Tag Archive: supply shortages

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

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    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.

  2. Supply shortages in German industry worsening

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    The shortage of supplies in German industry has worsened. In August, 69.2 % of industrial companies in Germany complained about bottlenecks and problems with product components and raw materials. Following a 63.8 % in July, a new high has been reached. This is the conclusion from a survey by the German Ifo Institute for economic research. “This is not without consequences for production in industry. The supply crisis poses a real threat to the economic recovery,” says the head of Ifo surveys, Klaus Wohlrabe. As a consequence, more and more companies want to raise prices.

    “The sharp rise in purchase prices for components continues to cause problems for the companies,” adds Wohlrabe. The shortage of semiconductors and chips for instance is particularly noticeable among car manufacturers and their suppliers (91.5% compared to 83.4 %) and among manufacturers of electrical equipment (constant at 84.4 %).

    As a result of this supply crisis, more and more companies want to raise prices. Ifo price expectations have risen to a new record. “The companies pass the increased purchase prices on to their customers,” says Wohlrabe. In the electrical and metal industries in particular, price increases are planned. But the chemical industry and mechanical engineering also want to make their services more expensive. The automotive industry, on the other hand, sees comparatively little leeway.

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