In March, global supply chains saw a surge in spare capacity, reaching the highest level since May 2020, indicating worsening conditions for manufacturers worldwide. Factories in the US, Mexico, and Canada experienced significant setbacks due to tariffs, with Canada being the most affected. The UK also faced a contraction in supplier activity, signaling considerable manufacturing weakness.
The GEP Global Supply Chain Volatility Index, a leading indicator tracking various supply chain factors, decreased for the third consecutive month in March, reaching its lowest value in almost five years. This suggests the highest degree of spare capacity in global supply chains since the peak of the COVID-19 pandemic in 2020.
A notable finding from GEP’s data was a sharp decline in companies stocking up on inventory, with manufacturers’ stockpiling at its lowest in nine years. This reflects caution among procurement leaders regarding future demand.
According to John Piatek, vice president of consulting at GEP, the decrease in supplier activity in March was attributed to tariffs and uncertainty, particularly affecting North America. Companies are now actively seeking ways to cut costs, shift tariffs to suppliers, and mitigate risks in their supply chains.
In the UK, supplier spare capacity rose for the fourth consecutive month to levels seen only during significant crises like the COVID-19 pandemic or the global financial crisis. Factories took aggressive measures to reduce stock and spending in March, indicating a potential downturn in the country’s industrial sector. European supply chains showed signs of slack, with demand for raw materials, commodities, and components decreasing at the slowest rate in almost three years. In contrast, Asian supply chains were operating at full capacity, with increased procurement activity in China and India.
Key findings for March 2025 include stable global demand for materials and components, decreased reports of safety stockpiling, and below-average global material shortages. Labor shortages remained contained, while transportation costs fell to their lowest in the year.
Regional supply chain volatility varied, with North America experiencing spare capacity, Europe showing signs of recovery, and the UK facing a slowdown. Asian supply chains were operating at full capacity.
For more information, visit www.gep.com/volatility. The next release of the GEP Global Supply Chain Volatility Index will be on May 13, 2025.
The GEP Global Supply Chain Volatility Index is a collaboration between S&P Global and GEP, derived from PMI surveys sent to companies worldwide. The index indicates whether supply chain capacity is being stretched or underutilized.
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