Global Supply Shortages Fell to Their Lowest in June since January 2020

Worldwide supply chain spare capacity rose for the third successive month in June, remaining at the highest level since the zenith of the pandemic in May 2020, according to the GEP Global Supply Chain Volatility Index, a leading indicator tracking demand conditions, shortages, transportation costs, inventories and backlogs based on a monthly survey of 27,000 businesses.

Note: When the SCVI > 0, supply chain capacity is being stretched. The further above 0, the more stretched supply chains are.

When the SCVI < 0, supply chain capacity is being underutilized. The further below 0, the more underutilized supply chains are.

Key findings include:

• The demand for critical inputs deteriorated at a sharper pace in June compared to May, specifically in North America and Europe, creating excess capacity for suppliers in these regions. The muted demand in the manufacturing sector indicates that the Western economy is expected to slow in the second half of 2023. However, the picture is different in Asia, with purchasing activity still strong in some Eastern markets, especially by India.
• Transportation costs too fell below their historical average in June, indicating more competitive pricing by haulers and cargo handlers and highlighting the absence of pressure on logistics capacity. This has helped remove some cost pressures from businesses, and the ideal time to re-negotiate terms with transportation providers.
• Supply chain pressures have completely subsided, and companies are operating with low levels of inventories following months of efforts to draw down their inventories. Inventory managers are prioritizing destocking and lean warehouses.

The July release of the GEP Global Supply Chain Volatility Index will be 8 a.m. ET, August 14, 2023 For more insights and to request the full report, go to www.gep.com/volatility