Delivery times continue to increase due to logistical problems

Companies are finding it increasingly difficult to purchase their products on time or to get them to the customer. This is according to a market analysis by research firm IHS Markit. In fact, the situation at the moment is More problematic than just after the outbreak of the corona pandemic. An increasing demand for goods and scarcity of containers is causing higher costs and longer delivery times.

The graph below shows how delivery times for companies in the United States and in Europe have changed over time. A value of 50 means that conditions have remained the same compared to the previous period. A higher score means that conditions have improved, while a lower score indicates a deterioration. This graph is therefore comparable to the representation of figures on producer and consumer confidence.

Companies are noticing a significant deterioration in delivery times (Source: IHS Markit, via IMF)

Longer delivery times

Market conditions seemed to improve in the second half of last year, but this year there has been a structural deterioration. This is not only related to the Price increase of container transport, but also with scarcity of available raw materials and semi-finished products. This causes delays in the long and complex global production chains. The scarcity of computer chips for a wide range of electronic devices is also causing problems.

The increase in delivery times is the result of a combination of increasing demand and limited supply. This scarcity is causing price increases for numerous goods, which translates to higher inflation rates. Price inflation that is not caused by money growth, but by a shortage of products in the real economy. Another possible explanation is that companies are now hoarding more goods to avoid production problems in the future.

This contribution comes from Geotrendlines