Core Insights - Global supply chain activity declined in July as U.S. manufacturers reduced purchases of materials and components after building inventories in June ahead of the end of the 'tariff pause' [1][2] - The GEP Global Supply Chain Volatility Index fell to -0.35 from -0.17 in June, indicating increased spare capacity worldwide, primarily driven by the U.S. [2][6] - U.S. manufacturers are preparing for lower demand, as evidenced by a significant reduction in input purchases [3][6] Regional Key Findings - North America's index dropped to -0.33 from -0.06, reflecting a pullback in orders [2][6] - Asian factory purchasing activity remains slightly below trend, with notable weakness in Japan and South Korea, while Taiwan's factories experienced an accelerated downturn [7] - Europe's industrial recovery stalled, with the index declining to -0.30 from 0.01, highlighting the fragile nature of the recovery, particularly in Germany [7] Inventory and Labor Insights - Safety stockpiling has eased, suggesting limited concern over supply bottlenecks or price surges [8] - Staffing capacity and transportation costs remained stable, with no signs of inflationary pressure from these sources [8]

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **transportation industry**, specifically the impact of tariffs on freight flows from **China to the USA** [1][2][3]. Core Observations - **Laden vessels from China to the USA** decreased by **8% week-over-week**, marking the fourth consecutive week of decline after a surge in inbound shipments [1][5]. - Year-over-year (YoY), laden vessels showed a **3% drop** [5]. - **Port of Los Angeles** is expected to see a **22% increase** in sequential imports, followed by a **17% decrease** two weeks later, indicating volatility in shipping patterns [5][40]. - **Rail intermodal volumes** on the West Coast increased by **5% YoY**, suggesting a recovery in logistics following previous declines [5]. - **Container rates** remained flat sequentially but are under significant pressure, down **70% YoY** [5][37]. Trade Scenarios for 2025 - Two potential scenarios for trade in 2025: 1. A surge in orders ahead of a **90-day tariff pause** in China. 2. A slowdown in activity due to uncertainty regarding tariffs and inventory management [6][7]. - The likelihood of a pull-forward surge is seen as more probable, complicating volume and earnings predictions for transportation companies [7]. Tariff Impact - The **30% tariffs** remain high, potentially affecting demand over time, especially as e-commerce faces the end of de minimis exemptions [8]. - Three possible outcomes for transport stocks: 1. A significant pull-forward leading to inventory build-up followed by a drop in freight demand in the second half of 2025. 2. A less pronounced pull-forward, leading to uncertainty for shippers. 3. Economic stability leading to increased orders as retailers face inventory shortages [11]. Freight Forwarders and Logistics - Freight forwarders like **EXPD** and **CHRW** are expected to benefit from volatility and potential surges in demand due to tariff pauses [12]. - **Parcel services** (e.g., **UPS** and **FDX**) may also benefit from increased demand for air freight during this period [14]. Container and TEU Trends - **TEUs** from China to the USA increased by **10% YoY** in the latest week, following a previous decline [21]. - The overall trend in TEUs remains volatile, reflecting the dynamic nature of trade flows [23][27]. Port Activity - **Chinese major port throughput** increased by **3% week-over-week** and **5% YoY**, indicating a slight recovery in port activity [34][35]. - The **Big Three ports** (LA, Long Beach, Oakland) saw a **5% YoY decline** but a **21% sequential increase** from May to June, indicating a recovery trend [57][59]. Inventory and Cost Trends - The **Logistics Managers Index** showed upstream inventory expansion at **66.4** in June, while downstream inventories compressed at **44.2** [72]. - The **inventory cost index** rose to **80.9**, reflecting higher costs associated with inventory management [73]. Conclusion - The transportation industry is currently experiencing significant volatility due to tariff impacts, shifting shipping patterns, and fluctuating demand. Companies in this sector must navigate these challenges while looking for opportunities in freight forwarding and logistics as trade dynamics evolve.

