The GEP global supply chain volatility index showed global supply chain pressures remained elevated in June despite falling oil prices and lower transportation costs, reflecting uncertainty surrounding the U.S.-Iran ceasefire.
Reports from manufacturers of rising backlogs due to shortages of critical inputs were at their highest since late 2022. The data suggests supply chain bottlenecks are likely to persist into at least the third quarter, as businesses wait for materials needed to complete customer orders.
To guard against further disruption, manufacturers continued building buffer inventories in June. Reports of safety stockpiling increased again and remained at their highest level since January 2023.
Demand for raw materials, commodities and intermediate goods remained strong across North America and Asia, reinforcing expectations that supply chain activity will stay elevated in the coming months as inventories are replenished and existing orders are fulfilled. In contrast, input demand weakened across Europe.
“The rise in stockpiling and persistent order backlogs point to one clear conclusion: businesses still don’t trust the global trading environment to remain stable,” said John Piatek, vice president, consulting, GEP. “Despite lower oil prices and easing transportation costs, companies continue buying ahead because they expect further disruption. While this is encouraging for the global economy in the near term, it also shows manufacturers remain very cautious and are planning for more disruption in international trade.”
