Global supply pressures may have peaked: New York Fed Index

08 Jan '22

2 min read

Pic: Kamonrutm | Dreamstime.com

The high pressures on global supply chains that have led to shortages of key goods and materials and a rise in inflation may have peaked, a new index released recently by the New York Federal Reserve observed. Researchers found ‘enormous growth’ in shipping costs since the recovery started from the lows when the pandemic began. But that growth has started to slow in recent months.

The global supply chain pressure index (GSCPI)—based on 27 variables like shipping rates and air freight costs between the United States, Asia and Europe—rose early during the pandemic when China imposed lockdown measures. Pressures eased as production resumed but picked back up during the winter of 2020 as COVID-19 infections jumped.

"More recently, the [index] seems to suggest that global supply chain pressures, while still historically high, have peaked and might start to moderate somewhat going forward," the researchers wrote in a blog post.

The researchers also noted that container shipping rates rose more significantly during the most recent economic recovery than after the Global Financial Crisis (GFC). But the costs of shipping raw materials, such as coal or steel, rose ‘on par’ with the post-GFC recovery, they added.

The researchers said they adjusted for shifts in demand, but noted that the index is ‘not a perfect’ measure and likely still reflects some demand factors.

Fibre2Fashion News Desk (DS)

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