Encompass Global Logistics will further expand its network into low-cost manufacturing centers as outsourcing trends evolve, according to a leading executive.
Tom Hickey, vice president, Eastern Region, said 3PLs like Encompass that are already entrenched in a location with offices or agencies could maximize “first mover advantage” when vendors shift production.
“Outsourcing of production continues to mature yet multiple factors will continue to play a role in the ongoing maturation process,” he said.
“Trade flow and shifts in production will continue whenever manufacturing costs begin to rise. Just as a retailer must forecast accurately and put significant emphasis on sound demand planning, so the logistics provider must also forecast trends in manufacturing and be set up and established to meet the demands that a buyers’ supply chain presents.”
Encompass expects growth in Latin American trade in the near term now that Central and South America are viewed by many manufacturers as prime locations for sourcing due to the Caribbean Basin Initiative and rapid transit times available into U.S. markets via Gulf and East Coast ports.
“‘Rapid Replenishment’ continues to play an integral role in the big box retailer strategy and apparel sourcing has shifted to countries such as Columbia and Peru,” Hickey said. “Establishing a greater presence in the Latin American region is one of our core objectives in 2012 and beyond.”
In Asia Encompass also sees Vietnam and India as opportunities, with both countries expanding their manufacturing capability and improving infrastructure as rising labor costs prompt some manufacturers to diversify production to locations outside China.
“Other shifts in production and trade flows for product destined for the U.S. and Europe is evident in countries such as Kenya, Israel, and South Africa,” Hickey said.
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