October 8, 2009

Transportation execs see shift in sourcing

A noticeable shift is occurring in terms of where companies are sourcing products and manufacturing, agreed a panel of transportation experts speaking at the CSCMP Annual Conference.

By Peter Bradley

A noticeable shift is occurring in terms of where companies are sourcing products and manufacturing, agreed a panel of transportation experts speaking at the Council of Supply Chain Management Professionals (CSCMP) Annual Conference.

Mexico, Vietnam, and the Chinese and Indian hinterlands are just some of the places benefiting from those shifts, said William Villalon, vice president of land transport services for APL Logistics. Inland China will gain traction due to China's massive investment in rail, while India's relaxation of regulations that had impeded rail efficiency will fuel development in more remote regions of that country.

In Mexico's case, the country is benefiting both from "near-sourcing" strategies by U.S. firms and from shippers implementing alternative port strategies to reduce reliance on Los Angeles/Long Beach, said Brian Bowers, senior vice president of intermodal and automotive for Kansas City Southern Railway. Part of Mexico's attraction lies in its physical connection to the United States and short transit times, particularly as concerns about future fuel costs rise, he said. Automotive and appliance manufacturers in particular have been leaders in near-sourcing, he said. (For example, LG Electronics recently chose to relocate its manufacturing operations in Mexico.)

Mexico is not ideal for all, however. Some apparel manufacturers are starting to consider shifting some sourcing farther south into Central and South America, said John Ferguson, vice president of international for Schneider Logistics.

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