Is nearshoring the next big investment opportunity?
Rethinking global supply chains
The global economy has been through a turbulent few years. From the pandemic to geopolitical tensions, businesses have been forced to reassess how and where they operate. One emerging response to these pressures is the trend known as nearshoring, a move to bring supply chains closer to home, prioritising resilience over pure efficiency.
While the term may not be as widely known as offshoring or reshoring, its implications for the global economy, and for investors, could be far-reaching.
From “just-in-time” to “just-in-case”
Nearshoring represents a fundamental shift in strategy. Traditionally, many firms have used just-in-time logistics
to keep costs low, relying on complex global supply chains and minimal inventory. But this approach has shown its vulnerabilities, particularly in times of disruption.
As a result, companies are increasingly moving towards “just-in-case” models, where reliability, responsiveness and control take precedence over the lowest possible production cost. This has led to renewed interest in moving manufacturing, logistics and operations closer to end markets.
Who’s nearshoring, and where?
Nearshoring doesn’t mean everything comes back home. Instead, companies are looking at regional alternatives that offer a better balance of access, cost and stability.
Countries such as Mexico, Poland and Vietnam are positioning themselves as attractive nearshoring hubs. These locations can offer lower labour costs than domestic markets, while still allowing for quicker delivery times and reduced transport complexity compared to distant offshore regions.
As supply chains shift, demand is increasing in sectors such as automation, logistics, infrastructure and advanced manufacturing – all areas that could benefit from increased regional investment.
Is this a short-term reaction or a structural shift?
There’s ongoing debate about whether nearshoring is a temporary response to recent shocks, or a more enduring structural change. Some argue that globalisation remains the dominant force in international business. In fact, according to investment manager PGIM, around 75% of the world’s economy is still geared towards global integration rather than nearshoring¹.
Shehriyar Antia, Head of Thematic Research at PGIM, notes that “even if America’s ‘small yard’ of protected industries grows larger, companies in most industries will still seek out the benefits of free trade and competitive advantage.”
Yet others see nearshoring as a necessary evolution, not an abandonment of global trade, but a recalibration of its most fragile elements.
Investment implications
For investors, the nearshoring trend raises important questions. Which companies are best positioned to benefit? Where is new infrastructure likely to be built? Which sectors stand to gain from supply chain modernisation?
The answers aren’t always straightforward. Labour costs, political stability, environmental regulation and infrastructure quality all play a part. Additionally, shifting a supply chain is often complex, expensive and time-consuming. Some firms may explore nearshoring but ultimately decide the returns aren’t worth the transition.
Still, for those that do move forward, there may be strong long-term potential, not only for the businesses themselves, but for investors who spot the trend early and back the right sectors or regions.
A long-term view is essential
Like any investment theme, nearshoring shouldn’t be treated as a shortcut to returns. But it does present a potential opportunity for those who want exposure to supply chain innovation, industrial modernisation, or emerging regional growth stories.
If you’re curious about the themes shaping the global economy, we can help identify opportunities that align with your long-term goals.
