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US global sourcing will take time to develop: analysts
来源：shippingazette 编辑：编辑部 发布：2023/02/14 14:00:47
US RETAILERS are replacing the "China plus one" sourcing model they relied on for the past 20 years with a global sourcing strategy,reports New York's Journal of CommerceThe move includes a shift of production to southeast and south Asia, near-sourcing in Latin America, and a return of some production to the US, according to trade experts.
That diversification of product sourcing is needed because the size of China's workforce is declining, its labour costs are increasing, and other countries such as Vietnam and India are investing in manufacturing and logistics infrastructure, said S&P Global Market Intelligence analyst Paul Bingham.
"China faces a difficult challenge for a number of reasons," Mr Bingham said.
National Retail Federation vice president Jonathan Gold said a global sourcing strategy will be needed because no one country has the capacity to immediately step in and replace the production capacity and transport infrastructure that China has built.
"It takes time to shift your supply chain," said Mr Gold. "There is no new China to take up all of the capacity that China had."
Indeed, China, including Hong Kong, still dominates the sourcing landscape, supplying 40.7 per cent of US imports last year. But that was down from 42.4 per cent in 2021 and nearly as low as in 2006, when the share was just 0.1 percentage point higher, according to PIERS data.
Mr Bingham explained that each retail sector will develop a sourcing strategy based on its individual needs, with importers of low-cost consumer merchandise shifting more production to countries with lower labour costs, mostly in southeast Asia and the Indian subcontinent.
The US automobile industry may gravitate toward more co-production with Mexico where parts and electrical components are shipped across the border for assembly using lower-cost labor in Mexico, he said.
High-tech industries that are capable of replacing some of their labour requirements with automation, such as chip producers, will build up their production capacity in the US, said Mr Bingham.
Based on the direction of retail sales and consumer spending, retailers are forecasting a decline in US imports through the first half of 2023, with a slight uptick in the second half of the year, Mr Gold said. This comes after strong retail sales growth of seven per cent in 2022 and especially strong growth of 14 per cent in 2021, he said.
Retailers face a number of challenges, including inflation, high interest rates, and raw material and labor shortages in some sectors. Sourcing uncertainties are also a factor as China attempts to recover from its declines in production due to Covid lockdowns over the past year and deals with US tariffs on its imports.
That diversification of product sourcing is needed because the size of China's workforce is declining, its labour costs are increasing, and other countries such as Vietnam and India are investing in manufacturing and logistics infrastructure, said S&P Global Market Intelligence analyst Paul Bingham.
"China faces a difficult challenge for a number of reasons," Mr Bingham said.
National Retail Federation vice president Jonathan Gold said a global sourcing strategy will be needed because no one country has the capacity to immediately step in and replace the production capacity and transport infrastructure that China has built.
"It takes time to shift your supply chain," said Mr Gold. "There is no new China to take up all of the capacity that China had."
Indeed, China, including Hong Kong, still dominates the sourcing landscape, supplying 40.7 per cent of US imports last year. But that was down from 42.4 per cent in 2021 and nearly as low as in 2006, when the share was just 0.1 percentage point higher, according to PIERS data.
Mr Bingham explained that each retail sector will develop a sourcing strategy based on its individual needs, with importers of low-cost consumer merchandise shifting more production to countries with lower labour costs, mostly in southeast Asia and the Indian subcontinent.
The US automobile industry may gravitate toward more co-production with Mexico where parts and electrical components are shipped across the border for assembly using lower-cost labor in Mexico, he said.
High-tech industries that are capable of replacing some of their labour requirements with automation, such as chip producers, will build up their production capacity in the US, said Mr Bingham.
Based on the direction of retail sales and consumer spending, retailers are forecasting a decline in US imports through the first half of 2023, with a slight uptick in the second half of the year, Mr Gold said. This comes after strong retail sales growth of seven per cent in 2022 and especially strong growth of 14 per cent in 2021, he said.
Retailers face a number of challenges, including inflation, high interest rates, and raw material and labor shortages in some sectors. Sourcing uncertainties are also a factor as China attempts to recover from its declines in production due to Covid lockdowns over the past year and deals with US tariffs on its imports.