Ken Cottrill of MIT finds that despite all the talk of reshoring, there are few instances of companies bringing manufacturing back to their parent country. There’s a lot of talk, but it has materialized in very few cases. One of the areas that has benefitted is the Midwest; he finds that machinery and plastics industries have seen a bit of reshoring.
One of Ken’s concerns is that chasing a chimera may cause us to lose focus on what gives supply chains advantages. What will happen to our investment of time and money and energy in logistics and operational supply chain improvements if we spend them on fostering reshoring?
I tend to agree with his worry, especially in the light of decreasing energy prices. Those will make long supply chains easier to justify from a cost perspective. I also think currency fluctuations have been clouding our judgment about the real costs. As the Renminbi increases in value against the dollar, US locations gain an advantage; but it is a partially controlled currency, and the balance could change without much notice, affecting strategic longer term decisions. And volatility of currencies is almost guaranteed in these curious financial times.
Here is documentation on the shifts in competitiveness of different countries in manufacturing. Interesting that Russia and Brazil are now expensive to manufacture in, and Mexico is cheap. The US has also improved, and is now less than 5% above China.
A Cold Chain or cold goods supply chain is an excellent example of a special purpose supply chain that serves a segment of shippers and demands. In this area much innovation has occurred, and we can expect it to continue, and as with lots of innovation, it involves high tech.
To play in this segment, tracking and visibility not only of location but also conditions, such as temperature and humidity, are important. Determining feasibility requires a complete set of business judgements, such as market values, information technology, business intelligence and dashboards, and finance and operations acuity, not just technical know-how. An MBA degree with a logistics focus might be just the education needed.
BIMCO publishes monthly container shipping reports and outlook for the next period. They are based on good data they collect, and are sort of a reference standard. This summary comes from the Shipping Tribune, a daily publication that aggregates various news feeds.
There’s still overcapacity in container shipping. New ships of very large size are coming online, and the tonnage expected to be retired is less. Interesting facts on building of ships and demolition sales.