According to the latest report by consulting firm Savills, Portugal, the Czech Republic and Poland in Europe, Japan and Singapore in Asia, and Canada in both Americas are the best locations in their respective regions for industrial tenants looking for nearshoring opportunities in supply chains.
The 2024 Nearshoring Index compiled by Savills classifies 26 countries based on factors that may be important for companies looking for new locations to shorten or diversify supply chains, as well as reduce dependence on foreign imports. These factors include economic resilience, economic costs (including rents, energy and labor costs), business environment, and ESG results.
This year’s top five countries for nearshoring according to the index are Portugal, Czech Republic, Poland, Sweden and Japan. However, the authors of the index note that, depending on tenant priorities, other locations with lower rankings may be preferred. These may be places where costs are higher, but they have better results in terms of environmental protection and business conditions.
Małgorzata Lińska-Bator, Director in the Investment Consultancy Department at Savills, highlighted that investors and developers from the logistics real estate sector active in the Polish market have recently been enjoying an increase in activity among tenants. The steady popularity of the nearshoring trend is one of the reasons for the 19% growth in total gross demand in the first half of the year compared with the year-on-year. This has allowed Poland to secure third place on the 2024 Nearshoring Index.
Poland is considered one of the most attractive places for companies moving production closer to their customers. The main advantage of the Polish market as a nearshoring location is the shortened supply chain, lower transport costs and shorter order fulfillment times, which are crucial in a dynamically changing economic environment. Locating production closer to the markets allows companies to react faster to customer needs and minimize the risks associated with disruption in global supply chains.
Katarzyna Pyś-Fabiańczyk, Head of Industrial Services Hub, Savills, commented that Poland stands out with competitive operating costs, including the rental of industrial, logistics and warehouse space, and low operating costs. This makes Poland a leading choice, especially in the Central and Eastern Europe region, while simultaneously providing access to the single European market.
The growing automation and robotization of production is another important factor attracting companies looking for modern industrial solutions. Automation allows for further cost optimization and increased production efficiency, critical in the face of increasing pressure for innovation and rapid adaptability to market changes.
According to Savills, traditional cheap locations were the biggest beneficiaries of the first wave of offshoring as companies prioritized costs. However, with recent significant disruptions in supply chains and increasing importance of ESG issues, decision-making processes are also considering other locations.
Some locations which perform well in the economic costs category in the Nearshoring Index do not necessarily achieve high results in terms of resilience, business environment and ESG. Exceptions to this are Poland, Portugal and the Czech Republic, which offer a unique combination of low costs, economic stability and access to the single European market. A similar role in the APAC region is played by South Korea, offering lower costs, although it is ranked lower than other APAC countries such as Japan and Singapore.
Initial concerns associated with nearshoring related to the potential for complete global supply chain transformation. The reality turned out to be more complex. Companies deciding to relocate their production are still primarily focused on reducing costs, so cheaper locations remain attractive. However, factors not directly related to costs, such as access to modern technologies, a strong educational infrastructure and the human factor, are becoming increasingly important.
Katarzyna Pyś-Fabiańczyk stated that Poland can stand out among other locations by combining various potentials and offering competitive operating costs while simultaneously having access to modern technologies.
Source: https://managerplus.pl/polska-na-3-miejscu-w-europie-w-indeksie-nearshoringu-2024
