How nearshoring is unlocking growth opportunities for LTL industry

China has long been considered “the world’s factory,” offering Western manufacturers inexpensive, skilled labor and robust supply chain infrastructure. Pandemic-fueled production and shipping delays — combined with rising labor costs and geopolitical tensions across the globe — have undercut those benefits in recent years. As a result, more and more companies are moving their manufacturing operations to North America.

“The global logistics landscape is rapidly changing, and supply chain stability and resilience have become top concerns for many companies,” said Greg DiPalma, vice president of enterprise sales at XPO, a leading provider of freight transportation.

While some of these companies are setting their sights on the United States, both Canada and Mexico are seeing tremendous growth as a result of these nearshoring efforts. This presents an exciting opportunity for the less-than-truckload freight transportation industry, generating significant interest in cross-border capabilities from carriers like XPO, according to DiPalma.

“With the rise of demand for cross-border shipping, LTL becomes an attractive solution,” DiPalma said. “Carriers with vast networks across North America, like XPO, are uniquely positioned to capture this demand as they can provide cost savings, flexibility and better freight handling in general.”

Industrial and automotive manufacturers lead the pack when it comes to nearshoring, but DiPalma is seeing a growing number of consumer goods and e-commerce retail companies follow suit. By moving operations closer to their end customers, these companies can shorten their supply chains, save money on transportation costs and up their sustainability games.

“Moving manufacturing closer to where goods are being shipped helps avoid emissions associated with the production and shipping of those goods from overseas,” DiPalma said. “The shorter transportation cycles reduce carbon footprints and transportation costs, giving customers greater oversight and control of their supply chain.”

Companies should not overlook these potential sustainability gains, as environmental pressure from government leaders and end consumers alike is only expected to grow in the coming years. By cutting out overseas transportation emissions, companies can realize serious eco-conscious improvements virtually overnight.

Despite the growth opportunities nearshoring promises, moving manufacturing operations tends to be an overwhelming task that requires juggling several moving pieces. Partnering with the right carriers is a crucial first step during this time, as it can make the difference between a smooth transition or a logistical nightmare.

DiPalma encourages companies to consider their partners carefully, which includes analyzing their skill sets, proven capabilities and security protocols. Considering the depth of the network is also important. Companies should look for carriers with broad coverage of border crossings, as well as sufficient tractors, trailers and trusted drivers, from a capacity standpoint.

XPO boasts nine U.S.-Canada border crossings, as well as 13 U.S.-Mexico border crossings in XPO service centers in California, Texas and Arizona. The company also has its own in-house trailer manufacturing facility that enables it to respond to shippers’ freight transportation needs with more flexibility.

“Partner with carriers that leverage technology, like we do here at XPO, that will provide you with real-time update and precise delivery ETAs so there is a higher likelihood of on-time delivery and the best customer experience,” DiPalma said.

Ultimately, cross-border success requires a collaborative effort between all members of the supply chain. Choosing the right partners early on in the process holds the key to success — and profitability — from day one.

Click here to learn more about XPO’s cross-border offerings.