28 Mar 2025 Maximum Profit Combines Sourcing and Logistics Savings
Written By Jeffrey Cartwright – 5 min read
Re-sourcing manufacturing from China to Mexico has been a significant focus for many businesses navigating the complexities of tariffs and shifting supply chains. Yet re-sourcing alone is not enough to ensure long-term profitability. True success comes from integrating manufacturing efficiencies with supply chain and logistics strategies to reduce costs holistically.
Historically, the conversation has often centered on the U.S. versus China, in which Mexico emerged as a key beneficiary of the trade war. Looking ahead, however, the dynamics are shifting again. The future may pit US/Canada/Mexico versus China/Vietnam, reflecting a push towards regionalized supply chains in North America.
While Vietnam is often presented as a viable alternative to China, its supply chain independence is limited. Many factories in Vietnam are owned by Chinese companies and rely heavily on raw materials and components sourced from China. This interdependence has enabled China to tactically avoid tariffs, blurring the distinctions between the two regions. Comparing the regional integration offered by North America to the extended, fragmented networks of Southeast Asia reveals significant advantages for businesses focused on long-term stability and profitability.
Logistics: A Critical Element in Profitability
The true cost of manufacturing is not just in production—it extends to the logistics networks that deliver products to market. For companies considering re-sourcing from China, it is essential to evaluate the full financial implications of inbound and outbound logistics.
Inbound Logistics Comparison
- From China: A 40 ft high-cube container shipped to the Port of Long Beach, California, costs approximately $5,000, with an additional $1,000 in drayage and inland transport fees to reach a central distribution center. Transit time averages 30 days.
- From Mexico: A 53 ft truckload van from Monterrey, Mexico, to Dallas, Texas, costs $2,046, including brokerage fees. This option offers 50% more cubic capacity compared to a standard container, which dramatically lowers costs for lightweight products. Transit time is just 3 days.
For high-volume shipments, the savings are striking. For 100 shipments annually:
- China: $600,000 in inbound logistics costs.
- Mexico: $205,000, yielding annual savings of $395,000 for heavier products and up to $465,000 for lightweight shipments.
Outbound Logistics Advantage
The geographic location of a distribution center significantly impacts the efficiency and cost of outbound logistics, particularly for direct-to-consumer businesses in the U.S. Traditionally, many companies have relied on distribution hubs in California’s Inland Empire due to their proximity to West Coast ports. However, with the shift towards near-shoring and centralizing supply chains, locations such as Dallas, Texas, are proving to be far more advantageous.
Consider the following comparison of annual freight costs and transit times:
- From the Inland Empire (California): Freight costs total approximately $2.33 million annually, with average transit times of 4 days to reach the majority of U.S. consumers.
- From Dallas (Texas): Freight costs are reduced to $1.88 million annually, with significantly faster transit times of 2.3 days on average due to its centralized location and proximity to major population centers.
This nearly 20% reduction in outbound freight costs is driven by Dallas’s geographic advantage, as it minimizes the distance to key destinations across the U.S. Furthermore, faster transit times align with the expectations of modern consumers for rapid delivery, particularly in the e-commerce-driven marketplace.
The Inland Empire, while still relevant for shipments arriving from Asia, becomes less optimal when goods are sourced from Mexico. A Dallas-based distribution center simplifies outbound logistics by serving as a natural hub for North America, further amplifying the cost and time savings achieved through near-shoring.
This strategic realignment of outbound logistics underscores the broader advantages of integrating manufacturing and distribution decisions, ensuring that businesses maximize profitability at every stage of the supply chain.
The Opportunity of Regional Integration
The global trade environment is constantly evolving, driven by geopolitical risks, trade wars, and government policies. In this context, regional supply chain integration emerges as the most compelling strategy for businesses seeking long-term resilience.
North America’s USMCA agreement fosters a collaborative ecosystem between the U.S., Canada, and Mexico, creating an opportunity for a robust and highly integrated regional supply chain. This approach reduces reliance on lengthy and fragmented networks in Asia, which are more vulnerable to disruptions.
Vietnam, while frequently cited as an alternative to China, faces significant limitations. Many Vietnamese factories rely on Chinese-owned supply chains, sourcing raw materials and components from China. This interdependency undermines Vietnam’s potential as an autonomous supply chain solution, creating vulnerabilities that North America’s regional integration avoids.
By shifting production closer to the U.S., businesses can reduce lead times, build stronger supplier relationships, and create more agile operations poised to adapt to market changes.
Beyond Manufacturing: A Holistic Approach to Profitability
While manufacturing costs are often the starting point for re-sourcing discussions, they are only part of the equation. Businesses must take a holistic approach, factoring logistics, lead times, and supply chain stability into their decision-making process.
The benefits of near-shoring extend far beyond cost savings. The shorter transit times to and within North America enable leaner inventory management, reduced working capital requirements, and a more responsive supply chain. This interconnected approach ensures that profitability is not sacrificed for short-term savings.
Moreover, the shifting dynamics of global trade—particularly as tariffs and geopolitical tensions continue to shape markets—reinforce the importance of building resilient, adaptable supply chains.
Shoreview Management Advisors: Strategic Guidance for Evolving Supply Chains
Navigating the complexities of global supply chain transitions requires expertise and a strategic vision. At Shoreview Management Advisors, we specialize in helping businesses achieve true profitability by combining sourcing efficiencies with optimized logistics.
With decades of experience in manufacturing and sourcing across North America and Asia, we understand the nuances of shifting production and the opportunities inherent in regional integration. Whether you’re exploring near-shoring to Mexico or re-evaluating your global supply chain, our team is here to guide you every step of the way.
Contact Shoreview Management Advisors today to learn how we can help you create a more efficient, resilient, and profitable supply chain.