Abstract
Global supply chain disruptions, particularly those arising from the COVID-19 pandemic and escalating geopolitical tensions, have prompted multinational corporations to reconsider their sourcing strategies. Nearshoring—the relocation of production and supply activities to geographically proximate regions—has emerged as a prominent response mechanism. This dissertation synthesises contemporary academic literature to examine whether nearshoring genuinely reduces supply chain risk or merely redistributes vulnerabilities to new locations. Through systematic literature synthesis, the analysis reveals that nearshoring demonstrably reduces certain risk categories, including lead-time variability, logistics complexity, and coordination failures. However, the evidence also indicates that nearshoring, when implemented as an isolated strategic intervention, may re-concentrate vulnerabilities within a single proximate region, exposing firms to localised political, economic, and climatic shocks. The findings suggest that optimal risk mitigation emerges when nearshoring is combined with complementary strategies, including multisourcing, enhanced inventory management, and robust governance frameworks. This research contributes to supply chain resilience scholarship by clarifying the conditional effectiveness of nearshoring and identifying critical success factors for its implementation.
Introduction
The past decade has witnessed unprecedented disruptions to global supply chains, fundamentally challenging the prevailing paradigm of geographically dispersed, cost-optimised production networks. The COVID-19 pandemic exposed critical vulnerabilities in extended supply chains, with port closures, freight volatility, and production halts cascading through interconnected global systems (Remko, 2020). Simultaneously, escalating geopolitical tensions, trade disputes, and regional conflicts have introduced additional uncertainty into international sourcing arrangements. These compounding disruptions have catalysed a strategic reassessment among multinational corporations regarding the configuration of their supply networks.
Within this context, nearshoring has emerged as a prominent strategic response. Nearshoring involves relocating production, manufacturing, or sourcing activities from distant offshore locations to geographically closer regions, typically within the same continent or time zone as the firm’s primary markets (Chaturvedi and Walker, 2023). For North American firms, this frequently entails shifting operations from Asia to Mexico or other Latin American countries; for European enterprises, Eastern European nations often represent preferred nearshore destinations (Capello and Dellisanti, 2025).
Proponents argue that nearshoring offers compelling advantages: reduced lead times, simplified logistics, enhanced communication through cultural and linguistic proximity, and diminished exposure to geopolitical risks affecting distant regions (Huq, Pawar and Subramanian, 2020). Indeed, empirical evidence suggests that Mexican exports to the United States surpassed those from China by 2023, indicating a substantial reorientation of North American supply networks (Stringer and Ramírez-Melgarejo, 2023). However, critical scholars question whether this geographical relocation genuinely reduces aggregate supply chain risk or simply transfers vulnerabilities to new locations, potentially creating different but equally significant exposure profiles.
This dissertation addresses this central question through comprehensive synthesis of contemporary research. The topic carries substantial practical significance for supply chain practitioners navigating post-disruption recovery, whilst contributing theoretically to scholarly understanding of supply chain resilience mechanisms. Furthermore, the research holds policy relevance as governments increasingly promote reshoring and nearshoring through industrial strategies and trade incentives.
Aim and objectives
Aim
The primary aim of this dissertation is to critically evaluate whether nearshoring strategies implemented following supply chain disruptions effectively reduce supply risk or whether they predominantly relocate vulnerabilities to different geographical locations.
Objectives
To achieve this aim, the following specific objectives guide the research:
1. To identify and analyse the mechanisms through which nearshoring may reduce specific categories of supply chain risk.
2. To examine empirical evidence regarding the resilience outcomes of nearshoring strategies implemented in response to recent disruptions.
3. To investigate the conditions under which nearshoring may transfer or reconcentrate vulnerabilities rather than eliminate them.
4. To determine the complementary strategies and contextual factors that influence the risk-reduction effectiveness of nearshoring initiatives.
5. To develop evidence-based recommendations for practitioners and policymakers regarding the optimal implementation of nearshoring strategies.
