Expert: Businesses must focus on nearshoring during supply chain crisis

By George Slaughter, News Editor
Posted 9/15/22

Businesses must focus on nearshoring—shipping from ports closer to home—as supply chain issues continue to affect the economy, a supply chain expert said Thursday.

Margaret Kidd is …

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Expert: Businesses must focus on nearshoring during supply chain crisis

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Businesses must focus on nearshoring—shipping from ports closer to home—as supply chain issues continue to affect the economy, a supply chain expert said Thursday.

Margaret Kidd is program director for supply chain and logistics technology, and an instructional assistant professor at the University of Houston College of Technology. She spoke at a Katy Area Chamber of Commerce meeting held at Alamo Drafthouse, 2707 Commercial Center Blvd.

Katy’s location, coupled with the strong business climate, presents opportunities for economic growth. Kidd showed a map that projected future Greater Katy Area population growth.

“Everything is growing between US 59 and I-10 where we’re sitting right here,” Kidd said. “And so, there’s a lot of opportunity as that population expands into our region. And then, when we look at the jobs, it’s the same phenomenon, so between US 59, I-10 and then a little bit up towards US 290. We have another decade plus of growth and we do have to work together collectively with our school districts and with higher ed, with the community colleges, the technical colleges, the economic development folks, the chambers to keep that momentum going.”

While the Katy area continues to do well, the situation in Europe is very different. There, she said, gas prices are high because of oil pipelines being cut off. Countries have also imposed trade sanctions on Russia because of its invasion of Ukraine.

“We’re starting to read about factory closures,” Kidd said, adding just within the last month, steel manufacturing plants have closed in Spain and Germany. “Because we’re so interconnected, there are concerns globally of a slowdown.”

The situation in China, Kidd said, involves both lockdowns and access to power, with factory closures due to power surges.

“Now, certainly the situation in China has improved from the spring when 45 cities were on lock down at about 400 million people were stuck at home on mandatory confinement,” Kidd said. “But as a result of that and again, go back to the interconnectedness of all our economics. Back in the spring, China was estimated to have a growth rate of 4.2%. That’s a very high youth unemployment rate at 18%.”

Inflation is another factor, Kidd said.

“Inflation has been certainly painful throughout the crisis,” Kidd said. “The shortage of raw materials and the shortage of equipment or components to going to manufacturing, the excessive consumer demand that’s driven inflation up. Right now, we’re around 8.5%. Last year it was 7%.”

Kidd said the US is better positioned on inflation, but not by much.

“Europe is running around 9% on average, 9.1%,” Kidd said.

Kidd said society is not only networked but interconnected. Yet, she said, there are no rules. The flow of capital, information and driving consumption are instantaneous.

Then, the pandemic came.

“We thought that was bad, and then the Ukraine situation came around,” Kidd said. “There are opportunities and we’ve seen some great success stories during COVID, and that was based on organizations and companies that adapted and collaborated and they leveraged technology.”

Kidd said Amazon is one company that successfully did these things.

“Amazon made a lot of news last year when they just went out and said, we’re just going to charter our own ships,” Kidd said. “We’re going to charter our own planes. So, they had excess space and then monetized it. They sold excess space to competitors. That’s logistics as a service. It’s a great method. They were able to get into ports like Houston because there was less traffic.”

Kidd said “nearshoring,” by which she referred to shipping to and receiving goods from Western Hemisphere ports in Mexico, South America, or parts of the Caribbean Sea, requires a renewed focus.

“We need to look at technology and automation and we need to look at logistics as a service,” Kidd said. “No more of this less than a truckload of empty space. That’s not sustainable. We need to figure out how do we collaborate to make a more sustainable supply chain system.”

supply chain management, Katy Area Chamber of Commerce, University of Houston

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