RE-SHORING: A BANDWAGON GATHERING MOMENTUM?

This is an interesting case, as intuitively one could think that jeans (or textiles in general) would be one of the segments where re-shoring would be the most challenging (a similar eff ort by Adidas for heavily robotized production in Germany and the US having previously failed). Both the COVID pandemic and the surging shipping costs, however, play into the hands of more re-shoring.

A 2021 report for the EU concludes: ‘The empirical evidence on reshoring in the last decade highlights that reshoring processes are on the rise, with larger firms and medium to high-tech industries exhibiting the greatest reshoring propensity. However, these processes remain so far limited in scale and thus have exerted only small effects on the EU economy as a whole’. The report goes on to stress the case for ongoing initiatives to promote re-shoring, as part of the EU’s push for ‘open autonomy’.

The EU is not alone in this respect; the pandemic has pushed reshoring initiatives of policymakers in various countries, both by nations with reshoring policies in place (e.g. France) and by countries without such policies (for instance Japan and India).

So far, the effect on freight volumes has not been noticeable; the container volumes in most of the large EU ports in 2021 are substantially higher than in 2020.

The C&A initiative accounts for less than two per cent of the total jeans sales in Europe. However, this may be one of these cases where it takes a relatively long time before the impact of new developments becomes clear.

As an example, Economist Robert Solow famously said in 1987 that the computer age was everywhere except for the productivity statistics. This changed in the 1990s when productivity growth in sectors like technology, retail, and wholesale was huge. Likewise, one could argue now ‘re-shoring is everywhere except in the container volumes’. Let’s see where we stand 10 years from now!