In an increasingly uncertain world, European businesses are reevaluating their global supply chains. Geopolitical tensions, pandemic disruptions, and economic volatility have accelerated a strategic shift: nearshoring. As a sourcing strategy, nearshoring brings production closer to home – within or near the European continent – offering agility, cost-efficiency, and resilience.
Why Nearshoring Is on the Rise
“The post-pandemic world demands shorter supply chains, more predictable logistics, and faster market response,” notes EU trade analyst Claudia Richter. “Nearshoring answers all three.”
Several key drivers are accelerating nearshoring adoption:
- Geopolitical Risk: The war in Ukraine, EU-China tensions, and global sanctions regimes are motivating businesses to limit exposure to fragile supply routes. According to the European Council on Foreign Relations, 72% of surveyed EU firms cited political instability as a major influence in restructuring their sourcing strategies.
- Post-COVID Recovery: The pandemic revealed overdependence on Asian suppliers, with extended shutdowns and shipping delays creating bottlenecks. Data from the World Bank shows that container shipping times from Asia to Europe in 2021–2022 increased by 40% on average, disrupting time-sensitive production.
- Sustainability Mandates: With the EU Corporate Sustainability Reporting Directive (CSRD) coming into force in 2024, carbon footprints and ethical sourcing are under scrutiny. Nearshoring aligns with ESG goals through shorter transport routes and traceable production.
- Digital Supply Chains: Technologies such as cloud ERP, blockchain, and AI-driven analytics facilitate collaboration across borders. A 2023 Capgemini study found that companies investing in nearshore digital supply networks improved operational visibility by 28% within a year.
Industry Trends: Where Nearshoring Is Taking Hold
Nearshoring is being applied in industry-specific ways, based on operational demands, compliance needs, and speed-to-market expectations:
- Automotive: European OEMs and Tier-1 suppliers are increasingly relying on Eastern European plants for parts and final assembly. The Czech Republic and Slovakia are expanding EV component production to reduce dependency on East Asian suppliers. Volkswagen and Stellantis have invested over €1.5 billion in EV supply chains in the region since 2022.
- Medical Technology: Regulatory oversight and the need for traceability have led med-tech firms to concentrate production in Poland and Hungary. These countries offer clean-room manufacturing standards aligned with EU MDR, and in 2023, Poland ranked third in Europe for medical device exports.
- Mechanical Engineering: Germany, Austria, and Italy are sourcing parts and subassemblies from nearby partners in Slovenia, Romania, and Bulgaria—capitalizing on lower costs without compromising quality or turnaround. Bosch expanded a precision tooling facility in Cluj, Romania, citing strong local engineering talent.
- Apparel and Footwear: Brands focused on fast fashion, ethical labor, and speed-to-shelf have relocated portions of their production from Asia to Portugal, Bulgaria, and North Macedonia, which offer skilled labor and proximity to EU markets. H&M and Inditex have both expanded partnerships in the region since 2023.
The Business Case: Benefits Beyond Cost
Nearshoring’s value proposition extends beyond labor savings:
Tariff and Trade Efficiency
EU-based sourcing sidesteps customs delays and leverages standardized tax and regulatory frameworks, reducing administrative overhead.
Agility and Responsiveness
Regional suppliers can quickly adjust production to shifting demand, offering shorter lead times and reduced stockpiling. A Bain & Company report in 2024 noted that firms with nearshored production lines responded to market changes 45% faster than those with offshore operations.
Improved Communication
Shared working hours and cultural alignment foster smoother project management, better collaboration, and faster problem resolution.
Resilience and Continuity
Nearshoring creates redundancy and diversifies the risk associated with global disruptions—from port closures to geopolitical shocks.
As Deloitte noted in its 2024 Supply Chain Resilience Report, “Enterprises that restructured supply chains for proximity and visibility outperformed peers in every major risk event since 2022.”
