'China+1' reshoring trend could provide a fillip for air freight

17 July 2023

'China+1' reshoring trend could provide a fillip for air freight

Airfreight could benefit from the infrastructure and resource concerns generated as the trend for companies re-shoring from China gathers pace.

After Covid supply chain disruption and amid simmering China-US tension, there is a marked effort from western firms to set up production facilities outside the people’s republic, with Vietnam the top destination for the “China+1” model.

A European shipper source told “Re-shoring is very definitely happening. But with this a fairly recent phenomena, Vietnam has not had time to build adequate infrastructure for logistics facilities like ports, and with new companies pouring in, it’s very much hitting the overflow mark.”

The source noted that given this, some shippers were looking at alternatives in the region, with Thailand, Laos and “even” Burma under consideration.

Elsewhere, Mexico has also been a benefactor from the US-China trade tension, although some sources told they thought media coverage was “over-egging the pudding”, and that China would remain number-one.

Nonetheless, the source added: “Long-term, I think reshoring will become as pronounced as the hype, and countries will get wise to this and meet the demand. But short-term, I believe the strain on existing infrastructure will be a boon for airfreight.

“There are international companies looking at Vietnam, but so are Chinese companies that want to avoid being embroiled in geopolitical issues. And when there a problems sourcing capacity through ports and by ocean, we see air willing to step into the breach with shippers willing to pay for this.”

One site already close to capacity is northern Vietnam’s Deep-C 2 industrial site, where marketing executive Dung Bui Thi Thuy told the UK it was considering reclaiming land from the sea.

This, though, would not be a quick process – particularly given Vietnamese bureaucracy, the shipper said.

By: Alex Whiteman

Source: theloadstar.com