Portugal and the Czech Republic in Europe, Japan and Singapore in Asia, and Canada in the Americas are the best locations in their respective regions for industrial occupiers looking to ‘nearshore’ supply chains, according to Savills.
Savills 2024 Nearshoring Index ranks 26 countries on the factors that may be important to occupiers looking for new locations to shorten or diversify their supply chains, and even reduce their reliance on foreign imports.
These factors include their resilience, economic cost including rents, energy and labour costs, business environment and ESG performance.
The top five locations overall are Portugal, Czech Republic, Poland, Sweden and Japan, although Savills said that depending on occupiers’ individual priorities, other locations further down the Index may be preferred, such as those where costs may be higher but have stronger environmental credentials and a better business environment, whilst others may perform exceptionally well but only in one pillar.
According to Savills, traditionally low cost hubs were the largest beneficiaries of the original wave of offshoring, as occupiers prioritised cost, but with the impacts of supply shocks and an increased focus on ESG performance, many are now weighing other factors in their decision-making process, although budgets are still a major driving force.
Locations that score well in the Nearshoring Index’s economic cost pillar, however, don’t tend to score as highly for resilience, business environment and ESG. The exceptions are Poland, Portugal and the Czech Republic, which provide a rare combination of being low cost, resilient, and provide occupiers with access to the European single market; South Korea serves a similar purpose in APAC and offers lower costs, even though it appears lower in the Index than other APAC countries such as Japan and Singapore.
Charlotte Rushton, analyst, Savills World Research, said: ‘When nearshoring began to emerge, there were concerns of a wholesale global supply chain upheaval. What has occurred so far, however, is more subtle: manufacturing trends appear to show that although companies are setting up in new locations, they’re still prioritising reducing costs, therefore favouring locations such as Mexico and Vietnam. But there are exceptions: some manufacturing, such as semiconductors, electric vehicles and energy, is more sensitive to geopolitics and trade policy, so occupiers here tend to prioritise higher-skilled and higher-valued production, and therefore favour locations such as Sweden, the UK and US.’
Ranking
Savills Nearshoring Index 2024:
Country Rank
1 Portugal
2 Czech Republic
3 Poland
4 Sweden
5 Japan
6 Singapore
7 Canada
8 South Korea
9 Spain
10 United Kingdom
11 Vietnam
12 China
13 Mexico
14 France
15 Germany
16 Norway
17 Austria
18 Netherlands
19 Italy
20 United States
21 India
2 Denmark
23 Australia
24 Romania
25 Ireland
26 Belgium
