Research Briefing | Apr 11, 2022

More pain for US supply chains


Supply chain conditions deteriorated for a second straight month in March. Pressures increased on the price and transportation fronts as the war in Ukraine pushed key energy and non-energy commodity prices higher and aggravated logistics logjams. Plunging Covid cases in the US kept demand resilient which, alongside constrained supply, increased stress on the activity front. On the bright side, inventory dynamics improved and labor strains moderated.

What you will learn:

  • Higher energy prices (oil prices jumped 20% on the month) and more costly non-energy commodities made durable and nondurable goods production more expensive. Services costs also ramped up. There are signs of moderation in early April, but inflation won’t fall sharply.
  • The number of cargo ships waiting to unload at LA and Long Beach fell again in March, down 9%, though artificially suppressed by China’s strict Covid containment policy, and the imbalance between strong demand and limited supply likely moderated in the trucking industry. But more expensive shipping and stress in other logistics channels, namely air cargo, had a negative impact.
  • Activity improved as coronavirus cases decreased, putting more stress on the economy’s productive capacity. With unfilled goods orders lingering at historic levels and leisure and hospitality spending reviving, we foresee stress remaining high on the activity front.

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