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Supply Chain Graphic of the Week: New Index Shows Supply Chain Pressures have Soared in the Past Year



New Tool from the Federal Reserve Bank of New York is Interesting, though We are Still not Quite Sure What to Do with It



New York Fed researchers Gianluca Benigno, Julian di Giovanni, Jan J. J. Groen, and Adam I. Noble have developed a new tool to measure the state of the global supply chain environment.


The new Global Supply Chain Pressure Index combines 27 variables that take the temperature of everything from cross-border transportation costs to country-level manufacturing data in the euro area, China, Japan, South Korea, Taiwan, the UK. and the US.


The Fed economists compiled data going back to 1997. As can be seen in the graphic below, the index has soared over the past 18 months:


Global Supply Chain Pressure Index





Source: Bloomberg


The data sources used in the index include:


• The Baltic Dry Index that tracks the cost of shipping raw materials such as coal or steel

• The Harpex, which tracks worldwide price development on the charter market for container ships

• The US. Bureau of Labor Statistics’ indexes that measure changes in air-freight rates to and from the US

• Purchasing Managers Index surveys from several countries, and for the US the PMI from the Institute for Supply Management and its measures for new orders, delivery times, backlogs and purchased inventories


The index value is measured by the number of standard deviations from average levels of pressure.


What to do with it? Not quite sure yet, but we'll keep tabs on it.


Any reaction to our Supply Chain Graphic of the Week? Let us know your thoughts at the Feedback button below.


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