The Turnaround: Global Supply Chain Recovery

A drastic change has occurred in the global supply chain over the past 18 months. After severe disruption and inflation, excess capacity in ocean freight shipping, trucking, and other logistics components is reducing prices and backlogs. This shift is evident in the plummeting Global Supply Chain Pressure Index (GSCPI) by the New York Fed, reaching pre-pandemic levels. Every supply chain component shows signs of improvement: ocean freight costs have dropped significantly, air freight costs are decreasing, trucking rates have declined, and warehouse capacity has increased. Also, nearshoring trends and measures like the CHIPS Act are strengthening domestic manufacturing capacities. The current state of the supply chain suggests that the crisis is over, leading to deflationary pressure and providing relief to central banks, governments, and consumers.

Source: Forbes