4
min read

NEARSHORING IN THE FASHION INDUSTRY

Published on
October 27, 2023
Geolocation of location or nearshoring towards Colombia.
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Fashion Designer and Content Creator. Daniela leads the social media operations at GAT Fashion Lab

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Nearshoring in the fashion industry


WHAT IS NEARSHORING?

Nearshoring has been gaining strength in the fashion industry since the pandemic. Nearshoring is about relocating operations or production to a country or area close to the customer's/company's country, with the goal of bringing inputs and production closer to customers.

Nearshoring became a trend or gained momentum because companies that previously produced offshore, meaning abroad, grew tired of battling high shipping costs and the various limitations that it implies. Bringing production closer to nearby countries allows companies to focus on speed and flexibility, reduce costs, and increase supply chain efficiency.

 

REVERSING OFFSHORING

The nearshoring trend has reversed decades of offshoring in the fashion industry, where companies initially moved their production to countries like China, where labor was easily available and, above all, cost-effective.

One of the main drivers of offshoring was globalization, which created an environment in which offshoring was fashionable. Although it was in vogue, it brought significant consequences to the industry, such as a decrease in human rights and an increase in environmental impact, making the industry responsible for 8-10% of global carbon emissions according to the United Nations.

 

ADVANTAGES OF NEARSHORING


Due to the environmental impact generated by past years, companies are now seeking to reduce environmental damage and produce in a more sustainable manner. With this strategy, they also aim to protect themselves from future disruptions in supply chains, as was the case with the COVID-19 pandemic.

Nearshoring is considered more environmentally friendly due to shorter shipping distances and faster transport times, resulting in a lower carbon footprint and reduced shipping costs.

When the trend of producing in China and other Asian countries began, it was all about obtaining cheaper labor and materials. However, it was discovered that these places had unethical working conditions, which clashed with the rise of sustainable fashion and changing consumer attitudes.

Nearshoring is also promoted as a responsible and sustainable production method by shifting processes to countries with good labor practices. While it may increase production costs in some cases, consumers prefer sustainable brands regardless of the price.

"The business case for nearshoring centers on market speed, maximizing geographic proximity to consumer markets. Shortened supply chains make successful strategies for accelerating marketing possible, but these supply chains consume much less carbon than traditional transpacific sourcing," says Kimberly Glas, President and CEO of the National Council of Textile Organizations (NCTO).

To learn more about the advantages, click here.

 

MCKINSEY REPORT


COVID-19 left a significant impact on the fashion industry, leading to concerns about the challenges companies faced during the pandemic, including demand instability, logistical bottlenecks, and rising costs.

Supply chain disruptions (shipping prices, raw materials, and capacity-related tensions) are ongoing problems that persist even three years after the pandemic.

According to the McKinsey report, 71% of clothing and fashion brands plan to implement nearshoring by 2025. The interest in implementing this strategy is to prevent future concerns in case of another pandemic.

The main reasons for implementing nearshoring, according to companies, are high transportation costs. "Port closures, port congestion, container shortages, and capacity problems in maritime and air transport are putting enormous pressure on the fashion industry. For the first time, shipping disruptions are becoming the primary price driver," says Karl-Hendrik Magnus, Leader of the Apparel, Fashion, and Luxury Practice and Senior Partner at McKinsey in Germany.

According to the McKinsey report, companies must focus on fast response times and supply chain resilience to remain competitive. Nearshoring is a way to respond more flexibly to supply chain risks and current trends.

RECOMMENDED: A complete analysis of the McKinsey report.

 

NEARSHORING IN COLOMBIA


Colombia is a country that has become a destination for nearshoring in the fashion industry. Over the years, it has distinguished itself for its excellent product quality, recognized designers such as Johanna Ortiz, Diego Guarnizo, Beatriz Camacho, Silvia Tcherassi, Mercedes Campuzano, and Juan Pablo Socarrás, who testify to the high quality and standards maintained in Colombia with their brands and products.

PRODUCTION IN COLOMBIA

The fashion production industry in Colombia employs more than 2 million workers. The labor force in Colombia adheres to high-quality standards in both processes and inputs, with most workers being certified.

Colombia has retail production capacity suitable for boutiques and designers, with good labor practices related to employer treatment, fair wages, and punctual working hours.

Colombia is also known for its creativity and leadership in the fashion industry in Latin America, with internationally renowned fairs such as Colombiamoda and Colombiatex, in addition to various creative talents.

MARKET AND ECONOMY

The fashion industry in Colombia currently sells in some of the world's largest markets. Due to its economic currency, manufacturing costs are lower, and the country has multiple trade agreements that can benefit its brands.

Another advantage of nearshoring in Colombia is the ease of transportation, with a flight distance of only 2 hours to the United States, which would facilitate quality control processes and production monitoring.

SUSTAINABILITY

From its beginnings with Levis to the present day, Colombia has adopted more conscious, humane, and responsible manufacturing models. Production in Colombia is recognized for its environmental friendliness and sustainability. Its proximity to customer countries reduces transport carbon footprint and travel time for production and shipping costs.

Producing in Colombia is a viable international option due to its location, quality, and more. To learn more about this topic, click here.

At GAT Fashion Lab, we are a 100% Colombian full-package manufacturer. If you'd like to learn more about our services, click here.

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