As noted in this recent Supply Chain Management Review article on the short tail, analyst Jeff Rubin estimates that the cost of transporting imported goods into the United States is now equivalent to a 9% tariff on imports. Nine Percent! That’s a significant cost considering it’s supposed to be “low cost country sourcing”. In addition, the cost of fuel is now about 40% of carrier operating costs — it used to be about 15%. And the U.S. dollar has significantly decreased in value against the Yuan, Yen, and Euro over the last three years, close to 20%. In fact, the decrease is so significant that, as I noted in a recent post, the United Nations Conference Is Calling For A New Global Currency.
When you put it all together, near-sourcing is starting to look pretty good, and a lot of smart companies are going to do it. And they’re going to win big.
Furthermore, so are a number of other companies as well. Who’s going to benefit, besides the companies that near-source to save transportation related costs? The SCMR article points out three types of companies who can win big with the coming shift:
- Near-Sourcing Transportation & Service Providers
Truck and rail is poised for growth, and so are 3PL firms that manage near-sourcing transportation.
- Warehousers and Packagers
Companies that can offer warehousing and packaging services to near-sourcing companies are also poised for growth.
- Domestic Raw Materials & Manufacturing
Near-sourcing means local production, and that means local manufacturing and raw materials.