NY Fed Sees Global Supply Chain Pressures Easing
New data shows supply chain pressures abating following a four-year high earlier in the year.
The Federal Reserve Bank of New York’s Global Supply Chain Pressure Index moved to 1.25 from an upwardly revised 1.81 in May, the bank announced Monday (July 6).
In April, the index reached its highest level since 2022 as the U.S.-Iran conflict disrupted the flow of trade through the vital Strait of Hormuz and led to a spike in the price of fuel.
A Monday report by Reuters on the findings noted that the war is being slowly resolved, with some traffic being allowed through the strait, giving economists and Fed officials hope that inflationary pressures will begin to ease.
The report also cited a recent warning from New York Fed President John Williams about the risks to the price outlook posed by supply chain problems. In a speech late last month, he said, “inflation is unquestionably elevated and well above” the 2% target.
However, Reuters added, Willians said he expects inflation pressure to moderate and—assuming the disruptions at the strait are soon resolved—“energy and related goods prices should stabilize, then start to come down later this year.”
In other supply chain-related news, PYMNTS wrote last week about efforts to use agentic artificial intelligence (AI) to prevent supply chain disruptions.
For example, the report said, third-party logistics company C.H. Robinson debuted an AI system last month that assesses an entire supply chain and identifies needed improvements before performance breaks down. It does this in 25 to 30 minutes, rather than the four weeks traditional methods require.
The report cited data from global consulting firm J.S. Held showing that supply chain disruptions cost businesses roughly $184 billion per year as of 2025, though much of that cost is not due to the actual disruption.
“It comes from the lag between when a problem is identified and when someone acts on it,” the report added. “The Hackett Group estimated that $1.7 trillion in global working capital is tied up in excess inventory, held as a buffer precisely because companies lack the real-time data to set inventory levels with confidence rather than padding.”
Meanwhile, McKinsey found that manufacturers who increased supply chain visibility saw a 15 to 20% improvement in inventory turns and lowered expedited-service costs by 30 to 50%, gains that can be turned into working capital release and margin protection.
