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Home » Challenging outlook for global supply chains as costs rise while orders fall
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Challenging outlook for global supply chains as costs rise while orders fall

July 18, 2022
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That’s according to the latest Index of Global Trade Health from Tradeshift, the supply chain commerce platform facilitating digital trade transactions between B2B buyers and suppliers.

Order volumes on Tradeshift’s platform fell to further below expectation in Q2, sliding by a further 6 points following a 7-point drop in the previous quarter. The lack of fresh orders is beginning to impact suppliers, who had only recently been struggling to cope with surging demand. The number of invoices submitted by suppliers dropped by 7 points in Q2, the most significant slowdown in a year.

Orders might be softening, but Tradeshift’s analysis suggests costs have risen sharply since the beginning of the year. The average value of an invoice submitted on Tradeshift’s platform has increased by 11% since the start of 2022, compared to a more modest 3.5% rise in 2021.

Tradeshift’s analysis reveals a remarkably similar pattern across regional supply chains the world over:

Total trade activity in the UK and the Eurozone dropped by 5 points, with new orders and supplier invoices tracking below the expected range.

US supply chains fared slightly better than the global average. Transaction volumes were 4 points below the expected range in Q2, but the volume of new orders remains low.

Chinese trade activity had another challenging quarter as new lockdown measures in key cities contributed to another 7-point fall in transaction volumes against the expected range.

Tradeshift’s data suggests that declining demand is also leading to a cooling-off in activity across the transport and logistics sector. Transaction volumes across the industry dipped below the expected range for the first time in a year after a 5-point fall in activity compared to the previous quarter.

Manufacturing and retail trade activity also remained below the expected range. Technology spending recovered sharply in Q2, with activity tracking well within the predicted range.

“Many of the current supply chain challenges, including inflation, have roots in the pandemic,” said Christian Lanng, CEO and co-founder at Tradeshift. “Some of these problems are transitory, but the bigger issues, including labor shortages, geopolitical tension, and energy transition, are structural and risk becoming entrenched unless businesses take decisive action now.”

“It would be an entirely natural response for business leaders to want to batten down the hatches and wait for the current storm to pass,” said Lanng, “but many of the same problems supply chains face today will still be there a year from now. How long can a business hold its breath before it runs out of air?”

“The majority of business leaders I speak to are keeping their eyes on the horizon and pressing ahead with much-need investments in technology that will allow them to become more agile, resilient, and sustainable.”

https://tradeshift.com/global-trade-report/
Submit your logistics, material handling, or supply chain related company news in Supply Chain Quarterly's's Industry Press Room section or New Products section
KEYWORDS Tradeshift
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