Global trade activity is stabilising with a varied pace of recovery across different regions, according to Tradeshift’s “Index of Global Trade Health Q2 2024.” The report reveals that while the US and China continue to show robust performance, Europe appears to be plateauing, and the UK struggles to regain momentum. Emerging markets like Vietnam, India, Malaysia, and Mexico are experiencing rapid growth, driven by increased supply chain diversification.
Stabilisation Amidst Mixed Performance
Total transaction volumes between buyers and suppliers on the Tradeshift network remained flat compared to the previous quarter, falling short of growth expectations by three points. Order volumes, which had peaked above expectations at the end of 2023, dipped six points below anticipated levels in Q2 2024. This indicates a cooling in the rapid acceleration of global trade, which James Stirk, CEO of Tradeshift, suggests may signal a period of stabilisation rather than decline.
Stirk remarked, “Order volumes have been climbing rapidly over the last six months, but we’re now seeing the rate of acceleration begin to cool. This may well be the first indication that global trade’s recent resurgence is beginning to find its level, which may not necessarily be a negative.” He emphasised that a more measured growth rate could help supply chains adapt and stabilise, potentially reducing the risk of the bottlenecks and disruptions that have plagued the industry recently.
Regional Insights
The US continues to exceed expectations with trade activity tracking one point above the baseline, reflecting its strong performance for the second consecutive quarter. China also showed resilience, with trade activity rising and surpassing expected levels by one point in Q2 2024, recovering from a significant decline in the latter half of 2023.
In contrast, the Eurozone’s trade activity remains three points below the baseline. Despite a promising start to the year, the region has not surpassed this level in over two years, signalling a plateau. The UK, meanwhile, saw a decline in trade activity, with transaction volumes ending Q2 five points below anticipated levels, highlighting persistent challenges in achieving growth.
Emerging markets are emerging as bright spots. Countries such as Vietnam, Malaysia, India, and Mexico are witnessing significant growth, with transaction volumes in these regions climbing well above the global average. This trend underscores their rising importance in global trade dynamics, driven by shifts in global supply chains.
Sector Performance and Liquidity Challenges
The report also sheds light on sector-specific performance. Manufacturing activity experienced a slight decrease, signalling a slowdown in this critical sector. Demand for freight capacity remains high, reflecting ongoing logistical needs. Meanwhile, the retail sector has continued its slow growth trend with minimal change over the past 18 months.
In terms of supply chain liquidity, although cash flow pressures on suppliers have eased, payment cycles remain 5% longer than pre-pandemic levels. This extended payment period poses ongoing challenges for small and mid-sized enterprises (SMEs).
The Need for Enhanced Visibility
In this complex landscape, the implementation of supply chain and climate impact visibility software is more crucial than ever. By providing real-time data insights, this technology enables Beneficial Cargo Owners (BCOs) and Logistics Service Providers (LSPs) to make informed, business-critical decisions. Real-time visibility helps in navigating the fluctuating dynamics of global trade and mitigating the impacts of supply chain disruptions and climate-related challenges.
Stirk highlighted that geopolitical tensions and economic fragmentation are increasingly shaping the recovery landscape. “Winners and losers are now starting to emerge. At the business level, success means forging new trade relationships quickly while avoiding becoming entangled in a web of tariffs, taxes, and ESG regulations. Digitalisation is crucial in enabling companies to adapt to these changing conditions.”
As global trade continues to evolve, the integration of advanced visibility tools will be vital in managing complexity and driving success.