Covid-19 to accelerate diversification of supply chains

The disruption associated with Covid-19 has challenged the resilience of manufacturing supply chains across the globe and is set to accelerate a trend towards regional supply chains and nearshoring. Poland is expected to be among beneficiaries of this trend. According to international real estate advisor Savills, the creation of alternative manufacturing locations has the potential to shift trade flows and, in turn, the dynamics of the global industrial and logistics market.

Savills has identified the manufacturing nearshoring potential of countries that are, or in proximity to, major consumer markets. The Savills Nearshoring Index ranks countries according to their manufacturing labor costs, electricity costs and infrastructure and trade openness.

Vietnam tops this index, benefiting from low labor and electricity costs and a manufacturing base that was already growing quickly. Other low-cost regional hubs developing as alternatives to China in Asia Pacific include Indonesia (3rd) and Thailand (7th), where labor costs are under half those of China’s. 

In terms of Europe, the Savills index suggests that the countries offering the greatest potential for nearshoring are concentrated in Eastern Europe, thanks to lower input costs and direct road and rail links to the major Western European consumer markets. The Ukraine is the highest ranked European country, and second overall, thanks to very low wage costs by European standards. Already a major agricultural exporter, there is nearshoring potential in manufacturing supported by an open trade environment. Serbia (4th), another low-cost market, benefits from a strategic location that offers the easiest overland travel between Europe and Asia Minor and beyond. The Czech Republic follows (5th), supported by excellent infrastructure, favorable input costs and an established manufacturing economy for export.  

“Poland is expected to be among beneficiaries of nearshoring. Central location in Europe, sufficient and improving infrastructure, relatively low labor costs and the largest warehouse market in CEE are attracting investors to Poland. In addition, Poland’s economy is large and stable and showed resilient to disruptions in global economy in the past,” Dawid Samoń, Analyst, Research, Savills Poland, said. 

For now, Poland is at 19th place in the Savills Nearshoring Index ranking.

(WBJ)