Strategic Relocation: Using Friendshoring and Nearshoring as a Corporate Compass for Navigating Global Risks

Introduction: The New Certainty of Uncertainty

On September 19, 2021, the Cumbre Vieja volcano on the island of La Palma erupted after a 50-year slumber, spewing ash, lava, and toxic gases for 85 days. What began as a geological spectacle quickly became a global supply chain nightmare. Flights across the Canary Islands were grounded, the island’s main port closed for weeks, and shipments of bananas – the region’s top export – rotted on docks. Beyond perishable goods, the eruption disrupted just-in-time deliveries of electronics components and medical supplies destined for European hospitals. A single, unpredictable natural event in a small archipelago sent ripples through supply chains from Madrid to Milan.

[IMAGE: A split image: left side shows the La Palma eruption with ash clouds; right side shows a modern logistics hub with containers and a compass icon overlay.]

This is not an isolated story. From COVID-19 lockdowns in Shanghai to the Red Sea shipping attacks in 2024, the global business environment has entered what risk managers call an “era of perpetual disruption.” The old assumption that supply chains could be optimized solely for cost and speed has shattered. In response, a growing number of multinational corporations are turning to two strategies that were once considered niche: friendshoring and nearshoring.

Published by MAPFRE Global Risks and authored by Cristina Leon Vera, a deep analysis of this shift reveals that relocation is not merely a reactive scramble but a strategic compass. By examining the La Palma eruption as a case study, this article explores how trust-based trade corridors and geographic proximity are becoming the new north stars for corporate risk management. Friendshoring and nearshoring, we argue, are not just buzzwords – they are the directional tools companies need to navigate an increasingly volatile landscape.

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The Risk Landscape: From Natural Disasters to Geopolitical Shocks

The La Palma eruption exposed the fragility of lean, globalized supply chains in vivid detail. Ash clouds forced the cancellation of over 1,000 flights, disrupting airfreight routes that carry high-value, time-sensitive goods. The closure of the port of Tazacorte delayed shipments of raw materials for the European construction industry. Even after the eruption ended, cleanup and infrastructure repair took months, compounding delays.

[IMAGE: A world map with hotspots (volcanoes, trade conflict zones, pandemic epicenters) overlaid with red warning dots and supply chain arrows breaking.]

But natural disasters are only one piece of a much larger risk mosaic. Consider the following shocks that have occurred in just the past five years:

• Geopolitical conflicts: The Russia-Ukraine war disrupted grain and energy flows, while US-China trade tensions and semiconductor export controls reshaped manufacturing corridors.
• Pandemics: COVID-19 shut down factories from Wuhan to Detroit, exposing the vulnerability of single-source suppliers.
• Climate events: Floods in Pakistan, droughts in the Panama Canal, and wildfires in Canada have repeatedly torn through logistics networks.
• Infrastructure attacks: The 2024 Houthi missile strikes in the Red Sea forced major shipping lines to reroute around Africa, adding 10–14 days to delivery times.

The frequency of such shocks is accelerating. According to data from the World Economic Forum, supply chain disruptions cost companies an average of 2–5% of annual revenue – and those figures are rising. Traditional risk models, which prioritized cost-per-unit and lead time, are proving dangerously inadequate. A supplier in Vietnam may offer the lowest price today, but if a typhoon or political crisis halts production next quarter, the entire assembly line in Detroit grinds to a halt.

The lesson from La Palma is stark: resilience must be embedded as a core metric in supply chain design, not an afterthought. Companies that fail to diversify their geographic footprint are essentially betting that the next disruption will not hit their single point of failure. That bet is no longer worth taking.

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Friendshoring and Nearshoring: The Compass Points of Strategic Relocation

The terms “friendshoring” and “nearshoring” have gained currency in boardrooms and policy circles, but they are often used interchangeably. In reality, they are distinct but complementary strategies.

Nearshoring refers to relocating production or sourcing to countries that are geographically close to the end market. A US company moving assembly from China to Mexico, or a German manufacturer shifting from Vietnam to Poland, is nearshoring. The primary benefits are shorter lead times, lower transportation costs, and easier oversight.

Friendshoring, a term popularized by US Treasury Secretary Janet Yellen in 2022, involves moving production to countries that are politically and economically aligned – what business strategists call “trusted nations.” This goes beyond geography. A company might choose to source semiconductors from Taiwan or South Korea over China, not because they are closer, but because they share similar legal frameworks, data protection standards, and geopolitical alliances.

[IMAGE: A compass rose with four points labeled: 'Cost', 'Speed', 'Risk', 'Trust'. Arrow pointing toward 'Trust' and 'Risk' with a factory icon moving closer to headquarters.]

The La Palma eruption provides a clear illustration of why friendshoring matters. When the port closed, European companies that relied on a single supplier in the Canary Islands had no fallback. In contrast, firms that had already diversified their sourcing to allied Mediterranean countries – such as Spain’s own mainland or Morocco – could reroute shipments within days. Trust-based trade corridors, built on mutual regulatory recognition and stable diplomatic relations, allowed for faster crisis response.

