SAN FRANCISCO: A signiﬁcant slump in order volumes across US supply chains took the shine off a slight improvement in global trade activity in Q4-2022, according to the latest data from Tradeshift, the digital network for global trade.
Tradeshift’s Index of Global Trade Health shows the total volume of trade transactions across global supply chains at 3 points below the baseline in Q4, a modest improvement on the 5-point deﬁcit recorded in Q3 of 2022. Both the Eurozone and the UK followed the global trend, with activity 3 points below the baseline in Q4.
The slightly brighter picture worldwide contrasted with a signiﬁcant drop in activity across supply chains in the US. Trade transactions in the US fell to 6 points below the expected range in Q4, the steepest quarterly loss of momentum in over a year. Order volumes, in particular, fell sharply, ﬁnishing the quarter 9 points below the baseline, the most signiﬁcant reversal in buying activity since the world locked down in Q1 2020.
“This quarter’s Index data shows a shift in the poles compared to the rest of 2022,” said Christian Lanng, CEO of Tradeshift. “Trade activity in Europe has been in freefall since the beginning of the year. Let’s be clear, this is not a recovery; activity is still relatively low. But a slight uptick in momentum in Q4 suggests Europe’s supply chains are starting to see some light at the end of the tunnel.
“The sharp reversal in the US could well be a one-off as regional supply chains seek to rationalize inventories at the tail-end of a bullwhip. That said, it could also be the ﬁrst real sign of a reaction to consumer belt-tightening in the US domestic market.”
Slackening demand across the worldwide transport and logistics (T&L) sector suggests a more protracted slowdown in 2023. Transaction volumes across the sector ﬁnished the year 11 points below the baseline, having fallen steadily since the beginning of the year.
The end of zero-covid restrictions in China could well lift demand across the T&L sector in 2023. In the short term however, the Tradeshift Index data suggests a difﬁcult transition. Transactions volumes in China dropped to 4 points below the baseline as a huge surge in Covid cases threatens to overwhelm the country.
“China’s reopening is certainly signiﬁcant, but it remains to be seen whether Chinese factories can continue to dominate global supply chains as they did prior to the pandemic,” said Lanng. “Supply chain operators that were forced to ﬁnd alternatives to China during the pandemic may think twice before returning, particularly as geopolitical tension rises.”
About Tradeshift’s Index of Global Trade Health
Tradeshift’s Index of Global Trade Health analyses business-to-business transaction volumes (orders processed from buyers and invoices processed from suppliers) submitted via the Tradeshift platform to offer a perspective of how external events may be impacting business-to-business commerce in a variety of different regions and sectors across the globe.
Tradeshift is the cloud-based supply chain platform that transforms the way B2B buyers and sellers connect, transact and trade. We’re a leader in e-invoicing and AP automation, offering tools for compliant e-invoicing in 50+ countries, including China. Tradeshift is also an innovator in B2B marketplaces and embedded ﬁntech services that bring value, opportunity and growth to any business that joins the network. Headquartered in San Francisco, Tradeshift’s vision is to connect every company in the world, creating economic opportunity for all. Today, the Tradeshift platform is home to a rapidly growing community of buyers and sellers operating in more than 190 countries. Find out more at: www.Tradeshift.com
Any statements contained in this document that are not historical facts are forward-looking statements as deﬁned in the U.S. Private Securities Litigation Reform Act of 1995. Tradeshift undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations.
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