For the second consecutive month, the GEP Global Supply Chain Volatility Index has remained in positive territory, indicating a continued increase in global supply chain activity and stretched capacity among suppliers worldwide. The index, based on a monthly survey of 27,000 businesses, stood at 0.13 in June, slightly lower than May’s 14-month high of 0.21.
Leading the growth in supply chain activity is Asia, with major manufacturing and exporting economies such as China, Taiwan, Vietnam, and India experiencing accelerated factory activity. This surge in demand has contributed to the region’s steady month-over-month growth since April.
In contrast, North America’s suppliers have been experiencing fluctuations between underutilized and overutilized capacity. In June, factory input demand slightly decreased, resulting in reduced demand for suppliers. However, on average, North American vendors have been operating at full capacity since the beginning of 2024.
The European market, on the other hand, still has some slack in its manufacturing sector, with factory purchasing activity remaining subdued. Although conditions have improved compared to the end of last year, the region’s manufacturing recovery still has progress to make.
One potential concern is the rise in global transportation costs, which reached their highest level since October 2022 in June. The increased shipping and container rates can be attributed to the strengthening activity across global supply chains. However, reports of safety stockpiling remain low, indicating that the market is currently in a favorable state with subdued stress levels.
Amol Jawale, Vice President of Consulting at GEP, highlighted the momentum gained by Asian manufacturers. He emphasized the importance for companies to lock in pricing with key suppliers for 2025, as sustained growth in Asia could lead to increasing costs and price pressures for global companies.
The GEP Global Supply Chain Volatility Index serves as a valuable indicator of supply chain capacity utilization and volatility. It is derived from S&P Global’s PMI surveys, which are sent to companies in over 40 countries, totaling around 27,000 companies. The index provides insights into demand conditions, shortages, transportation costs, inventories, and backlogs.
Overall, the positive growth in Asia’s suppliers and the increasing momentum in global manufacturing signify a promising outlook for the industry. As supply chains continue to expand, companies should proactively manage their procurement strategies to ensure stability and competitiveness in the market.