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Nearshoring conversation is shifting the role of 3PLs

Nearshoring, the process of shifting all or part of operations from one of greater distance closer to home, has been a topic of discussion over the years by many companies – particularly in the U.S. regarding Mexico. However, due to evolving circumstances and changes in the economy and other factors, this action has been frequently dismissed over time. Since the pandemic, many more companies have started this conversation again and are turning to qualified third-party logistics partners that can help.

Ascent is a 3PL dedicated to elevating logistics through a simplified supply chain and has been in Mexico for more than 10 years with plans to expand even deeper into the country over the coming months. 

“The last two years have been a tough two years. Not only has the strain on global supply chains lasted longer than other disruptions that we’ve seen over the past couple decades, but the impact has been much more severe,” said David Ross, chief strategy officer at Ascent. “That’s finally forcing the nearshoring conversation into action.”

Ross believes these more serious conversations about nearshoring changed the role of 3PL companies from a strategic advisory role to one of execution. As this move is new to many companies, Ascent is working to leverage its expertise in answering the hard questions regarding connecting assets across the border and putting in action plans to make the transition a success.

“As a 3PL partner, you need to be where your customer wants to go, and you need to have advice that will help them make their business better if they want to [expand],” Ross said. “Especially with supply chains having been sped up by e-commerce, you want to be closer to the customer and have more flexibility.”

The expiration of the International Longshore and Warehouse Union contract in July could create even more upset in the industry.

“The labor issues on the West Coast present the risk of making a bad situation worse,” Ross said. “Just as we have seen some reprieve in port congestion, there is now the potential for a slowdown, which could make the congestion and supply chain issues last a little bit longer.”

He said the ILWU could find support as it pushes for higher wages and against the adoption of technology at the ports. 

“The ILWU probably has its strongest case in a while, because while everyone else was on lockdown, they were working to keep goods moving,” said Ross. “And arguing that their workers have sacrificed to keep everything moving during a pandemic and are owed something may not get much push-back from the union-friendly administration.”

You can learn more about Ascent by visiting its website.