Methodology
This dissertation employs a systematic literature synthesis methodology to address the research objectives. Literature synthesis represents an appropriate methodological approach when the research aim requires consolidation and critical analysis of existing empirical and theoretical contributions across a defined domain (Tranfield, Denyer and Smart, 2003). Given the emerging nature of post-pandemic nearshoring research, synthesis enables identification of convergent findings, contradictions, and knowledge gaps within the contemporary evidence base.
Literature identification and selection
The literature search encompassed peer-reviewed academic journals, working papers from recognised institutions, and reports from international organisations. Primary databases included Scopus, Web of Science, and Google Scholar. Search terms combined nearshoring-related terminology (nearshoring, near-shoring, reshoring, onshoring, regional sourcing) with supply chain risk concepts (supply risk, supply chain resilience, disruption, vulnerability, risk mitigation).
Selection criteria required publications to address nearshoring within supply chain contexts, present empirical evidence or systematic theoretical analysis, and appear in reputable peer-reviewed outlets or recognised institutional publications. Publications from 2020 onwards received priority given the research focus on post-disruption strategies, though seminal earlier works were included where relevant.
Analytical approach
The synthesis followed a thematic analytical structure organised around the research objectives. Findings were categorised according to risk reduction mechanisms, empirical resilience outcomes, vulnerability transfer patterns, and success factors. This approach enabled identification of both consensus positions and contested claims within the literature, facilitating nuanced conclusions regarding nearshoring effectiveness.
Limitations
The methodology carries inherent limitations. Literature synthesis depends upon the quality and scope of existing publications, potentially reflecting publication bias towards positive findings. Additionally, the recency of post-pandemic nearshoring initiatives means longitudinal evidence remains limited. These constraints are acknowledged whilst recognising that synthesis provides the most appropriate methodology for current knowledge consolidation.
Literature review
Theoretical foundations of supply chain risk
Supply chain risk encompasses the potential for adverse deviations from expected value flows within supply networks, arising from disruptions, uncertainties, or vulnerabilities at any network node or link (Christopher and Peck, 2004). Contemporary supply chain risk management scholarship distinguishes between operational risks, affecting day-to-day flows, and disruption risks, representing low-probability, high-impact events that fundamentally interrupt supply continuity. The COVID-19 pandemic exemplified catastrophic disruption risk, whilst simultaneously revealing accumulated operational vulnerabilities in extended global networks.
Resilience theory provides a complementary conceptual framework, emphasising supply chain capacity to anticipate, prepare for, respond to, and recover from disruptions (Ponomarov and Holcomb, 2009). Resilient supply chains demonstrate adaptability and recoverability, maintaining acceptable performance despite environmental shocks. Nearshoring intersects with resilience theory as a structural adaptation mechanism, reconfiguring network geography to enhance responsiveness and reduce exposure to specific disruption categories.
Mechanisms through which nearshoring reduces risk
The literature identifies multiple mechanisms through which nearshoring may reduce supply chain risk. First, geographical proximity substantially shortens lead times and simplifies logistics arrangements. Van Hassel et al. (2021) demonstrate through total cost of ownership calculations that nearshoring reduces exposure to extended transport chains, port congestion, and extreme freight rate volatility. During the pandemic period, trans-Pacific shipping costs escalated dramatically, whilst port closures created cascading delays; nearshore supply arrangements proved comparatively insulated from these disruptions.
Second, nearshoring facilitates enhanced coordination and communication. Cultural proximity, shared or similar time zones, and reduced language barriers improve information exchange between buyers and suppliers (Huq, Pawar and Subramanian, 2020). De Lima et al. (2025) emphasise that regulatory and institutional proximity further reduces coordination failures and quality problems, enabling faster identification and resolution of emerging issues.
Third, optimisation modelling research provides theoretical support for nearshoring under uncertainty conditions. Wang et al. (2024) demonstrate that under scenarios of high lead-time uncertainty, including pandemic conditions and geopolitical shocks, optimal facility location and sourcing solutions systematically favour nearshore options over distant offshore sources. These models suggest that proximity advantages become increasingly valuable as environmental uncertainty escalates.
