## Longer Delivery Times Reflect Supply Chain Disruptions

_IMF Blog, October 25, 2021_

## Source details

**Canonical URL:** [Longer Delivery Times Reflect Supply Chain Disruptions](https://www.imf.org/en/blogs/articles/2021/10/25/longer-delivery-times-reflect-supply-chain-disruptions)

## Other formats

- [Markdown version](/en/blogs/articles/2021/10/25/longer-delivery-times-reflect-supply-chain-disruptions/index.md)
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## Bibliographic details
- Authors: Parisa Kamali, Alex Shiyao Wang
- Published: October 25, 2021

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### Overview
- Authors: Parisa Kamali, Alex (Shiyao) Wang
- Publication date: October 25, 2021
- Theme: Supply chain disruptions since the start of the COVID-19 pandemic have driven big increases in freight costs and delivery times, posing a major challenge for the global economy.

### Measurement and index construction
- Data source cited: IHS Markit’s suppliers’ delivery times index (constructed from Purchasing Managers Index business surveys).
- Historical coverage: data goes back to 2007.
- Survey question: Purchasing managers are asked if their suppliers' delivery times are, on average, slower, faster, or unchanged compared to the previous month.
- Interpretation rules:
  - Readings above 50 indicate faster delivery times.
  - Readings at 50 signal no change.
  - Readings below 50 indicate slower delivery times compared with those of the prior month.
- Empirical observation: Suppliers’ delivery times in the United States and the European Union have hit record highs since late 2020.

### Causes and economic effects
- Contributing factors listed:
  - Shutdowns of factories in China in early 2020.
  - Lockdowns in several countries.
  - Labor shortages.
  - Robust demand for tradable goods.
  - Disruptions to logistics networks.
  - Capacity constraints.
- Effects on prices and output:
  - The recent sharp drop in the delivery times index reflects surging demand, widespread supply constraints, or a combination of both.
  - During such times, suppliers usually have greater pricing power, causing a rise in prices.
  - Supply chain delays can reduce the availability of intermediate goods which, combined with labor shortages, can slow down production and output growth.

### Near-term outlook and downside risks
- Expected easing condition: Once the number of new COVID-19 cases starts to decline, capacity constraints and labor shortages should ease, taking some of the pressure off supply chains and delivery times.
- Factors that could prevent swift relief:
  - Elevated demand during the holiday season in some of the world’s largest economies.
  - Another wave of new COVID-19 cases.
  - Extreme weather events, if they materialize, could cause continued supply chain disruptions.

### Engagement
- The blog invites reader feedback via a 3-question survey on IMFBlog.

*IMFBlog (views expressed are those of the author(s) and do not necessarily represent the views of the IMF and its Executive Board; the IMF is an organization of 191 countries).*

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_Source: https://www.imf.org/en/blogs/articles/2021/10/25/longer-delivery-times-reflect-supply-chain-disruptions_