Input shortages drive more persistent inflation than freight shocks

A structural vector autoregression decomposes global supply tensions into transportation, input-production, and congestion shocks across 1968 to 2025.

Transportation shocks lift freight costs by 8 to 10 percent on impact, but price effects dissipate within two years.

In contrast, input-production shocks lower freight prices while lifting supplier delivery times by 0.8 to 1.2 index points.

In the United States, input disruptions trigger persistent inventory depletion, higher unemployment, and sustained increases in the one-year Treasury yield.

In 2021, both shocks contributed roughly 1.7 percentage points each to PCE inflation.

In 2022, input shortages added 1.8 percentage points as freight pressures eased.

The authors construct the Global Supply Chain Tension Index (GSTIX) to map five decades of monthly supply disruptions.

Standard indicators like delivery times conflate distinct economic forces.

During the 2003–2004 trade expansion, shipping capacity tightened while manufacturing input supply expanded.

Similarly, in 2023, normalizing freight subtracted 0.9 percentage point from U.S. PCE inflation while lingering input bottlenecks continued to add 1.4 percentage points to price growth.