Be ready to match the pace of market demand

Warehouses are fundamental to the efficient flow of goods through your supply chain. They enable materials to be stored for manufacturing, finished products ready for distribution, and also provide an efficient way to manage inventory across different markets, balanced for fluctuations in supply and demand.

The size, location and distribution of your inventory play a decisive role in how you plan for and respond to demand fluctuations. In this article, we’ll look at the advantages of both onshore and offshore warehousing and explore how each can complement your business strategy.

The advantages of onshore warehousing

Onshore warehousing is where you keep warehousing and distribution operations within the market you’re supplying. Say you’re an up-and-coming lifestyle brand serving the German market. Your sportswear products might be manufactured in Vietnam, but with an onshore warehousing strategy, they would be stored and distributed in Germany.

The obvious benefit here is proximity to the end consumer, which, in turn, enables three major strategic advantages:

• Less risk of disruption: By keeping warehousing in the same country you’re supplying to, you’re less exposed to risks of delays in either customs or shipping channels. Given that three out of four European shippers experienced supply chain disruptions in the past 12 months, removing these potential bottlenecks can provide much-needed control and stability.
• Faster delivery times: The closer you are to the consumer, the faster you can deliver to them. And when nearly two-thirds of global shoppers anticipate receiving their items within 24 hours, this need for speed might not be a competitive advantage so much as a competitive requirement.
• Reduced emissions: Shortening transport distances from warehouse to consumer is one factor among others – such as cargo volume, mode of transport and source of fuel – that can help businesses reduce supply chain emissions. Considering 63% of fashion brands are behind on their 2030 decarbonisation goals, rethinking distribution networks offers clear synergies to accelerate progress.

Furthermore, these strategic advantages can feed into other operational benefits. For instance, if a physical store is running low on inventory, onshore warehousing means you can quickly send backup inventory to the store and avoid – or rectify – a stockout. Or if you have your own warehouse and only need extra storage for overflow during peak season, onshore warehousing is again more advantageous. Because stock is likely to sell fast during this period, it makes more sense to use a facility close to market, allowing you to quickly top up your own warehouse without any disruption.

The advantages of offshore warehousing

Offshore warehousing, on the other hand, is where you establish warehousing and distribution operations outside the market you’re supplying. Continuing with the lifestyle example, under this strategy your products might be manufactured in Vietnam, warehoused in Poland, then forwarded to market in Germany.

Here, the biggest strategic advantages pertain to choice, cost and decentralisation:

• Wider choice: With the contract logistics market in Europe forecast to expand from $79.48 billion in 2024 to $89.60 billion in 2029, there’s simply more choice when you’re not confined to one market. There are more options to find a facility across a broader geographical reach.
• Lower costs: At the same time, by looking outside the market you’re distributing within, you can tap into economies where costs are lower. Particularly in Central and Eastern Europe, where real estate, labour and utilities costs are lower, this might present greater cost efficiencies.
• Decentralisation: With an offshore strategy, you can diversify inventory more effectively by balancing goods across different locations. These can be redistributed across different regions based on fluctuations in current and forecasted demand, so you are better prepared to serve customers in multiple markets, reliably and rapidly.

An offshore warehousing strategy might be suitable in situations where it’s advantageous to keep a large inventory. For example, non-perishable goods where sourcing costs are volatile, or where there are frequent supply disruptions and spikes in demand.

However, where you store your goods has broader cost-efficiency implications than warehousing costs. It requires a cost-benefit analysis to understand the full impact, also factoring in things like distribution and fulfilment costs, disruption risks and transit times. In short, offshoring may only make sense if you have reliable inland and customs clearance workflows to move your inventory between warehouses, or into the hands of customers without delays.

Another factor in the decision is the maturity of your network. For instance, if demand is accelerating in a number of new markets, it might make more sense to invest in a large facility nearby a port that can connect to multiple trade routes and cover the whole of Europe, rather than prioritising the most lucrative market. Alternatively, you might opt to work with a partner that has a number of facilities spread across various offshore locations. This provides the opportunity to operate more dynamically and move inventory around the different sites based on where customer demand is strongest.

Building your warehousing strategy with Maersk

Though onshore and offshore warehousing are two opposing schools of thought, in practice, the most effective strategy is one that blends the best elements of both theories. Take the lifestyle brand example. One option is to store its highest sellers in an onshore warehouse in close proximity to end consumers, while storing the bulk of its inventory in an offshore location that’s cheaper to rent and has access to other markets.

This hybrid approach is what a partnership with Maersk Contract Logistics presents. Because whether you have an onshore, offshore or hybrid warehousing strategy in mind, the key requirement is having access to facilities in the right places – and we provide that through our network of strategically located warehouses in Europe.

But we’re more than just a contract logistics provider. What differentiates Maersk is our ability to offer both standalone and integrated solutions – seamlessly combining warehousing, multimodal transport, and customs clearance. With deep expertise and owned assets, we can optimise every link in your supply chain. So whether you need targeted support for warehousing or a complete end-to-end logistics solution, we’ll be by your side every step of the way.