The offshoring calculation used to be simple enough to do on one page: unit price is forty percent lower, freight adds a few percent, the decision makes itself. Enough has changed in the inputs — wage convergence, freight volatility, tariff regimes, working capital costs — that many manufacturers are running the comparison again and getting a different answer than they did a decade ago.

The framework below is deliberately structural rather than current, because the specific rates move constantly. What matters is including all the terms.

The Costs Beyond Unit Price

Freight, obviously, and duty. Both need to be current rather than assumed, since both have been volatile.

Inventory in transit. Six weeks of ocean freight means six weeks of stock you own and can’t use. On high-value goods this is a substantial capital cost that unit-price comparisons ignore entirely.

Safety stock for lead time variability. Longer, less reliable supply requires deeper buffers. This is often the single largest hidden cost of distant sourcing, and it’s permanent rather than one-off.

Minimum order quantities. Distant suppliers typically require larger batches, which means more inventory and more obsolescence exposure when designs change.

Quality and communication overhead. Travel, inspection, time zone friction, and the cost of problems taking weeks rather than days to resolve.

Expediting. When something goes wrong, air freight from far away costs considerably more than a truck from nearby.

The Terms That Don’t Appear as Costs

Responsiveness has commercial value. A nearby supplier who can turn around a change in days lets you carry less finished stock and quote shorter lead times. That’s revenue-side value the cost comparison misses.

Flexibility on volume. Short supply lines let you respond to demand movement. Long ones lock you into decisions made months earlier.

Risk exposure. Longer chains have more points of failure and slower recovery. Whether that matters depends on what a disruption costs you — which is a number worth having before the comparison, not after.

Where Each Still Wins

Offshoring remains strong for high-volume, stable, labour-intensive products with long life cycles and predictable demand. The economics that drove the original wave haven’t disappeared; they’ve narrowed.

Nearshoring wins for products with volatile demand, frequent design changes, short life cycles, high value density, or customers expecting short lead times. It also wins where responsiveness is part of the commercial proposition rather than an operational nicety.

The Hybrid Answer

Most manufacturers who run this properly end up splitting rather than choosing. Base volume offshore where it’s efficient, variable and urgent volume nearby. This costs more per unit on the nearby portion and buys flexibility across the whole range.

It also creates a qualified alternative source as a by-product, which has resilience value that a pure cost comparison would never capture.

Whichever way the analysis points, re-run it periodically. Freight rates, wage differentials, tariff schedules, and currency all move, and a sourcing decision made on a five-year-old comparison is being justified by conditions that may no longer exist.

ticktick.ai models total landed cost including transit inventory, lead time buffer requirements, and expedite history, so sourcing comparisons include the terms unit price leaves out.