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Anticipate the Unknown: Does Supply Chain Disruption Lead to Increased Credit Risk?


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Anticipate the Unknown: Does Supply Chain Disruption Lead to Increased Credit Risk?

This article is written and published by S&P Global Market Intelligence, a division independent from S&P Global Ratings. Lowercase nomenclature is used to differentiate S&P Global Market Intelligence credit scores from the credit ratings issued by S&P Global Ratings.

In recent times, inefficiently functioning supply chains have come under increasing scrutiny, with risks amplified during the height of the COVID-19 outbreak when companies struggled to balance supply constraints with changing consumer demand. Despite easing COVID-19 restrictions across the globe, we have seen supply chains struggle to return to pre-pandemic levels. The Russia-Ukraine conflict, shortage of critical components, rising energy and commodity prices, the Omicron variant-related lockdowns in multiple Chinese cities and a host of other issues have placed renewed pressure on the flow of goods. In the Global Credit Conditions Q2 2022 report by S&P Global Ratings,[1] it was determined that supply chains were one of the top contributing risks to global credit conditions given “sharply higher input costs and supply chain disruptions that are being further fuelled by the rising energy and commodities prices”.

To analyze the impact of recent events on supply chains, we have used shipping data and supplier intelligence from Panjiva, our extensive global trade offering, along with our Probability of Default Market Signals (PDMS) model from Credit Analytics. This later capability incorporates stock price and volatility to calculate a one-year probability of default (PD), enabling us to reflect the more immediate market shocks and assess which industries have experienced material changes to their default risk.

Supply Chain Import Trends

To understand which industries experienced the greatest supply chain disruptions, we looked at the year-over-year reduction in seaborne U.S. import volume between March 1, 2021 and March 1, 2022 as a proxy.[2] As shown in Figure 1 below, imports slowed most in key parts of the Materials and Consumer Discretionary sectors, with Metal & Glass containers displaying the most significant percentage decrease in shipping volume within Materials, followed by Forest Products. Within Consumer Discretionary, a sector sometimes characterised as comprising non-essentials that people can forgo in times of economic downturn, Auto Parts & Equipment saw the most significant decrease, followed by Household Appliances and Auto Manufacturers.

Figure 1: Biggest reduction in seaborne U.S. import volume

A Deeper Look at Industry Supply Chain Dynamics

Looking at the top six industry movers shown in Figure 1, Table 1 below summarizes the decline in imports over the period March 1, 2021 to March 1, 2022.

Table 1: Industries with the highest decrease in U.S. seaborne shipping volume (TEUs)


March 1, 2021

March 1, 2022

Import Change

Metal & Glass Containers




Forest Products




Auto Parts & Equipment




Household Appliances




Electrical Components & Equipment




Automobile Manufacturers




Source: S&P Global Market Intelligence. As of April 1, 2022. For illustrative purposes only. 

We saw imports within the Metal & Glass Containers industry fall by 40% following supply chain roadblocks with ships stuck in ports. Although there was no shortage of raw materials and many plants operating at full capacity, some domestic producers increased production that offset imports, while some food manufacturing businesses had stockpiled bottles and containers reducing their demand.  

The Forest Products industry saw imports fall by 30% as it suffered from output constraints in wood products from countries such as China, coupled with the slowdown and eventual halt of manufactured lumber from Russia to U.S. In addition, the reduction can be further explained by the aftereffects of trade tariffs and reduced consumer spending on wood products due to economic uncertainties.

Auto Parts & Equipment witnessed a 19% fall in imports as the industry arguably suffered a hangover-effect from the previous years' COVID-19 outbreak. With the worsening of the pandemic, automobile manufacturers drastically cut their production and parts orders. When conditions reversed and demand rebounded, this reduction in the supply of parts created a gap that auto parts manufacturers are now struggling to fill for new vehicles. Coupled with the congestion at ports, this has been very detrimental to the industry. Auto parts production is even worse for used car parts, as new car part production is often given priority due to higher levels of demand. This has also been severely curtailed by semiconductor and electrical steel shortage that are required to power many of the electricals in automobiles.

Household Appliances experienced a 17% year-over-year decrease in imports due to manufacturing and shipping backlogs. The microchip shortage especially impacted a number of appliances, such as washing machines, refrigerators and dishwashers.

