Supply chain issues may have peaked - NY Federal Reserve

Supply chain issues may have peaked - NY Federal Reserve

Supply chain issues may have peaked - NY Federal Reserve

The supply chain crisis that has kept grocery stores scrambling to keep shelves stocked may have reached its peak, according to a report from the New York Federal Reserve, Business Insider reports.

The NY Fed unveiled a new index on Tuesday, which combines different metrics of data from across the supply chain to establish a clearer picture of the situation.

The Global Supply Chain Pressure Index uses data such as the Baltic Dry Index (BDI), which tracks the cost of shipping raw materials, the Harpex index, which tracks container shipping rate changes, and price indices that measure the cost of air transportation of freight to and from the US, Asia, and Europe to track global supply chain disruptions. The data is tracked back to 1997.

In a blog post on Tuesday, the NY Fed said the results suggest that "global supply chain pressures, while still historically high, have peaked and might start to moderate somewhat going forward."

Experts have been closely watching the supply chain crisis for months, trying to decipher when the situation will ease up.

In October last year, a group of Jefferies analysts estimated that at that point, the crisis had likely peaked and things would significantly improve by mid-2022.

Other experts offered a gloomier outlook, however. They anticipated that supply chain challenges would last another two years. And several major retailers say they're expecting delays and shortages to last well into 2022. 

There are other ways to identify whether the crisis is easing, experts told Insider's Emma Cosgrove.

These include analyzing domestic trucking rates to see if they became more affordable, which would indicate that demand is easing up. Another approach would be to look at inventory-to-sales ratios to determine whether sales are depleting inventories faster than they can be restocked.

Source: Business Insider

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