Nearshoring shifts production closer to key markets, which improves responsiveness and reduces risks. It is a necessary strategy for future-proof manufacturers.
Introduction
Nearshoring is establishing itself as a strategic response to the significant challenges that global supply chains have faced in recent years. To reduce risk and speed up deliveries, this trend is prompting manufacturers to rethink their sourcing strategies and move production closer to home markets. The growing importance is measurable: a report shows that nearshoring investments increased by 62 % in 2022 and 2023 compared to 2018-2019.
This article examines how digital manufacturing platforms such as FACTUREE, with its network of European suppliers, are helping companies to reduce complexity in procurement and future-proof their purchasing.
Challenges in procurement from overseas
Long shipping times
It usually takes between 30 and 45 days to ship parts from China to major European ports. These schedules are often extended due to factors such as adverse weather conditions, port congestion and delays in customs clearance. The corona pandemic has exposed the problem of global port congestion. Likewise, the cargo ship Ever Given has disrupted global shipping routes.
These delays not only affect production, but also increase inventory costs and supply chain vulnerability. According to one report, supply chain disruptions cost the average company 45% of a year's profit over a decade. Transportation delays are among the biggest culprits.
Geopolitical instability and trade conflicts
Geopolitical instability continues to pose a significant challenge for supply chains. One example of this is the recent security incidents in the Red Sea. Attacks on merchant vessels by the Houthis have resulted in major shipping companies such as Maersk, MSC and CMA CGM having to suspend or reroute their operations around the Suez Canal. In addition, the ongoing conflict between Russia and Ukraine is affecting access to trade corridors and raw materials. Detours not only extend shipping times, but also increase fuel consumption.
Uncertainty in trade policy is also affecting procurement from overseas. For example, the latest reciprocal tariffs imposed by the USA can exert unexpected pressure on procurement strategies and budgets.
Exchange rate fluctuations
Exchange rate fluctuations are another concern for companies that operate across borders. According to a study published on ResearchGate, even small currency fluctuations can increase a company's operating costs.
These have an impact not only on direct procurement costs, but also on logistics costs. KPMG notes that poorly managed currency risk can lead to unforeseen losses or missed opportunities to optimize costs. The Bank for International Settlements (BIS) emphasizes that foreign exchange markets can become particularly volatile in times of economic uncertainty. This volatility makes it more difficult for companies to plan ahead.
Complex compliance processes and limited transparency
When sourcing from international suppliers, companies must comply with numerous regulations. In a Reuters survey, supply chain experts cited compliance with international trade documentation, cross-border tax frameworks and environmental regulations as their biggest challenges.
With the Carbon Border Adjustment Mechanism (CBAM), the European Union has introduced an instrument that ensures that the CO2 price of imports corresponds to the CO2 price of domestic production. The EU regulation on conflict minerals aims to prevent the use of minerals that are involved in armed conflicts or human rights violations. Meeting all these requirements increases the administrative burden in the procurement process.
Key advantages of nearshoring
Faster delivery times
When companies procure goods within Europe, transit times can be reduced from several weeks or over a month to just a few days. European road and rail freight transportation can deliver goods within two to ten days. This increase in speed enables leaner manufacturing strategies such as just-in-time (JIT) production and lower storage costs. For example, IT giant HP, one of the earliest adopters of JIT production, achieved inventory reductions of up to 75 % and labor cost reductions of between 15 % and 50 % in various business areas.
Lower transportation costs and environmental impact
For companies, sourcing goods from nearby and related countries is one of the most effective ways to reduce transportation costs. By sourcing within Europe, companies are protected from fluctuations in international freight rates. A look at historical data shows that truck and rail freight costs in Europe tend to be more stable than ocean freight. In addition, ongoing infrastructure improvements through the EU's Trans-European Transport Network (TEN-T) are continuously improving the efficiency of cross-border freight transport.
Nearshoring also has environmental benefits. Fewer intercontinental shipments mean lower emissions, which helps companies to meet strict sustainability targets.
Elimination of customs duties and taxes within the EU
A key advantage of relocating production within Europe is that companies do not have to worry about customs duties and taxes. Thanks to the EU's customs framework, goods can be transported across internal borders with little effort. This significantly reduces costs and the administrative burden for companies.
A 2021 Eurostat report highlighted that intra-EU trade was more resilient than trade with non-EU countries during the pandemic disruptions.
Easier compliance with strict local regulatory requirements
Compliance with regional regulations is easier when working with local suppliers. Manufacturers in the EU are already familiar with frameworks such as the Conflict Minerals Regulation. This makes it easier for companies to ensure sustainability, ethical sourcing and environmental responsibility throughout the supply chain. In addition, sourcing from a supplier in the same region enables a quick response to new regulatory requirements.
The role of FACTUREE in your nearshoring strategy
For companies that want to optimize their supply chains through Nearshoring more resilient and efficient, choosing the right partner is crucial. As an online manufacturer, FACTUREE offers a comprehensive platform that not only enables the switch to local procurement, but also simplifies it in a targeted manner.
Flexible nearshoring via supplier network that supports rapid production relocation
A successful Nearshoring-strategy stands and falls with access to the right manufacturing partners. FACTUREE operates a Broad network of certified manufacturing partnersalso in Europe. This capability is the basis for successful nearshoring: it not only ensures High quality and conformitybut also reduces logistical problems. It enables companies to quickly relocate production in response to global disruptions. For example, if tariffs on Chinese goods suddenly increase or geopolitical conflicts disrupt shipping routes, FACTUREE can help companies place orders with European suppliers within the network.
