Not a Drill! Global Supply Chain Pressure Hits Extreme Levels: Is 'Historical Chaos' Returning?

Growing evidence shows that the impact of the energy crisis on the global economy in recent months is increasingly reflected in supply chain pressure indicators—these metrics previously lit up "red lights" during global crises, providing central banks with more reasons to be vigilant about inflation returning.

Various "logistics activity dashboards" tracked by industry insiders show that some indicators have reached their highest levels since 2020-2023, when global economies were under lockdown, material shortages were frequent, and shipping congestion persisted.

While some indices remain far below the peak of global supply chain chaos around 2020, they still reflect disruptions to global trade from the Iran conflict, showing certain similarities to that period. Logistics covers the movement of goods between suppliers, factories, and end consumers, estimated to account for 10% of global GDP, highlighting its crucial role in the global economy.

HSBC Holdings trade economist Shanella Rajanayagam stated, "As the situation of restricted actual supply for key commodities approaches, upward pressure on prices may intensify further."

On Tuesday, data from the U.S. Bureau of Labor Statistics showed that as gasoline and grocery costs continued to rise, U.S. April CPI year-over-year growth further expanded to 3.8%, the largest increase since 2023. After inflation adjustment, U.S. real wages experienced their first decline in three years.

The Global Supply Chain Pressure Index compiled by the New York Fed directly reflects new pressures. After remaining stable for three years, the index has risen for three consecutive months—with April showing particularly significant increases, reaching its highest level in nearly four years.

The World Bank's Logistics Performance Index and the Baltic Dry Index also show similar trends, with the latter rising to its highest level since 2022.