Supply Chain Costs Forecast to Rise Up to 6.7% in Early 2027

A narrower forecast with a wider risk range

Kearney's latest Supply Chain Navigator projects that global supply chain costs will rise 2.7% in the first half of 2027. Its upside scenario puts the increase at 6.7%.21 The Supply Chain Institute, Kearney's internal think tank, released the semiannual report on October 29, 2026, under a title that sums up its argument: costs are rising everywhere, and geopolitical risk could push them higher.22

The global range hides large differences between countries. Costs could rise as much as 8.3% in India, 5.9% in China, 5% in the United States, 4.5% in Mexico and 3.1% in Germany.2223 The report also lists the forces behind the increase. Container rates are up 6.8%, manufacturing is growing at 5.5%, industrial-material import prices have risen 17.5%, and US import and export values grew 4.6% and 4.7% respectively.2123

The main point of the report is about method more than any single figure. Co-author Rupal Deshmukh says the firm looks at costs two ways. Fundamentals show what companies are paying now. Risk signals show pressure that has not yet reached reported numbers.21 Suketu Gandhi, global lead of the Supply Chain Institute, put it directly: companies should plan for the whole range this quarter, not a single figure.21 Kearney says the Navigator has been more than 95% accurate over the 10 quarters since it began.21

Geopolitics is the signal that moved most

Geopolitical risk rose 64.5% globally, the biggest change in any of the fundamental or sentiment indicators Kearney tracks.2223 Gandhi called it the standout signal and noted that executives already rank it among their top three obstacles to growth.21 Other pressures include expanding manufacturing, higher freight costs and rising prices for technology hardware.21 EconoTimes pointed out that Kearney does not say how much each of these contributes.23

The report gives companies three priorities. They should protect operating continuity and assign clear responsibility for it. They should free up working capital by cutting excess stock, chasing collections and settling payment disputes. And they should map the 2.7%–6.7% range across business units, products, suppliers and customers.21

How the outlook has changed this year

The new numbers are easier to read alongside Kearney's earlier forecasts. In February, the firm projected costs rising 2.3% to 4% above baseline inflation through 2026. It blamed trade policy, critical materials, geopolitics and high inventories, and described the result as a rising structural cost floor.2725 Within weeks, conflict in the Middle East changed that picture. A later Kearney briefing raised the projection to 5% to 7% above inflation through the end of 2026. With US inflation above 3%, it said total cost exposure would likely top 10%.24

That briefing described a series of linked shocks. Roughly a fifth of global oil and a quarter of liquefied natural gas pass through the Strait of Hormuz, and crude rose above $100 a barrel after the conflict began.24 Kearney estimated that 70% to 80% of vessels were rerouting around the Cape of Good Hope, adding 10 to 14 days per voyage. It projected that shipping costs on affected lanes could climb 30% to 70% in the near term.24 Gandhi said diesel was the most important factor and warned that disruption becomes "a little bit exponential" once a company's inventory buffer runs out.30

The new 2.7% central case looks lower than the earlier 5%–7% band, but the two may not measure the same thing. The earlier figures were explicitly above inflation. EconoTimes noted that the latest release does not say which period the global projection compares against or whether it adjusts for inflation.23 In this reading, the new forecast is not a sign that pressure is easing. It describes costs that have stopped climbing as steeply but remain high. Kearney's own wording supports that: it says supply chains are now operating under an elevated cost structure.21

Container rates: the 6.8% figure and the market data disagree

The largest gap in the coverage is over freight. Kearney says container rates are up 6.8%.21 Market benchmarks show much bigger increases.

• Drewry: the World Container Index stood at $4,434 per 40-foot container on October 1, 2026, up 166% from a year earlier. Shanghai–Los Angeles was up 257% and Shanghai–New York up 226%.11
• Xeneta: by October 1, spot rates from the Far East to the US West and East Coasts were 344% and 335% above February 28, before the Hormuz crisis.16
• Jefferies: global container freight rates roughly doubled, from about $2,000–$2,500 in February to $4,000–$4,500 in October.17

The difference probably reflects what is being measured. Kearney's figure is likely a broader or smoothed indicator, while the benchmarks track volatile spot rates. Companies with long-term contracts may see costs close to Kearney's number. Companies that buy capacity on the spot market are paying something much closer to the index readings.

