Citi GPS: Global Supply Chains

Rhea-AI Summary

Citi has released its Global Perspectives & Solutions report titled Supply Chain Finance: Uncertainty in Global Supply Chains Is Going to Stay. The findings highlight ongoing disruptions in global supply chains amid stabilizing trade and cooling demand. The Citi Global Supply Chain Pressure Index shows easing pressures due to decreased consumer demand, but recession risks loom. Natural Resources and Clean Energy trade flows surged 65% amid rising energy prices. A survey of 2,327 global corporates revealed themes such as rising prices, the need for supply chain resilience, and a shift in focus from just-in-time to just-in-case strategies.

Positive

• Natural Resources and Clean Energy Transition trade flows grew by 65% in the first three quarters.
• Survey insights indicate respondents remain optimistic about export growth despite economic challenges.

Negative

• Decreased consumer demand signals potential recessionary risks affecting supply chains.
• Ongoing geopolitical tensions pose threats to supply chain funding stability.

Uncertainty In Global Supply Chains Is Going to Stay

LONDON--(BUSINESS WIRE)-- Citi has launched its latest Global Perspectives & Solutions (Citi GPS) report titled: 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 propriety 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.

“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," notes Jane Fraser, CEO of Citi in her forward to the report.

Citi and its research partner surveyed 2,327 global corporates for its Supplier & Large Corporate Survey as part of this report. This survey garnered powerful 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. As a result, financing the end-to-end supply chain remains top priority. How this trend plays out long term remains to be seen. Buyers, however, are focused on ensuring their suppliers have access to better and stable working capital solutions. Businesses are also accelerating the digitalisation of supply chains. Digitalization 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

About Citi’s Treasury and Trade Solutions

Citi Treasury and Trade Solutions (TTS) enables our clients' success by providing an integrated suite of innovative and tailored cash management and trade finance services to multinational corporations, financial institutions and public sector organizations across the globe. Based on the foundation of the industry's largest proprietary network with banking licenses in over 90 countries and globally integrated technology platforms, TTS continues to lead the way in offering one of the industry's most comprehensive range of digitally enabled treasury, trade and liquidity management solutions.

About Citi Global Perspectives & Solutions (Citi GPS)

As our premier thought-leadership product, Citi Global Perspectives & Solutions (Citi GPS) is designed to help readers navigate the most demanding challenges and greatest opportunities of the 21st century. We access the best elements of our global conversation with senior Citi senior professionals, academics, and corporate leaders to anticipate themes and trends in today’s fast-changing and interconnected world.

About Citi

Citi is a preeminent banking partner for institutions with cross-border needs, a global leader in wealth management and a valued personal bank in its home market of the United States. Citi does business in more than 160 countries and jurisdictions, providing corporations, governments, investors, institutions and individuals with a broad range of financial products and services.

Additional information may be found at www.citigroup.com | Twitter: @Citi | YouTube: www.youtube.com/citi | Blog: http://blog.citigroup.com | Facebook: www.facebook.com/citi | LinkedIn: www.linkedin.com/company/citi

View source version on businesswire.com: https://www.businesswire.com/news/home/20230112005278/en/

Media:

Richard Bicknell

+44 (0) 20 7500 5003

richard.bicknell@citi.com

Source: Citi

FAQ

What are the key findings of Citi's Global Perspectives & Solutions report on supply chains?

Citi's report indicates ongoing disruptions in global supply chains, with easing pressures and a significant growth in Natural Resources and Clean Energy trade flows.

How much did trade flows in Natural Resources and Clean Energy grow according to Citi's report?

Trade flows in Natural Resources and Clean Energy grew by 65% through the first three quarters of the year.

What risks are highlighted in Citi's supply chain report?

The report highlights potential recessionary risks and ongoing geopolitical tensions as significant threats to supply chain stability.

What trends are businesses shifting towards in their supply chain strategies?

Businesses are shifting from just-in-time to just-in-case strategies, focusing on building resilience and holding more inventory.

How many global corporates were surveyed for Citi's supply chain report?

A total of 2,327 global corporates were surveyed for insights into supply chain challenges.