Tailor-made nearshoring based on customer-specific requirements
Successful nearshoring also means that each customer's needs are unique and require an independent solution. FACTUREE's distributed network is therefore designed to meet customer-specific sourcing requirements. It covers a wide range of technologies, including 3D printing, CNC machining, Sheet metal processing, Laser cutting, Injection Molding, Die Casting and Vacuum Casting. The network has modern machines that are capable of delivering tight tolerances. For example, FACTUREE offers tolerances of just ±0.01 mm for CNC milling and CNC turning. The contract manufacturer also offers scalability rarely found with traditional suppliers. Whether you are 3D printing a prototype or producing components for an established company in want to produce seriesFACTUREE's network is equipped for this.
Nearshoring simplifies compliance with regulations
A key benefit of any nearshoring initiative is simplified compliance with regulations. FACTUREE ensures that the drawing parts are delivered with all the necessary documentation. In addition, sourcing within Europe further simplifies the compliance process. For example, CBAM requires importers to pay a CO2 price for imported goods. By sourcing parts from Europe, customers do not have to worry about CBAM as it only applies to goods sourced from outside the EU. This reduces the administrative burden and compliance risk for procurement teams.
Personal support and advice for your nearshoring strategy
The switch to nearshoring requires trust and reliable partners. FACTUREE assigns a dedicated account manager to each client. who remains the contact person throughout the entire process. As this contact person is familiar with the customer's requirements, problems are solved quickly. FACTUREE takes full responsibility for the quality of the parts supplied. If a product requires repair or replacement, the company acts promptly and without unnecessary bureaucracy.
Conclusion
Nearshoring has become a necessary strategy for companies seeking stability and transparency in their supply chains. By moving production closer to their markets, companies benefit from faster deliveries, lower transportation costs and easier compliance with regulations. Nearshoring also enables better communication with suppliers, faster iteration cycles and a smaller carbon footprint.
Isi, Chandrakant (2025): How Nearshoring Streamlines Manufacturing and Strengthens Supply Chains (online). WeVolver. Available at: https://www.wevolver.com/article/how-nearshoring-streamlines-manufacturing-and-strengthens-supply-chains. A translation from English.
Nearshoring: FAQs
Nearshoring refers to the strategic relocation of business processes - such as production, IT services or customer service - to a geographically and culturally close foreign country. Instead of operating production facilities in distant countries (offshoring), companies are moving their value creation closer to their home markets in order to create a more resilient, agile and efficient supply chain.
In recent years, this strategy has developed from a trend to a strategic necessity for many European, particularly German, companies. In the face of global supply chain crises, geopolitical tensions and rising transport costs, nearshoring is the logical response to minimize risk.
The essential Difference between nearshoring and offshoring lies in the geographical distance of the production site and the associated strategic orientation.
At the Offshoring business processes, such as production, are relocated to distant countries (e.g. in Asia). The primary goal is to benefit from extremely low labor costs. However, this is often accompanied by long, complex supply chains, high transportation costs, significant time differences and geopolitical risks. Cooperation can be hampered by cultural and language barriers.
Nearshoring on the other hand, focuses on relocation to a geographically and culturally close foreign country (e.g. Eastern Europe or Portugal for German companies). The focus here is not just on the lowest price, but on a balance of efficiency, security and agility. The advantages are short delivery routes, faster response times, lower risks and simplified communication thanks to similar time zones and working cultures.
To summarize: Offshoring maximizes cost savings at the expense of complexity and risk. Nearshoring optimizes total costs and creates a more resilient, controllable and sustainable supply chain.
The decisive Difference between nearshoring and reshoring lies in the destination of the production relocation, even if both strategies are aimed at a more resilient and secure supply chain.
At the Reshoringalso known as "backshoring", companies bring their production completely back in-house. Home country. The aim is maximum control, the highest quality standards (e.g. "Made in Germany") and the strengthening of the domestic economy. This strategy is often associated with the highest wage and operating costs, but offers the shortest delivery routes and the greatest independence from geopolitical disruptions.
Nearshoring on the other hand, is relocating production to a geographically and culturally near abroad - for Germany to Poland, the Czech Republic or Portugal, for example. This strategy seeks the optimal compromise: it reduces the risks and complexity of distant offshoring, while at the same time utilizing cost advantages and qualified pools of skilled workers in the surrounding European countries. Supply chains remain short and control remains high.
To summarize: While Reshoring represents the ultimate security and control strategy, is Nearshoring the pragmatic middle way that combines cost awareness with stability and proximity.
The fundamental Difference between nearshoring and onshoring lies in whether or not a national border is crossed when business processes are relocated.
Onshoring (often used synonymously with reshoring) means that companies consciously optimize their production or services. in your own home country or relocate back there. The aim is maximum control, the shortest possible supply chain and the strengthening of the domestic economy, usually at the highest operating costs. The entire process takes place within national borders.
Nearshoring on the other hand, refers to the relocation to a geographically and culturally close foreign countries - for a German company to Poland, the Czech Republic or Portugal, for example. This strategy seeks a middle way: it makes use of the often lower costs and availability of skilled workers in neighboring countries without sacrificing the advantages of short delivery routes, high stability and cultural proximity.
To summarize: Onshoring prioritizes absolute security and control at home. Nearshoring offers a good balance of cost efficiency and stability by using locations close to home but abroad.
