Supply chain delivery times are worsening amid increased disruption risks such as hurricanes and strikes in many parts of the world.

S&P Global Market Intelligence said in a new analysis that despite this, shipping rates have dipped but remain high, bolstering the container lines' earnings, although competition remains fierce.

"Global manufacturing has entered a decline for the first time in seven months, the S&P Global manufacturing PMI shows, with firms blaming worse supplier delivery times for reducing export orders," the report said.

For the period, the PMI for supplier delivery times for global manufacturing dipped to 49.3 in July from 49.9 in June (below 50 indicates slower deliveries), the worst since January.

"Deliveries were slowest in the chemicals sector, while delays emerged in autos for the first time since February," S&P said, adding that electronics also entered a period of delays, holding back communications equipment, which had the slowest deliveries since December 2022.

For the remainder of the year, the report noted that logistics networks "face a variety of challenges," including the risks of strikes and hurricanes for shipping networks in the US, as well as continued disruptions to Red Sea routings.  

In terms of hurricanes, S&P noted that the second major hurricane of the Atlantic season, Debby, has resulted in one- or two-day closures at the ports of Jacksonville, Tampa Bay and Savannah — although such closures are normal and recovery should only take a few days.

The peak hurricane season normally runs from later in August to September.

"With regard to strikes, East Coast port unions are calling for a 76% pay rise, according to the Journal of Commerce by S&P Global, potentially raising the risk of a strike from September 30. In Canada, an August 9 vote by rail workers could precipitate a strike as soon as August 12," it added.

Other problems appear to be subsiding.

S&P noted that the draft of the Panama Canal will be increased to 49 feet from 45 feet in June. That is only slightly below the average of 50 feet in 2022.

"While the situation is still precarious — the water level in the critical Gatun Lake balancing system is 77.1 feet versus a five-year average for August of 83.9 feet — the pressure on logistics networks should be lessening," the analysis further said.