The benchmarks also suggest freight has peaked without falling sharply. Xeneta chief analyst Peter Sand said US-bound spot rates had reached their post-Hormuz high. He also said rates would not collapse, so shippers should expect elevated costs for the rest of the year.1618 Sand estimated that within three months, US East Coast rates could ease to about $6,000–$7,000 per FEU and West Coast rates to $4,500–$5,500.16 Drewry's October 22 reading was firmer: the composite rose 2% to $4,585, Shanghai–Los Angeles hit $8,007, and carriers used blank sailings on Asia–Europe routes to tighten capacity.20 Drewry also reported that waiting times at Shanghai fell from 97 hours to 38 hours between Week 38 and Week 42.20 Weekly moves vary, but all the sources agree that rates are well above pre-crisis levels.

Routes are also diverging. Asia–Europe rates were falling through much of September as more ships returned to the Suez Canal. Sea-Intelligence estimated that about 27% of Asia–Europe capacity used the Red Sea route that month.14 Transpacific rates stayed high because of strong US import demand.1420 This helps explain why Kearney's forecast for Germany is lower than for the US, India and China. That link is an interpretation; Kearney does not break down its country figures in this way.

Port strikes add a new source of risk

Labor disputes add risk that a cost index will not capture until later.

Los Angeles and Long Beach. About 250 watchmen in ILWU Local 26 could strike from November 1, when their contract extension expires.2 They make up only about 2% of the ILWU workforce at the two ports. However, the Pacific Maritime Association says they work at terminals handling about 85% of Long Beach's cargo and 33% of Los Angeles's. It also says other ILWU members are not expected to cross their picket lines.8 Union president Luisa Gratz says federal mediation has produced "nothing of value". The association says significant differences remain, and it says full-time watchmen average more than $170,000 a year.8 The ports handled a record combined 2.04 million TEU in September.2 As of October 28, no strike had been confirmed.3

The October 30 day of action. Dockworkers at more than 100 ports in at least 17 countries planned coordinated strikes and protests. The listed ports include Genoa, Piraeus, Marseille, Mersin, Tangier and ports in India, Mexico and the United States.7 Italy's USB union estimates that the participating unions handle about 40% of Mediterranean container traffic and that some 40,000 containers could be delayed for a day. Those figures have not been independently verified.7 In France, the CGT called a 24-hour strike at 24 ports, including Le Havre and Marseille-Fos. Its leader said up to 95% of port activity could stop, though that is the union's own forecast.10 Reported participation ranges from 17 to 22 countries depending on the source, which suggests the action was still growing.567

Earlier stoppages. A ver.di warning strike in August largely stopped Hamburg's four main container terminals in a dispute covering about 11,000 workers.4 In late September, a 24-hour national strike hit Genoa, Livorno and Gioia Tauro over pension recognition and staffing rules.1

Each of these stoppages is short. Together, they show the kind of risk Kearney's sentiment measures are meant to pick up early. They also make delivery times less predictable, which Kearney's earlier briefing identified as the harder problem to manage.24

Shortages and what companies should take from this

The effects are already showing at the company level. A survey cited by VNDLY found that 96% of US small and mid-sized businesses were hurt by tariffs, shipping delays or supplier failures. More than half (56.2%) reported stockouts and 61.6% reported lost sales.29 Kearney's earlier work found that companies with thin stocks are hit first, since some industries hold less than 30 days of inventory compared with up to 12 weeks at better-prepared firms.24

The overall picture is consistent across the coverage. Supply chain costs are no longer rising as sharply as they were, but they remain high. Freight has peaked without falling back, labor disruption is spreading from port to port, and geopolitical risk is still the factor most likely to push costs toward the 6.7% upside. Companies that budget only for the 2.7% central case are effectively assuming that none of these risks gets worse.