Global supply chains strained as stockpiling, shortages and costs stay elevated

Manufacturers are front-loading purchases at the fastest pace since early 2022.

Global supply chains remained under significant strain in May as businesses accelerated emergency stockpiling to guard against rising prices and potential material shortages, the GEP Global Supply Chain Volatility Index showed on Tuesday.

Reports of safety stockpiling climbed to their highest level since January 2023, driven by bulk orders of goods and raw materials placed ahead of expected price increases and possible supply disruptions. The surge pushed global demand for manufacturing inputs to its strongest reading since March 2022.

Material shortages also worsened last month, reaching a three-and-a-half-year high. Combined with persistently elevated transportation costs, the data suggest that supply chain pressures have broadened well beyond the shipping and energy markets where they first took hold.

Analysts flagged a particularly rare pattern: for three consecutive months, stockpiling, shortages and transportation costs have all remained elevated simultaneously. Outside the protracted supply chain crisis of 2021 to 2023, such a combination has historically preceded a sharp fall in the index as supply chains self-correct — typically through weaker input demand or a deterioration in broader economic conditions.

"The path for inflation is already being set, and companies are trying to limit the damage," said John Piatek, vice-president for consulting at GEP. "The surge in purchasing we saw in April and May is likely temporary. Once companies have built inventory, they and their customers will pull back, which means supply chain pressures may ease. But even if the Strait of Hormuz is opened fully, economic conditions will likely weaken in the second half of the year as companies draw down the inventories they have built up."

Regional picture

Pressures varied sharply across regions. Asia remained the most strained globally, though its index eased slightly from 3.79 in April to 2.96 in May. Factories in Japan, India, South Korea and Taiwan all reported more aggressive purchasing activity. North America, meanwhile, saw its index rise to 1.69 from 1.52 — the highest since August 2022 — as manufacturers, particularly in the United States, ramped up stockpiling.

In Europe, the index fell to 1.43 from 1.64, reflecting reduced procurement activity in Germany and France amid signs of fresh manufacturing weakness in both economies. The United Kingdom bucked the continental trend, however, with its index surging to a three-and-a-half-year high of 1.34, up from 0.96 in April, pointing to growing capacity constraints among British manufacturers' suppliers.

Key data points

Global demand for raw materials and intermediate goods posted its strongest rise since March 2022. Safety stockpiling was at its most widespread since January 2023, with manufacturers across Asia, Europe and North America building warehouse buffers more aggressively last month.

The items-in-short-supply indicator edged higher, signalling that worldwide shortages worsened from April and are now at their highest in three and a half years. The combination of constrained supply and stockpile-driven demand is exerting considerable upward pressure on factory gate prices.

Labour shortages, however, were not a significant constraint on capacity, with reports of backlogs attributable to workforce gaps remaining in line with historical averages.

Transportation cost pressures eased slightly in May after hitting a record high in April — the highest since the index began in 2005 — as global oil prices pulled back from peaks reached since the outbreak of the conflict in the Middle East. Even so, transportation costs remained the second-highest since March 2022, following Russia's full-scale invasion of Ukraine.

The GEP Global Supply Chain Volatility Index is compiled by S&P Global and GEP from monthly surveys of approximately 27,000 companies in more than 40 countries. A reading above zero indicates that supply chain capacity is being stretched; a reading below zero indicates it is being underutilised.

The next release is scheduled for 13 July 2026.