Core Insights - The GEP Global Supply Chain Volatility Index increased to -0.17 in June 2025 from -0.46 in May, indicating a recovery in global supply chain activity despite ongoing tariffs [1] - European manufacturers returned to full capacity for the first time in over two years, driven by strong demand from US customers and a rebound in domestic and export demand, particularly in Germany [1][8] - North American manufacturers significantly increased their purchasing activity ahead of a potential end to the tariff pause, leading to a rise in the index to -0.06 from -0.24 [2][9] Demand Conditions - Global factory purchasing activity showed a robust upward trend in June, with North America experiencing the most significant increase [7][8] - The index for Asia rose to -0.27 from -0.40, indicating a pick-up in activity, although overall supply chains in Southeast Asia remain underutilized [9] Supply Chain Capacity - The index for Europe rose to 0.01 from -0.30, signaling full capacity utilization across European supply chains as the industrial sector recovers [9] - In the UK, the index improved to -0.41 from -0.97, indicating a reduction in slack but still reflecting underutilization [9] Inventory and Material Shortages - Reports of increased stockpiling due to price or supply concerns were at their highest in 2025, with businesses building safety buffers in warehouses [15] - The global item shortages indicator remains historically low, suggesting robust availability of materials [15] Labor and Transportation - Suppliers' workforce capacity is sufficient to handle current order loads, with stable reports of manufacturing backlogs due to staff shortages [15] - Global transportation costs aligned with long-term averages, and logistic cost pressures remained stable [15]

Core Insights - The GEP Global Supply Chain Volatility Index increased to -0.17 in June 2025 from -0.46 in May, indicating a recovery in global supply chain activity despite ongoing tariffs [1] - European manufacturers returned to full capacity for the first time in over two years, driven by strong demand from US customers and a rebound in domestic and export demand, particularly in Germany [1][8] - North American manufacturers significantly increased their purchasing activity ahead of a potential end to the tariff pause, leading to a rise in the index to -0.06 from -0.24 [2][9] Demand Conditions - Global factory purchasing activity rose in June, marking the strongest demand in over a year, particularly driven by North America [7][8] - The index for Asia improved to -0.27 from -0.40, indicating a pick-up in activity, although overall supply chains in Southeast Asia remain underutilized [9] Supply Chain Capacity - The index for Europe rose to 0.01 from -0.30, signaling full capacity utilization across European supply chains as the industrial sector recovers [9] - In the UK, the index increased to -0.41 from -0.97, indicating improvement but still reflecting a significant level of slack in supply chains [9] Inventory and Material Shortages - There was a notable increase in stockpiling among businesses due to concerns over prices and supply, with the highest mentions of safety buffers in warehouses for 2025 [15] - The global item shortages indicator remains historically low, suggesting robust availability of materials [15] Labor and Transportation - Suppliers' workforce capacity is sufficient to handle current order loads, with stable reports of manufacturing backlogs due to staff shortages at historically typical levels [15] - Global transportation costs aligned with long-term averages in June, with logistic cost pressures remaining stable [15]

Core Insights - The GEP Global Supply Chain Volatility Index fell to -0.46 in May from -0.39 in April, indicating increasing spare capacity in global supply chains due to tariffs and trade tensions [1][5][10] Group 1: Regional Analysis - Asia reported the greatest degree of spare capacity in 18 months, with raw material purchases declining for the second consecutive month, primarily driven by a decrease in Chinese factory demand [2][8][10] - North America's supply chains remain underutilized, particularly in Mexico and Canada, although U.S. manufacturers increased raw material purchases to bolster inventories against potential price hikes [3][9][10] - Europe's industrial sector showed signs of recovery, with activity levels stabilizing, particularly in Germany due to fiscal stimulus, while the U.K. faced significant underutilization in its manufacturing sector [4][10] Group 2: Supply Chain Metrics - Global demand for raw materials and components remained weak, marking the lowest level year-to-date, with procurement activity in Asia experiencing its sharpest decline in nearly 18 months [8][17] - The North American index improved to -0.24 from -0.34, reflecting a slight increase in purchasing volumes in the U.S., while the European index remained stable at -0.30, indicating underutilized capacity [10][17] - The U.K. index rose to -0.97 from -1.12, still indicating significant slack in supply chains and ongoing weakness in the manufacturing industry [10][17]