Is it daily that container rates increase? Driving landed costs of imported goods higher, knocking on local input prices?
The source of this surge varies depending on who you ask. From post-covid stimulus in America, to geopolitics, to underinvestment in shipping there are many causes. you can read some opinions here:
Whatever the cause, the effect is changing cost dynamics that possibly change the equation in favour of local sourcing – at least in the near-term.
There are several freedoms from frightening freight forecasts offered by locally manufacturers that should make it attractive to those who have been importing until now.
Operating in the same legal jurisdiction, levels of trust are often higher and local manufacturers will give better payment terms, that match more closely the terms under which you sell to your customers.
Advance payments or deposits are rare once relationships are established and in any case, order sizes can be reduced to fulfill monthly demand rather than compensating for volume requirements and lead times.
In accounting terms, shorter lead times or smaller orders can allow reduced stocking levels, higher stock turns and lower working capital.
Add to that, reduced floor space to store imports and ‘dead stock’ => inventory freedom looks pretty compelling.
Freight and production economies give marketers tactical freedom to run sku’s at lower volumes, as well as enhance the ability to develop or improve products at low risk.
In the longer term, working with local manufacturing partners is likely to pay off as your business helps them invest in automation, R&D and other technologies.
So, whilst costs of local production have risen in line with general global inflation, the dynamics have changed – and may work in your favour….
Give us a try…