Cristina Leon Vera’s analysis in the MAPFRE Global Risks article emphasizes that these strategies are not temporary patches. They are sustainable because they reduce exposure to single points of failure and build long-term resilience. “Relocation is not about abandoning global trade,” she writes. “It is about recalibrating the compass so that risk – not just cost – guides the direction.”

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The Hidden Economic Logic: Efficiency vs. Resilience

One of the most persistent objections to friendshoring and nearshoring is the assumption that they raise costs. After all, moving production from a low-cost country like Bangladesh to a higher-cost one like Turkey or Mexico should increase labor expenses, right? In theory, yes. But the hidden economic logic tells a different story.

[IMAGE: A graph comparing total landed cost: low upfront cost vs. high hidden costs from disruptions, insurance premiums, and downtime. Arrow showing a breaking point where resilience investment becomes cheaper.]

First, consider the total cost of disruption. A single week of shutdown at a critical factory can cost a multinational tens of millions of dollars in lost sales, penalty fees, and emergency logistics. The 2021 La Palma eruption forced one European automotive parts supplier to airfreight components at 10 times the normal shipping cost to keep assembly lines running. Had they already sourced from a near-shore partner in Spain or Portugal, the cost would have been negligible. When you factor in insurance premiums, inventory buffer costs, and reputational damage – often hidden in traditional cost models – the “cheap” option is often more expensive.

Second, technology has closed the gap. Digital twins, AI-driven risk scoring, and real-time supply chain visibility tools now allow companies to model relocation scenarios with high precision. During the La Palma crisis, most firms lacked these tools. Today, a company can simulate how a typhoon in the Philippines would affect their nearshore partner in Costa Rica versus a friendshore ally in Taiwan – and calculate the expected financial impact. This analytical layer, absent just a few years ago, makes the efficiency-versus-resilience trade-off a false dichotomy.

Third, friendshoring reduces regulatory friction. Aligned nations often have mutual recognition agreements for product standards, data privacy, and customs procedures. This cuts down on red tape and speeds up cross-border logistics. The European Union’s network of trade agreements with neighboring countries, for example, means that a component sourced from a friend-shored nation in North Africa often moves through customs faster than one from a distant, non-aligned supplier.

The hidden logic is clear: resilience is not a cost – it is an investment. Companies that treat friendshoring and nearshoring as a strategic compass are not sacrificing efficiency; they are redefining it. They are shifting from a narrow focus on unit cost to a broader understanding of total landed cost, inclusive of risk.

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From Reactive to Proactive: The Corporate Compass in Practice

The La Palma eruption happened suddenly, but the vulnerabilities it revealed were years in the making. Companies that had already begun relocating parts of their supply chains before 2021 fared far better than those that had not. The difference was not luck – it was preparation.

Today, the business case for strategic relocation is stronger than ever. The key is to move from a reactive posture – scrambling after a crisis – to a proactive one, using friendshoring and nearshoring as a continuous compass for decision-making.

[IMAGE: A corporate strategy diagram showing a compass at the center, with four quadrants: 'Geopolitical Alignment', 'Geographic Proximity', 'Risk Exposure Analysis', and 'Cost-Benefit Balancing'. Arrows feed into a central 'Resilient Supply Chain' node.]

Concrete steps include:

• Risk mapping: Identify single points of failure in the current supply chain. Which suppliers are located in politically unstable regions? Which routes pass through choke points like the Suez Canal or the South China Sea? Prioritize relocation for the most vulnerable nodes.
• Tiered sourcing: Develop a multi-tier strategy. Use nearshoring for high-volume, low-complexity components; use friendshoring for critical, high-tech parts that require regulatory alignment.
• Trust-based partnerships: Invest in long-term relationships with suppliers in allied countries. This is not transactional; it involves joint risk planning, shared data, and mutual investment in backup capacity.
• Scenario simulation: Use digital twins to stress-test the supply chain against events like the La Palma eruption. Model the impact of a port closure, a trade embargo, or a cyberattack. The results will reveal where friendshoring and nearshoring offer the highest return on resilience.

Cristina Leon Vera’s analysis concludes with a powerful observation: “The companies that treat relocation as a one-time fix will be caught off guard again. The companies that embed it into their strategic compass – continuously recalibrating as risks shift – will not only survive but thrive.”

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Conclusion: Redrawing the Global Economic Map

The La Palma volcanic eruption was a small event in a remote corner of the Atlantic. Yet it served as a microcosm of the broader forces reshaping global trade. Natural disasters, geopolitical tensions, pandemics, and climate change are not anomalies – they are the new normal. The choice for corporations is not whether to relocate, but how.

Friendshoring and nearshoring are not about retreating from globalization. They are about redrawing the global economic map with resilience as the primary coordinate. The compass points toward trust, proximity, and diversification. The companies that follow that compass will be better positioned to navigate the uncertainties of the next decade – and beyond.

[IMAGE: A final stylized image of a compass embedded in a transparent globe, with glowing arrows from multiple continents converging on a single, stable hub. No text, no watermark, photorealistic style with a calm, forward-looking tone.]

This article draws on analysis published by MAPFRE Global Risks (August 14, 2025) authored by Cristina Leon Vera.