Key facts
- Supply chain stress is rising at its fastest pace since the early pandemic.
- Logistics costs have surged to the highest level since March 2022.
- Transportation costs are at their highest level in nearly 10 years.
- Supply chain disruptions are attributed to events around the Hormuz chokepoint.
- The Federal Reserve faces challenges combating supply-driven inflation.
Alarming stress across global supply chains is rising at its fastest pace since the early pandemic, according to UBS analyst Pierre Lafourcade. Ongoing disruptions around the Hormuz chokepoint and the resulting energy supply shock are pushing up input, freight, and other logistics costs. The May 2026 Logistics Managers' Index Report showed transportation costs surging to the highest level in its nearly 10-year history, while transportation capacity fell and utilization remained elevated. The report warned that this level of elevated cost has previously led to significant supply-driven inflation, which is more difficult for the Fed to combat than demand-driven inflation. Respondents forecast aggregate logistics costs will increase by 253.6 over the next 12 months. The Global Supply Chain Stress Index rose by 1.2 standard deviations in March and April, the second-largest two-month jump since July 2020. This situation raises the risk of sticky inflation even as growth slows, posing a headache for the Federal Reserve. The Fed's Beige Book also cited mounting concern among the business community about supply and freight costs.