The Exciting Growth of 3PL Outsourcing Logistics Options in Mexico
October 4, 2021
Commonly referred to as 3PLs, third-party logistics providers are often used by companies that are looking to outsource elements of their distribution, picking and packing, and fulfillment in Mexico. U.S. companies have typically outsourced to 3PLs with facilities in China, but more and more companies are now choosing to manufacture in Mexico due to advantages such as the country’s skilled workforce and proximity to the United States. As Mexico takes over as a top global manufacturing hotspot, opportunities for third party logistic outsourcing have grown too.
Why the 3PL Industry is Growing
Though 3PL growth in Mexico still has large amounts of untapped potential, more companies are moving there to benefit from the competitive advantages the country offers.
Free Trade Agreements
A key reason many 3PL providers are deciding to relocate their business to Mexico is to take advantage of the cost savings afforded by the USMCA and Mexico’s other free trade agreements. With fewer restrictions, taxes and tariffs placed on the movement of materials and products, 3PLs reduce their transportation and shipping costs and simultaneously increase service speed.
In addition to providing an incentive for 3PLs to relocate to Mexico, these free trade agreements continue to attract global manufacturers, increasing the need for supply chain management services and expanding a 3PL provider’s client base.
Mexico offers vital infrastructure advantages for third party logistics companies looking to get a competitive edge. The country is home to new and extensive highway systems to easily connect 3PLs with North American consumer markets. Mexico also contains numerous seaports on both east and west coasts that are equipped to handle the shipping needs of large-scale production facilities.
Mexico has become a place of emerging technologies as a result of investment from the Mexican government and the competition of companies looking to adapt their technology to better fulfill consumer demands. In combination with low labor costs and a workforce with people skilled in IT support, Mexico’s technological growth has made it an attractive location for 3PLs, who often rely on advanced software solutions to provide more efficient inventory management and order fulfillment services.
Globalization, consumerism, and the popularity of e-commerce continue to rise, contributing to the rapid growth of 3PLs. To keep up with consumer demand for quick, seamless product delivery, companies in Mexico are outsourcing to 3PLs in the hopes of optimizing their logistics operations. However, this need for logistics support is not just limited to e-commerce. Other industries, especially Mexico’s automotive industry, are requiring more sophisticated solutions for cross-border, overseas, and domestic logistics.
Alternatives to 3PL for Manufacturers
While 3PLs offer manufacturers a cost-effective solution to warehousing, distribution, and fulfillment, manufacturers risk losing control over distribution and warehousing processes. This means potentially losing control of product quality and customer satisfaction as well.
Because of this, many manufacturers choose to only outsource strategic components of their business to maintain more control. While receiving supply chain support from their 3PL, these companies can benefit from the administrative and compliance services provided by IMMEX shelter companies, such as NAPS.
Setting up your 3PL or Manufacturing Business
There are many logistics options in Mexico, and whether you’re a logistics provider or manufacturer, NAPS is able to give you the guidance and support you need to succeed in Mexico. With more than 30 years of experience, we offer full administrative and compliance management services and are equipped with the expertise to support 3PLs and manufacturing companies. Contact NAPS today to learn more about what we can do for you.