Global supply chain pressure index at an all-time high due to war in Ukraine

Source: Bike EU, Jo Beckendorff

The Federal Reserve Bank of New York, publisher of the global supply chain pressure index (GSCPI), has revealed the impact of the Russian invasion of Ukraine in its latest release.

The invasion added additional pressure to a global network that was already under strain. Pressure is now at an all-time high since the index’s creation in 1997. The scenario continues to develop as trade and payments with Russia and Belarus rapidly decrease in line with Western bank sanctions. This turn of events is a stark contrast to early 2022 predictions that pressure was beginning to equalise following Covid-19 disruption.

The GSCPI summarises 27 variables that impact global supply chain functioning, including measures such as cross-border and manufacturing costs. A score of 0 indicates that pressure is at an average level, and any positive increase indicates how many standard deviations the index is above average value, and vice versa. The value currently stands at 4.

In the LEV industry, where a product as a whole may be completely dependent on specific, independently sourced parts, this pressure increase could force some manufacturing to a standstill. As the global scenario continues its progression, the impact on the supply chain will be closely observed by many.