October 19, 2026

The below transcript is a translation of the podcast audio that has been machine generated by Notta.

Hi everyone. This is Taylor St. Germain with ITR Economics. Thanks for joining me on this episode of TrendsTalk. We at ITR are you’re apolitical and unbiased source of economic intelligence. And today I wanted to cover some current events, especially as it relates to energy shipping costs in the supply chain.  Certainly challenges in the supply chain given the geopolitical conflicts around the world, so I thought this was timely to unpack what we’re seeing from a data perspective.

I wanted to kick things off discussing our supply chain pressure index. Our supply chain pressure index, we refer to it as the Global Supply Chain pressure index, and that global supply chain pressure index is elevated. Usually when we see positive numbers or positive data on charts, it’s a good thing. In this case, it’s going to be a challenge. The reason I bring this up is because as an economist, I’m thinking of things that could negatively impact your ability to grow as a business as we look forward to the future. Now, I don’t want this to be conflated with economic growth because we are still forecasting economic growth. I’m thinking of challenges that could stop your ability to meet the demand that we see out there in the economy. And the supply chain is something that I’m growing a bit more concerned with. Again, positive global supply chain pressure number. Now, it’s not as bad as it was back in 2020, ‘21 or ‘22, but it is at its highest reading really since that time. So, we are seeing the supply chain come under more pressure, likely no surprise to many of you, given the situation in the Middle East and some of the challenges we’re seeing in Europe. But what I wanted to highlight about this index is we actually have leading indicators that lead this index. The purchasing Managers index is a great example of one. It has about a 7 month leading indicator. And while positive sentiment from the PMI is a good thing, which is what we’re seeing today, I am concerned because that typically means more supply chain pressure. So what do you need to take away from this? We expect to see some supply chain challenges over the next 7 months. That’s what the PMI is telling us as it relates to this supply chain pressure index. So, I don’t want you to assume the lead times that you have today are going to be where they are, you know, going to be the same lead time 7 months from now. I do want you to prepare for some more disruption, some slightly longer lead times. That is what the data is telling us.

Now, directly related to that, we track the amount of volume going through the Strait of Hormuz, and it is essentially negligible, barely anything still moving through the strait at this point on a week to week basis. So that is going to contribute to that supply chain pressure. And when our supply chain is under pressure, we tend to see higher prices. And I don’t have to tell you all this, but we are absolutely seeing that in the case of oil prices. If you look at the percent change on a week to week basis in oil prices, we are still up in that double digit territory. Now we would expect oil prices to likely slow next year, assuming we start to see more volume moving through the Strait of Hormuz. But that is not what we’re seeing here in the near term. So we’ve got more supply chain pressure. We have essentially no volume moving through the Strait of Hormuz. We have higher oil prices, diesel prices sitting up here at a record. I think it was just a week ago, we had 6.38 for the average weekly price of diesel here in the US. So, you’re seeing these energy markets certainly impacted by these challenges. And another data set I just put in perspective for you all is that when we look at the World Drewry Container Index, we are looking at the cost in US dollars of 40 foot containers that are typically shipping overseas. That number is up to 4,433 at the time of this recording. That is the highest level of in terms of shipping container costs that we’ve seen since back in 2024, when we were at about 5,800. And that is in an upward trend right now. So, we are seeing a lot of these costs, whether it’s energy costs, whether it’s shipping costs and gas diesel prices, you know, as a result of these supply chain pressures.

So, what do we need to do about all of this? Well, we need to continue to find ways to shore up our supply chain, looking for alternative regions, relocating these supply chains to areas that are more resilient. That’s something that we’re really putting an emphasis on, especially in the face of this higher cost environment. We need to find ways to become more efficient and productive. I know I’m preaching to the choir here, but we are not expecting this price inflation to go away. Now we go through cycles from an inflation standpoint. Again, I’m not saying that things won’t calm down. Should we see a resolution to the situation in Iran? They likely will. But are we forecasting lower prices next year? Absolutely not. We’re just forecasting prices to not increase as drastically in ‘27 as they will in 2026. So, I want you to be prepared for the challenges because we still have growth in our forecast, folks, we have a record setting GDP trend for the next three years. But we have to find solutions to these supply chain challenges, to these cost challenges, if we really want the revenue margin expansion that I’m sure we’re all capable of.

So, we’ll continue to update you on these current events. Again, I want you to know that slowing prices into next year, a slowing rate of growth in prices is what we’re forecasting. But here in the immediate near term, we need to find some solutions to protect our margins. And I’m really looking to the supply chain as where some of those biggest challenges are. I sure hope you found this information helpful. Please like and subscribe to TrendsTalk wherever you listen to your podcast. And I look forward to seeing you all in the next one. Thanks so much. Take care for now.