Electrical Components & Equipment saw a 14% decrease in imports. The resurgence of COVID-19 in China, the ubiquitous microchip shortfall and geopolitical tensions all contributed to this decline.  

Finally, Auto Manufacturers saw a 13.8% decrease in imports, plagued by many of the same related issues as Auto Parts & Equipment.

Supply Chain Implications for Default Risk

By generating median PDMS scores at the industry level globally for the period in question, as shown in Figure 2 below, we have a view of how recent market conditions have impacted the default risk for the top six industries that we identified as having the greatest year-over-year reduction in seaborne U.S. imports. 

Figure 2: PDMS in the industries with highest import reduction

Subsets of industries within Consumer Discretionary are exhibiting the greatest increase in default risk and the highest overall PDs. Automobile Manufacturers saw the largest rise in its PD, increasing by over 10% (from 0.75% to 0.83%), an equivalent implied credit score of ‘bbb’.[3] A key driver has been investor concerns that production levels cannot meet demand due to a shortage of parts, with the aforementioned semiconductor chips and other essential parts lowering vehicle production while simultaneously inflating vehicle prices. In Europe, the war in Ukraine has halted the production of essential vehicle wire harnesses, where the Ukraine accounts for a fifth of European production.[4]

Metal & Glass Containers showed the second highest increase in PD, worsening by more than 4% (from 0.81% to 0.84%). This industry was also impacted by the developments in Ukraine, with one of the largest producers (Verallia) suspending production at its domestic site. Moreover, despite high demand, the share prices of many of the biggest players in this industry remain highly volatile, impacting the PD’s performance.

The third biggest mover was Auto Parts & Equipment, which saw a 3.71% increase in its PD, due to impacts by issues previously mentioned. Being essential for new and used vehicles, however, may have buffered its PD. In addition, there are a broad range of companies within this industry that have a low market cap, making them more susceptible to shocks and lowering market sentiment and increasing overall risk.

Electrical Components & Equipment saw a modest 2.25% increase in its PD for similar reasons as Auto Parts & Equipment. Also worth mentioning is that innovative companies within this industry play an essential part in providing access to power and renewable energy generation, which is growing in importance.

Forest Products saw a marginal increase of 0.13% in its PD, indicating that the market did not see a significant increase in risk for this industry. However, the overall PD level at 1.56% as of March 1, 2022  clearly makes it much riskier than the other five industries (Auto Parts & Equipment by comparison was 0.83%). It has been at similarly high levels for the past year, which could signal that the market has already factored in the demand and supply changes.  

Finally, illustrating why it is best t to look at supply chain impacts along with credit/default risk, we saw the PD for Household Appliances marginally improve over the period, indicating that market perception of the supply chain impact on this industry could have been relatively moderate and that the other market dynamics did not completely dampen that view.

Overall, we have seen that supply chain disruptions severely impacted some industries, while not necessarily translating to an equivalent increase in PDs for others. This is due to many reasons, including a company’s ability to pass on the rising supply costs to consumers. However, a prolonged shortage of essential components, ratcheting component prices and increased inflationary pressures reducing consumer spending could start to impact the credit strength of companies across multiple industries even more profoundly.

Table 2: PDs for the top six industries with the highest decrease in shipping volume


March 1, 2021

March 1,2022

PD Change

Automobile Manufacturers




Metal & Glass Containers




Auto Parts & Equipment




Electrical Components & Equipment




Forest Products




Household Appliances




Source: S&P Global Market Intelligence. As of April 1, 2022. For illustrative purposes only. 

Learn more about the tools we used in this analysis by requesting a demo from one of our solution experts.

[1]  “Global Credit Conditions Q2 2022: Confluence Of Risks Halts Positive Credit Momentum”, S&P Global Ratings, March 31, 2022.

[2]  The supply chain measure of import volume as provided by Panjiva is denoted by TEU’s (twenty foot equivalent containers) of containerized freight imports.

[3]  S&P Global Ratings does not contribute to or participate in the creation of credit scores generated by S&P Global Market Intelligence. Lowercase nomenclature is used to differentiate S&P Global Market Intelligence PD credit model scores from the credit ratings issued by S&P Global Ratings.

[4]  “Europe’s car plants halted by lack of low-cost Ukrainian component”, Financial Times, March 16, 2022,

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