Find out why onshoring is growing in popularity

Onshoring is a growing trend in many industries. Even before Covid-19 hit, you could hear this term quite often in the business circle. Politics and the rise of costs have had a major impact on businesses in recent years. This has been a call for changes in business operations. Our movers in Bahrain are well versed in the events. This text intends to provide you with a useful perspective. Let’s find out why onshoring is growing in popularity.  

Offshoring vs. Onshoring – and why onshoring is growing in popularity? 

Professional cargo services in Bahrain have been indeed busy with commercial moving in the past few years. Many companies are deciding to move their businesses back home. For the most part, these are manufacturers and IT companies. To understand better why onshoring is growing in popularity, let’s take a brief retrospective here. We all know how technology improved communication and transport. Many businesses saw opportunities in these developments. So, to save on costs, they started offshoring their companies. Since the mid-80s’, this has become the norm. This is, until recently. Due to increased labor costs and risks due to the political environment, something needs to change. Meanwhile, the market and customer’s demands have changed, also. If we put together all this, it’s not a surprise that onshoring is growing in popularity. 

Freight terminal view
Onshoring is growing in popularity, and analysis shows that the trend will continue

So many terms…but what do they all mean? 

As onshoring is rising to fame, it’s good to have a look into the variation of its’ synonyms. Onshoring, inshoring, reshoring, and backshoring all mean the same. It refers to the process of relocating businesses from abroad back within domestic borders. It is also the process of outsourcing a domestic manufacturer, instead of a foreign one. For example, your business hires offshore shipping companies in Bahrain to move the company back to your country of origin. So, you are reshoring the business. While your company was offshore in Bahrain, it is now onshore. With so many terms, it is easy to get confused and lose track of what is going on. This brief note is sure to bring you clarity. With that being said, let’s explore further why onshoring is growing in popularity. 

What makes companies choose onshoring? 

For the past few decades, offshoring has been profitable for manufacturers. It has been used due to the low costs of labor, materials, and production. On the other hand, travel and shipping costs would have been lower. So, profitability is what made offshoring popular. For that same reason, onshoring is gaining popularity while making its’ counterpart thing of the past. So, if you contemplate moving your business, there must be a good reason for that. It’s worth mentioning that being well prepared ahead of time is the right way to go about it. Take help for the customs clearance part from top-line professionals. This practical step will subtract many complexities. There are few main reasons why companies choose onshoring: 

  • Customer experience and satisfaction 
  • Quality of product
  • Supply Chain management
  • Costs and profitability 
Person holding pen, laptop and papers - onshoring is growing in popularity
There are many reasons why companies choose onshoring, and customer demand is one of the strongest

Customer satisfaction is one of the main reasons why onshoring is growing in popularity 

Profitability is on top of the list for many manufacturers. But, lest we forget the power of the customers. The success of any business depends on consumers’ wants and needs. And in recent years these have changed. So, what do customers want? And how is this related to onshoring growing in popularity? Let’s try and give these questions a well-rounded answer. Offshoring was a trend when companies could afford to choose cost-efficiency over customer experience. Consumers made their choices based on the price. So, businesses made their strategies accordingly. Today, cheap options are many. To thrive, businesses depend on customer satisfaction. Local products are seen in a positive light. And with better quality, too. This is the global consumers’ mentality of today. And a major reason why onshoring is quickly rising in popularity.    

Quality of products and services 

After just one bad experience more than 50% of customers say they will not do business with a company again. Onshoring enables you to serve and support your customers at home. Hence, your business is seen as high touch and gains customers’ trust. This is another good reason why onshoring is getting all the attention. Also, the recall of bad products is frequent news. Customers tend to relate this with products made abroad. They trust local products to be of better quality. Many are also worried about their privacy. To share their data with an offshore company feels risky. Most customers are inclined to trust onshore businesses more. And that is quite a strong reason for the onshoring gain of popularity. 

Supply Chain management – another reason why onshoring is growing in popularity 

The success of some companies depends on communication. Thus, onshoring is becoming very popular. This is because there are no long distances and time zones. All parts in the supply chain can form closer connections. Language and culture barriers are removed too. Work from home is slowly becoming the norm. And it saves time as well. For instance, design and approval and lead-time are shorter. So, what do you think customers want, fast or cheap? This can help you make decisions about your business. And help us answer why onshoring is growing in popularity.

Team holding hands
Team building is easier in onshore companies due to location

Costs and profitability

Onshoring started rising in popularity before the pandemic. There is no doubt that Covid-19 has affected businesses on a global level. It led to a rise in freight rates. Production in China has come to a halt. But, even before this, companies were leaning towards reshoring. Concerns over quality and supply chain disruptions are on the rise. Growing labor costs and taxes cause profitability losses. And ultimately, customers have discerning expectations. All of this combined impacts profitability. As a result, onshoring is growing in popularity, and it seems that this trend will continue in the years to come.

In conclusion, there is no simple answer to our question. If there was, it would be, the combination of world events and customer demand. We hope we have managed to keep your attention. And answered why onshoring is growing in popularity, in a way that will benefit you. Good luck and stay safe!

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