Fourth, sector-specific studies illustrate nearshoring benefits in resource-intensive supply chains. Fernández-Miguel et al. (2022) examine Italian ceramics manufacturing, finding that nearshoring and reshoring strategies reduced geopolitical sourcing risk whilst simultaneously improving sustainability outcomes. The concentrated geographical footprint enabled enhanced environmental monitoring and compliance with increasingly stringent European regulations.
Empirical evidence of resilience improvements
Empirical studies examining post-pandemic nearshoring provide evidence of resilience improvements in practice. Stringer and Ramírez-Melgarejo (2023) analyse United States nearshoring to Mexico, documenting that this geographical reorientation is associated with more resilient supply for key sectors. Their analysis reveals that proximity “significantly bolsters” long-term resilience, with Mexican manufacturing exhibiting faster recovery and more consistent supply flows compared to distant Asian sources during disruption episodes.
Alfaro and Chor (2023) examine what they term the “Great Reallocation” in global supply chains, identifying substantial shifts in sourcing patterns away from China towards proximate alternatives. Their research indicates that whilst geopolitical considerations partially drive this reallocation, supply chain resilience objectives feature prominently in corporate decision-making. The empirical pattern suggests firms increasingly value proximity as a risk mitigation characteristic.
Case study evidence further supports resilience benefits. Eniola and Akinbolajo (2022) examine reshoring and nearshoring strategies in post-pandemic United States supply chains, finding that regionalised networks and hybrid sourcing approaches—combining onshore, nearshore, and selectively retained offshore elements—outperform pure offshoring configurations for resilience and responsiveness. These findings suggest that nearshoring need not entirely replace offshore sourcing but can complement existing arrangements.
Executive perspectives corroborate academic findings. Phukan and Kumar (2025) review practitioner evidence, identifying nearshoring, multisourcing, and enhanced supply chain visibility as central resilience levers emphasised by supply chain managers. Importantly, practitioners frame these strategies as risk mitigation mechanisms rather than risk elimination tools, acknowledging residual vulnerabilities even in reconfigured networks. Remko (2020) similarly highlights the gap between academic resilience research and industry practice, noting that nearshoring appears in both scholarly recommendations and practitioner implementation priorities.
Conditions under which vulnerabilities transfer rather than diminish
Despite evidence of risk reduction, the literature equally identifies conditions under which nearshoring transfers rather than eliminates vulnerabilities. Critically, if nearshoring involves relocating concentrated sourcing from one distant location to a single proximate location, firms may exchange one set of geographical risks for another without reducing aggregate exposure.
Stringer and Ramírez-Melgarejo (2023) caution that massive relocation from China to Mexico, without accompanying diversification, creates new concentration risk in the nearshore destination. Similarly, Alfaro and Chor (2023) observe that whilst supply chains are reallocating, excessive concentration in any single geography—whether distant or proximate—perpetuates vulnerability to localised disruptions. Chaturvedi and Walker (2023) explicitly warn against treating nearshoring as a standalone solution, emphasising that single-source nearshore arrangements remain exposed to regional disruption events.
Regional shock exposure represents a distinct vulnerability category. Capello and Dellisanti (2025) examine economic growth in European nearshoring regions, noting that whilst nearshoring brings investment benefits, concentrated economic activity creates exposure to regional political instability, labour market disruptions, and localised economic downturns. Fernández-Miguel et al. (2022) identify energy supply vulnerabilities in European nearshore manufacturing, particularly relevant given subsequent energy market disruptions. Van Hassel et al. (2021) further note that nearshore regions may face climate-related risks distinct from but equally significant to those affecting offshore locations.
Cost, capacity, and policy risks constitute additional vulnerability categories. Eniola and Akinbolajo (2022) identify that nearshore locations frequently feature higher labour costs than traditional offshore destinations, creating margin pressure that may undermine supply arrangement stability. Hoek (2020) examines capacity constraints in nearshore manufacturing clusters, noting that rapid demand increases can overwhelm limited nearshore capacity, forcing firms back toward offshore sources. Van Hassel et al. (2021) highlight policy risks, including changing government incentives, regulatory evolution, and trade agreement modifications that can alter nearshoring economics rapidly.
