Tuesday 21st January 2025
Rizwan Soomar, DP World’s CEO and Managing Director of the Middle East, North Africa & India Subcontinent, unveiled the fifth annual Trade in Transition report at the Annual Meeting of the World Economic Forum (WEF) this week.
One of the key findings of this year’s research, which was commissioned by Economist Impact and supported by DP World, is that companies are bringing production closer to home and are adopting nearshoring strategies as geopolitical and climate disruption continue to impact trade and decision making.
The case for these strategic decisions is strong. Technology company Apple moved production out of China and back to the U.S. following rising trade tensions, significantly minimising their supply and demand risk (with another U.S.-based move being alluded to this week too). Long-term, however, companies need to consider whether local workforces are prepared to maintain these reconfigured supply chains if they want real stability.
The Human Factor
The importance of reskilling workers to match the advanced manufacturing and logistics skills of more established supply chains is often overlooked, particularly when businesses are considering major changes such as nearshoring.
Add to this the fact supply chains are operating in an era of advanced technologies, as robotics and artificial intelligence become more commonplace across the logistics sector, meaning employee expertise needs to keep pace.
As Amazon Web Services CEO, Matt Garman, aptly noted during a session on Industries in the Intelligent Age: “Technology is moving at an incredible rate. I don't know that we've seen technology progress as fast as it has. And I think one of the challenges of that is it's hard for everyone to keep up.”
Further, the potential job creation benefit of reshoring is lost if we’re not arming communities with the skills needed to access these careers. According to the IMF, emerging technologies could exacerbate the divide between wealthy and poorer nations by directing more investment toward advanced economies where automation is already in place.
During a session at the Annual Meeting on Tuesday, January 21, Robert F. Smith, founder EO of Vista Equity Partners, addressed this issue head-on, explaining that, “Despite the rapid proliferation of the Internet across the globe, over 2.5 billion people still lack access to it. Nearly a third of the world’s population are not skilled enough to take advantage of online services that are essential in today’s digital world.”
Needless to say, this demands targeted investment to boost productivity and enhance workforce skills. Otherwise, the advantages of nearshoring – from supply chain reliability to economic and job growth – could fail to materialise.
Shorter Supply Chains Need Larger Networks
While shortening supply chains aligns with the general fragmentation our customers are experiencing worldwide, we believe it has never been more important to come together through public-private partnerships to ensure strategies like nearshoring deliver long-term resilience. The combined expertise afforded by these partnerships can both fund and inform key reskilling programmes, equipping workers with the tools needed for advanced industries at a local level.
Speaking at the Annual Meeting on Tuesday January 21, Julia Sweet, Chair and CEO of Accenture, said: “Innovation only happens through partnerships. Any company that says they can innovate only internally is almost by definition not innovative. Meanwhile, leaders that bring together companies to think about upskilling through partnerships, both with government and the private sector, excel.”
It goes without saying that there should be a special effort to direct these initiatives at emerging markets. As Rizwan Soomar reflected, “We ultimately believe that companies that invest in digital tools and resources – i.e., people – are better positioned to build resilient supply chains. With our partners, DP World can use its global network to ensure this approach benefits all to enable total long-term resilience.”
The Nearshoring Imperative
The need to make people central to nearshoring strategies is clear. And as trade leaders at the Annual Meeting agree; resilience is not just about where goods are made - it’s about empowering the people who make them. By working together, strategies like nearshoring can live up to their promise of stability and opportunity.