As the congestion of Asian ports and the sky-rocketing prices of fuel cause logistics complications for shipments to and from China, companies are looking to “shorten supply chains” by seeking alternative regional manufacturers. Zipfox, a new US-based platform, is introducing an alternative to China-sourcing through Mexican manufacturers found closer to final destinations.
“People are feeling the pain from sourcing from China right now but they are not really aware of the manufacturing capability and capacity that Mexico already has,” said Zipfox Founder Raine Mahdi to Bloomberg this week.
The San Francisco-based was founded to capitalize on Mahdi’s more than 10 years in the industry. Shipping overseas, particularly to and from China, is becoming increasingly complicated. Between Dec. 2021 and Jan. 2022, the already long average wait-times for shipments in Hong Kong’s ports increased from 17.5 days to 22.5. Under these circumstances, finding suppliers closer to home can be a promising alternative to reduce costs and transport times.
Total shipping from Asia to North America is currently taking 110 days even after a three-day reduction from last week, according to Ocean Timeliness Indicator’s most recent report. Meanwhile, shipping from Mexico to the US takes an average of 10 days, according to Mahdi. Additionally, US businesses sourcing products from Mexico can avoid the up to 25 percent tariffs on Chinese imports set by former US President Donald Trump as part of his “trade war” with China. Last year, the US spent an estimated US$1.6 billion in imports from Asia.
After a year and a half of recruiting manufacturers in Mexico for Zipfox’s services, the platform launched in February offering services with over 200 Mexican factories. Through Zipfox, US customers can request quotes from Mexican manufacturers and make decisions based on price and speed of delivery. Buyers can also place orders and make payments through the app, which will hold on to payments until the shipments have been delivered. Aside from relatively small order quantity minimums, the platform is free to use.
Shipping from Mexico can reduce a company’s shipping spending by up to 75 percent. However, the types of products available are limited as the region has an abundance of clothing, home goods, furniture and industrial products but not as many electronic supplies. To address this problem, Zipfox is looking to expand to Central and South America next before reaching overseas manufacturers in Africa and the EU. But before that, Zipfox aims to add an on-site factory audit through a third-party inspection agency.