-identified impact of the credit crunch, has spurred discussions on near-shoring.

Talk of moving the supply chain back to home markets in the US has heightened in times of tighter credit and high fuel prices, says Richard Owens, senior vice president of DHL global customer solutions (GCS).

Speaking at a press briefing, Owens says while this trend has yet to take off, there has definitely been more talk on near-shoring.

"This may be happening to a small extent, but we will see more of this happening going forward," Owens says.

Manufacturers in Asia need not worry, however, as this does not erode Asia's strength as a sourcing base. Rather, the market is moving toward having parts still manufactured in Asian markets like China, but having assembly and kitting move back toward the west and into markets like Mexico.

"This gives companies more agility in responding to market, and takes risk away from China," says Alfred Goh, VP of supply chain logistics for DHL GCS.

Owens believes that while oil prices are coming down from their record highs of US$140 per barrel, supply chain costs remain high, making near shoring a possibly attractive prospect. He also observes that the shipping and aviation industries are getting less and less profitable, and are looking to invest in more fuel efficient alternatives.