Complementary strategies enhancing nearshoring effectiveness
The literature consistently emphasises that nearshoring achieves optimal risk reduction when combined with complementary strategies. Multisourcing—maintaining multiple suppliers across different geographical locations—emerges as particularly important. Wang et al. (2024) demonstrate through optimisation modelling that combining nearshore sources with selective offshore backup suppliers provides superior risk-adjusted performance compared to single-location strategies. This hybrid approach captures proximity benefits whilst maintaining geographic diversification.
Inventory strategy adjustments complement geographical reconfiguration. Phukan and Kumar (2025) note that nearshoring enables reduced safety stock requirements due to shorter, more predictable lead times, but firms must carefully calibrate inventory policies to avoid over-reliance on just-in-time replenishment. Appropriate buffer stocks provide additional resilience against nearshore disruptions.
Governance and relationship management mechanisms further influence outcomes. De Lima et al. (2025) emphasise that nearshoring effectiveness depends substantially on governance quality, including contract structures, information sharing arrangements, and collaborative planning processes. Geographical proximity facilitates but does not guarantee effective governance; firms must deliberately develop appropriate relational capabilities.
Discussion
Synthesis of evidence regarding risk reduction
The evidence synthesis reveals substantial support for nearshoring as a risk reduction mechanism, particularly regarding specific risk categories. Lead-time risk, logistics complexity risk, and certain coordination risks demonstrably diminish when firms relocate sourcing to proximate regions. These findings align with theoretical expectations derived from supply chain resilience scholarship and receive empirical validation through case studies, optimisation modelling, and aggregate trade pattern analysis.
The Mexican nearshoring case exemplifies successful risk reduction. Following pandemic-induced supply disruptions, United States firms increasingly sourced from Mexico, benefiting from reduced transit times, simplified customs procedures under the USMCA trade agreement, and enhanced communication enabled by time zone alignment and cultural familiarity. By 2023, this reorientation had produced measurably more resilient supply arrangements for participating firms, validating nearshoring as an effective post-disruption response.
However, the evidence equally demonstrates that nearshoring does not constitute a universal risk elimination mechanism. Rather, it selectively addresses specific risk categories whilst leaving others unchanged or potentially exacerbated. Geopolitical risks may shift rather than disappear; Mexico, for instance, presents distinct political and security considerations compared to Asian manufacturing hubs. Climate risks, labour market dynamics, and infrastructure dependencies differ between regions but do not necessarily favour nearshore locations across all dimensions.
The reconcentration problem
Perhaps the most significant finding concerns the reconcentration of vulnerabilities when nearshoring is implemented without accompanying diversification. Firms that simply transfer concentrated sourcing from one location to another exchange familiar risks for unfamiliar ones without reducing aggregate exposure. This pattern appears particularly likely when nearshoring decisions respond primarily to acute disruption experiences rather than systematic risk assessment.
The reconcentration problem manifests in several forms. First, supplier concentration may persist if firms select a single nearshore supplier to replace a single offshore supplier. Second, geographical concentration continues if multiple nearshore suppliers cluster in a single industrial region vulnerable to localised disruptions. Third, capacity concentration emerges when nearshore manufacturing clusters face aggregate demand exceeding available capacity, creating systemic constraints.
Addressing the reconcentration problem requires deliberate strategy design that incorporates diversification principles alongside proximity objectives. The literature consistently advocates hybrid sourcing configurations combining nearshore primary suppliers with geographically dispersed secondary sources. Such arrangements capture nearshoring benefits during normal operations whilst maintaining resilience against nearshore-specific disruptions.
Contextual factors influencing effectiveness
Nearshoring effectiveness varies substantially across contexts. Industry characteristics matter considerably; sectors with high coordination requirements, quality sensitivity, or time-to-market pressures benefit disproportionately from proximity advantages. Conversely, commodity products with stable specifications and limited coordination needs may realise fewer nearshoring benefits, making cost considerations relatively more prominent.
