- Increasing oil prices push up transportation costs to their
highest since February
- Excess supplier capacity reflects a persistent subdued
economic environment, with Europe
at the epicenter of the downturn
- In contrast, resilience seen in Asia, driven by demand rising strongly in
India, Indonesia and Vietnam
- More European and North American manufacturers are reporting
a rise in backlogs due to staff shortages
N.J., Sept. 13, 2023 /PRNewswire/ -- 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 — recorded -0.18 in August (vs. -0.50 in July), showing
sustained idle capacity at global suppliers as demand conditions
remained subdued and procurement managers stayed cautious.
August is the 14th successive month in which global demand
displayed weakness, reflecting the brittle global economic
environment. Conditions are their most fragile in Europe, where demand continues to fall
drastically, and recession risks appear their most prominent.
Demand also fell considerably across North America in August, indicating a slowing
economy. In contrast, demand conditions are more stable in
Asia, despite the slow Chinese
economy, with purchasing rising strongly in India, Indonesia and Vietnam.
Notably, global transportation costs rose to their highest level
since February amid renewed pressures on fuel prices as oil
producers announced cuts to supply. U.S. and European manufacturers
are also experiencing some renewed pressures arising from staff
shortages due to tight labor markets and wage pressures.
Commenting on the August data, Neha
Shah, president, GEP, said: "Our data shows that we're
currently on a fine line hovering between recession and stagnation.
Despite many months of excess global supply and subdued demand,
companies can expect rising costs from petrochemicals industries,
shortages of certain commodities, including sugar, rice, and wheat,
and also wage pressures in some sectors because of the effective
collective bargaining by employees."
August 2023 Key
- DEMAND: Demand for raw materials, commodities and
components continues to deteriorate at a similar pace to that seen
in the other summer months, with little improvement seen at all in
2023. Europe led the downturn in
purchasing, followed by North
- INVENTORIES: Global businesses continue to demonstrate
little appetite for building up their stocks, with inventory
managers unwilling to hold surplus stock.
- MATERIALS SHORTAGES: Supply shortages have ended, with
reports of item scarcity now in line with historically normal
- LABOR SHORTAGES: Labor shortages are having a limited
impact on companies' ability to meet global demand, although
manufacturers in Europe and
North America have experienced
some renewed issues with staff availability.
- TRANSPORTATION: Having fallen to their lowest since
January 2016 in July, global
transportation costs ticked higher in August amid rising pressures
on oil prices.
REGIONAL SUPPLY CHAIN VOLATILITY
- NORTH AMERICA: Index
fell to -0.55 from -0.37 as demand for materials worsened and firms
- EUROPE: Index rose
from the global financial crisis low in July of -1.07 to -0.50, but
nonetheless indicates a marked rise in supplier spare
- U.K.: Index was little changed in August at -0.92,
versus -1.01 in July as the struggling European economy hits U.K.
- ASIA: Index rose to
0.06, from -0.31, signalling a faint uptick in Asian supply chain
volatility compared to July.
For more information, visit www.gep.com/volatility
Note: Full historic data dating back to January 2005 is available for subscription.
Please contact firstname.lastname@example.org.
The next release of the GEP Global Supply Chain Volatility
Index will be 8 a.m. ET, October 13, 2023.
ABOUT THE GEP GLOBAL SUPPLY CHAIN VOLATILITY INDEX
The GEP Global Supply Chain Volatility Index is produced by
S&P Global and GEP. It is derived from S&P Global's PMI™
surveys, sent to companies in over 40 countries, totaling around
27,000 companies. The headline figure is a weighted sum of six
sub-indices derived from PMI data, PMI Comments Trackers and PMI
Commodity Price & Supply Indicators compiled by S&P
- A value above 0 indicates that supply chain capacity is being
stretched and supply chain volatility is increasing. The further
above 0, the greater the extent to which capacity is being
- A value below 0 indicates that supply chain capacity is being
underutilized, reducing supply chain volatility. The further below
0, the greater the extent to which capacity is being
A Supply Chain Volatility Index is also published at a regional
level for Europe, Asia, North
America and the U.K. For more information about the
methodology, click here.
GEP® delivers transformative supply chain solutions
that help global enterprises become more agile and resilient,
operate more efficiently and effectively, gain competitive
advantage, boost profitability and increase shareholder value.
Fresh thinking, innovative products, unrivaled domain expertise,
smart, passionate people — this is how AI-driven GEP SOFTWARE™, GEP
STRATEGY™ and GEP MANAGED SERVICES™ together deliver supply chain
solutions of unprecedented scale, power and effectiveness. Our
customers are the world's best companies, including more than 550
Fortune 500 and Global 2000 industry leaders who rely on GEP to
meet ambitious strategic, financial and operational goals. A leader
in multiple Gartner Magic Quadrants, GEP's cloud-native software
and digital business platforms consistently win awards and
recognition from industry analysts, research firms and media
outlets, including Gartner, Forrester, IDC, ISG, and Spend Matters.
GEP is also regularly ranked a top supply chain consulting and
strategy firm, and a leading managed services provider by ALM,
Everest Group, NelsonHall, IDC, ISG and HFS, among others.
Headquartered in Clark, New
Jersey, GEP has offices and operations centers across
Europe, Asia, Africa
and the Americas. To learn more, visit www.gep.com.
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