Global supply chain pressure eased in February

Global supply chain pressures eased in February as backlogs and delivery times improved in several key markets and a measure of ocean shipping costs declined, according to new data released Thursday by the New York Federal Reserve.

The New York Fed's supply chain stress index , which was first published in January to measure the impact of the coronavirus on global production and prices, remains at historically high levels.

But from a peak of 4.5 in December, the index has been falling for several months , reaching 3.3 in February, with 0 representing the long-term average for the index, which combines measures of shipping costs, delays and order backlogs for the United States, the eurozone, Britain, Japan, China, Taiwan and South Korea.

Analysts at the New York Fed noted that the improvement was broad-based across regions and categories around the world.

If this continues, it could mark an important turning point in the efforts of the Federal Reserve and other central banks to control inflation.

Policymakers have attributed much of the recent price increases to problems with the world’s supply chains. If those problems improve over time, inflation could ease, with relatively little effort by central banks to address the problem by raising interest rates to curb demand.

"The reduction in supply chain pressures is widespread... This is a welcome development in terms of reducing global supply chain disruptions," the analysts said.

Improvements in outbound volumes to Asia and improvements in delivery times to South Korea and the UK contributed most to the decline in the index, while some components in the US, including backlogs of orders, deteriorated slightly. Nevertheless, the overall index for the US also fell to 2.63, after peaking at 2.99 in January.

In the past two years, due to the impact of the epidemic, the global supply chain has always been in an unstable state. This year's Russia-Ukraine conflict has also led to large-scale shipping delays. Coupled with the exchange rate changes caused by the turbulent situation, for cross-border sellers, the length of freight will also have a greater impact on the profit of the product!

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