Product characteristics similarly influence outcomes. Components requiring intensive supplier collaboration during development, frequent engineering changes, or tight quality tolerances benefit from nearshoring more than standardised inputs with well-established specifications. This suggests selective nearshoring strategies, relocating some supply categories whilst retaining offshore arrangements for others, may prove optimal.
Firm capabilities represent another contextual factor. Organisations with sophisticated supply chain risk management practices, robust supplier governance mechanisms, and effective information systems better exploit nearshoring opportunities. Conversely, firms lacking these capabilities may struggle to realise proximity benefits fully, experiencing coordination challenges despite reduced geographical distance.
Policy implications
The findings carry implications for government policies promoting nearshoring and reshoring. Whilst such policies may legitimately pursue objectives including employment creation, strategic autonomy, and supply security, the evidence suggests caution regarding risk reduction claims. Nearshoring does not automatically reduce national or sectoral supply risk; rather, outcomes depend substantially on implementation details including diversification provisions and complementary investments.
Effective policies should encourage diversified nearshoring rather than simple location substitution. Incentive structures could explicitly reward multi-supplier arrangements and penalise excessive concentration. Additionally, policies should address nearshore capacity constraints through infrastructure investment, workforce development, and industrial cluster support, reducing the likelihood that capacity limitations force firms back toward offshore sources during demand surges.
Achievement of research objectives
The analysis substantially achieves the stated research objectives. Regarding Objective 1, the review identifies clear mechanisms—lead-time reduction, logistics simplification, and coordination enhancement—through which nearshoring reduces specific risk categories. Regarding Objective 2, empirical evidence from multiple studies demonstrates resilience improvements in practice, particularly in US-Mexico supply relationships.
Objective 3 is addressed through identification of reconcentration patterns, regional shock exposure, and cost-capacity-policy risks that represent transferred rather than eliminated vulnerabilities. Objective 4 finds substantial evidence that diversification, inventory adjustment, and governance enhancement function as critical success factors. These findings enable evidence-based recommendations addressing Objective 5.
Conclusions
This dissertation has examined whether nearshoring strategies implemented following supply chain disruptions genuinely reduce supply risk or predominantly relocate vulnerabilities. The evidence synthesis supports a nuanced conclusion: nearshoring demonstrably reduces certain important supply risks, particularly those associated with extended lead times, logistics complexity, and coordination across significant geographical and cultural distances. These benefits are empirically validated in post-pandemic nearshoring cases, notably in North American supply chain reorientations toward Mexico.
However, nearshoring does not constitute a comprehensive risk elimination strategy. When implemented as an isolated intervention without accompanying diversification, it may reconcentrate vulnerabilities in the nearshore destination, exchanging one geographical risk profile for another. Regional political instability, energy supply disruptions, labour market constraints, and localised climate events represent vulnerabilities that may intensify through nearshore concentration even as transport-related risks diminish.
The research establishes that optimal risk reduction emerges when nearshoring combines with complementary strategies. Multisourcing maintains geographical diversification whilst capturing proximity benefits for primary supply flows. Appropriate inventory strategies provide buffers against residual uncertainties. Robust governance mechanisms ensure that geographical proximity translates into effective coordination and communication advantages.
For practitioners, these findings suggest that nearshoring decisions should emerge from systematic risk assessment rather than reactive responses to acute disruptions. Implementation should incorporate diversification requirements, capacity contingencies, and explicit consideration of nearshore-specific vulnerabilities. For policymakers, the evidence counsels caution regarding claims that nearshoring promotion automatically enhances supply security; policy design should encourage diversified configurations and address capacity constraints in nearshore regions.
Future research should examine longitudinal resilience outcomes as post-pandemic nearshoring strategies mature, enabling assessment of whether early resilience benefits persist or whether reconcentration vulnerabilities eventually manifest. Additionally, comparative research across industries and product categories would illuminate contextual effectiveness variations, supporting more targeted implementation guidance. Finally, quantitative modelling incorporating comprehensive risk categories would enable more precise optimisation of hybrid sourcing configurations balancing proximity and diversification objectives.
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