The GEP Global Supply Chain Volatility Index, which tracks global supply chain volatility through key business activity indicators, dropped for the third straight month in March to -0.51. This marks the lowest reading in nearly five years and indicates the highest level of spare capacity since the height of the COVID-19 pandemic in 2020.

Businesses across global markets reported less stockpiling, cautious procurement behavior, and lower demand across key categories. The decline reflects weak demand and soft market conditions, particularly in North America, according to GEP.

Global Supply Chain Volatility: Stockpiling Reaches Nine-Year Low

GEP’s latest report revealed a major shift: Fewer companies are stockpiling inventory. The data showed stockpile activity at its lowest level in nine years, as procurement leaders exercised caution amid unclear demand signals.

“March’s sharp decline in supplier activity was due to the stifling effect of tariffs and tariff-related uncertainty. This had its strongest impact in North America, where manufacturers reported cutbacks to purchasing activity and inventories,” said John Piatek, vice president, consulting GEP. “Most companies had taken a wait-and-see approach. Now, organizations are aggressively exploring every possible way to eliminate costs, push suppliers to absorb tariffs, and de-risk their global supply chains.”

In the U.K., supplier spare capacity continued to grow for the fourth consecutive month, reaching levels not seen since the global financial crisis. Factories cut spending and inventory in anticipation of an industrial slowdown.

Europe Eyes Recovery While Asia Maintains Capacity

In Europe, the GEP Index showed continued underutilization, but the gap narrowed slightly. Manufacturers saw the smallest decrease in raw material demand in three years, signaling early signs of recovery.

Meanwhile, Asia maintained full supply chain capacity. China and India contributed to a modest increase in regional procurement activity, reflecting steady demand across some Asian markets.

March Snapshot: Demand, Inventory, and Transportation

• Demand: Demand for materials remained flat globally. North America saw a decline, while Europe and Asia posted minor improvements.
• Inventory: Manufacturers reported the lowest safety stock levels since 2016, showing wariness about future orders.
• Material shortages: Global supply remained strong, with shortages well below the long-term average.
• Labor shortages: Labor availability continued to meet demand, with few companies citing capacity-related delays.
• Transportation: Global shipping costs fell to their lowest in 2025, trending near historical averages.

Global Supply Chain Volatility by Region

• North America: The index dropped sharply to -0.63 from -0.18, showing rising supply chain slack.
• Europe: The index rose slightly to -0.63 from -0.72, suggesting mild improvement despite high underutilization.
• United Kingdom: The U.K. index dropped to -1.23 from -0.85, reflecting a sharp pullback in purchases and inventory.
• Asia: The region held steady, with a slight dip to -0.12 as procurement rose in China and India.

GEP said its findings suggest businesses will continue exercising caution as they navigate tariff pressure and seek more resilient sourcing strategies.