Regional Focus: Where Nearshoring Is Gaining Ground
Central Europe
(Poland, Czechia, Slovakia)
- With long-standing manufacturing sectors, robust infrastructure, and access to skilled labor, this region continues to lead.
- Poland’s logistics sector is the largest in CEE, with €5 billion in logistics investments recorded in 2023.
- Czechia’s advanced manufacturing and innovation capacity make it ideal for mid- to high-tech production. The country is ranked 7th in the EU for manufacturing value-added as a percentage of GDP.
The Western Balkans
(Serbia, Bosnia & Herzegovina, North Macedonia)
- These nations offer compelling advantages: lower wages, improved infrastructure, and proximity to the EU.
- Initiatives like Mostar Supplier Connect and the InterConnect Matchmaking Conference have helped increase visibility and build trust between local manufacturers and Western buyers.
- EU-backed programs like IPA III (2021–2027) are funding cross-border cooperation and industrial development. Serbia alone attracted €4.4 billion in FDI in 2023, much of it into manufacturing.
Southern Europe
(Portugal, Romania, Bulgaria)
- Southern Europe is experiencing renewed interest for niche, value-added manufacturing.
- Portugal has grown as a hub for sustainable textiles and high-quality footwear, with exports rising 12% in 2023.
- Romania and Bulgaria provide IT-literate workforces, competitive costs, and multilingual capabilities. Their EU membership ensures regulatory alignment and access to funding, key for long-term investment.
Challenges in Nearshoring Implementation
B2B firms must consider implementation complexities before shifting sourcing or production closer to home:
Infrastructure Gaps
While Central Europe is well-connected, parts of the Balkans and Southern Europe still lack consistent road, rail, and customs integration. Transport bottlenecks and underfunded logistics corridors can delay operations.
Cultural and Language Barriers
Expectations around timelines, quality, and communication vary widely. Investing in local relationship managers and training reduces friction. Cultural agility is now seen as a key competency in international supply chain roles.
Regulatory Complexity
Labor laws, environmental standards, and tax policies differ significantly across jurisdictions. Companies must engage local legal expertise early to avoid costly delays or fines.
Supply Chain Visibility
Many suppliers lack digital systems to share real-time data. Firms investing in digital onboarding and monitoring platforms gain better control and traceability. According to PwC, 43% of firms see supply chain transparency as their top digital priority for 2025.
As McKinsey highlighted in its 2023 Pulse Report, “Success in nearshoring is not just about geography—it’s about governance, digitalization, and partnership maturity.”
The Future of Nearshoring in Europe
Several forces are shaping what’s next for nearshoring in Europe:
- Digital Transformation: AI is transforming demand forecasting; IoT devices monitor goods in real-time; and digital twins simulate production scenarios before disruptions occur. These technologies amplify the advantages of geographic proximity and enable hyper-agile planning.
- Investment Hotspots: Serbia, Romania, and southern Poland are emerging as nearshoring magnets due to favorable policies, skilled labor, and investor incentives. According to Eurostat, FDI in Romania’s industrial sector rose 18% in 2023 alone. Serbia has committed €1 billion to digital infrastructure and export-oriented industries by 2026.
- Strategic Autonomy: The EU’s industrial policy promotes reducing dependence on third countries for critical goods. Nearshoring is aligned with EU green and digital strategies, making it a tool for both resilience and reform.
As EU Commissioner Thierry Breton stated in 2024, “A more resilient Europe is a more autonomous Europe. Nearshoring is a cornerstone of that strategy.”
Final Thoughts
Nearshoring is no longer just a reactive strategy—it’s a competitive differentiator. For European B2B firms, it builds agile, transparent, and future-ready supply chains that meet today’s demands and tomorrow’s challenges.
At Orka, we support businesses through every phase of this transformation. From scouting and vetting regional partners to navigating legal frameworks and integrating digital supply chain tools, we help clients realize the full value of nearshoring.