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Citi has launched its latest Global Perspectives & Solutions (Citi GPS) report, “Supply Chain Finance: Uncertainty in Global Supply Chains Is Going to Stay”

Its findings indicate that in an environment of stabilising trade flows and cooling goods demand, disruption remains top of mind for businesses reliant on global supply chains.

The report, which follows last year’s report titled, “The Complicated Road Back to Normal”, draws insight from Citi Research’s proprietary Global Supply Chain Pressure Index, trade flows and survey responses from multinational corporations and their suppliers globally.

The Citi Global Supply Chain Pressure Index, outlined in the report, continued to ease on the back of a slowdown in global consumer’s demand for goods.

Core goods inflation is expected to alleviate in the coming months as heightened supply chain pressure has been a key driver of price pressure. The report cautions that while the decrease in demand is an important driver of loosening supply chain pressures, these developments are also a sign of mounting recessionary risks across countries and globally.

By analysing the $4 trillion of average daily payment flow that Citi’s treasury and trade solutions division processes, the report finds that flows have largely stabilised after multiple disruptions in 2021 and early 2022. 

It is against this backdrop of stabilisation, that Natural Resources and Clean Energy Transition (NRCET) trade flows grew 65% through the first three quarters of the year as energy prices have soared globally.

Jane Fraser, CEO of Citi said, “The pandemic and then the war in Ukraine demonstrated the fragility of supply chains. Many companies and customers experienced the pain of those disruptions and are now looking for resiliency wherever they can get it.

While reshoring and nearshoring may seem like the next steps, buyers and suppliers alike indicate that the higher priority is resiliency or redundancy deeper into the supply chain.”

Citi and its research partner surveyed 2,327 global corporates for its supplier & large corporate survey as part of this report. This survey garnered insights into the challenges facing companies large and small around the world, from which five themes emerged:

  • Rising prices and rising interest rates have had impact as corporates take steps to boost financial supply chain resilience
  • Corporates and their suppliers want to strengthen relationships and broaden their supplier base to mitigate further disruption
  • Pandemic disruption has given way to geopolitical tension as the primary threat to supply chain funding stability
  • Despite economic headwinds, respondents remain optimistic about the prospect for export growth
  • ESG remains an area of focus, but lack of clarity has impeded meaningful progress.

Chris Cox, global head of trade and working capital solutions at Citi said, “Given the impact from global events businesses have re-evaluated supply chain strategies. Notably, resiliency and continuity is taking centre stage on sourcing through the production cycle.

Another developing trend is the shift from ‘Just in time’ to ‘Just in case’. Buyers are now building-in more resilience by purchasing earlier and holding more inventory. Businesses are also accelerating the digitalisation of supply chains. Digitalisation enables ease of monitoring and management throughout the chain, enabling the robustness for any future disruptions.”

The digital copy of the report is available here