Global Supply Chain Costs Forecast to Rise 2.7% to 6.7% in 2027

Global supply chain costs are set to rise, according to a new report from the global strategy and management consulting firm Kearney.

Kearney's Supply Chain Institute, the internal think tank behind the report, highlighted that geopolitical risk is a major driver of these cost increases, with a 64.5 percent rise globally. The report notes that while trade values have fluctuated across all five regions, the shared signal of geopolitical risk is a critical factor.

In the United States, supply chain costs could rise by as much as 5 percent. This increase is driven by rising trade and labor costs, with container rates increasing by 6.8 percent. Manufacturing is growing at a rate of 5.5 percent, and industrial material import prices are up by 17.5 percent. The U.S. saw growth in both import (4.6 percent) and export (4.7 percent) values, reflecting the broader economic trends.

The report also provides a detailed outlook for other major economies. India is projected to see the highest increase, with supply chain costs rising by as much as 8.3 percent. China is expected to see a 5.9 percent increase, while the United States, Mexico, and Germany are forecasted to experience increases of 5 percent, 4.5 percent, and 3.1 percent, respectively.

Kearney's Supply Chain Navigator, which has maintained an accuracy rate of more than 95 percent since its inception 10 quarters ago, advises companies to plan for volatility in the 2.7 to 6.7 percent range. The report emphasizes the importance of considering these cost increases across different business units, products, suppliers, and customers.

The report outlines three key disciplines for companies to prioritize in shaping their operations performance: 1. Protecting operating continuity and making it accountable. 2. Releasing working capital by reducing excess stock, reviewing collections, and resolving payment disputes. 3. Planning for the 2.7 to 6.7 percent range of volatility.

Kearney, a 100-year-old management consulting firm with a presence in more than 40 countries, has been a trusted partner to three-quarters of the Fortune Global 500 and governments worldwide. The firm's people make a difference, tackling clients' toughest challenges with original thinking and a commitment to making change happen together.