New data from Tradeshift shows transaction volumes across global supply chains dropped at their fastest rate in eighteen months in Q3.
More than one million businesses “use Tradeshift’s business commerce network to exchange invoicing and purchase order information relating to trade transactions across global supply chains.”
The company’s Q3 Index of Global Trade Health, “which analyses the flow of these transactions, shows activity levels tracking 6 points below expected levels over the summer months (July-September).”
A slump in demand for manufactured goods “is undoubtedly a factor in the latest slowdown. Activity across the sector dropped 9 points below the baseline in Q3. Freight demand also softened, dipping to 6 points below the anticipated level.”
Export-focused markets, “including China and the Eurozone, are being hit the hardest by the slowdown in goods demand.” Trade activity across the Eurozone slumped “to 9 points below the expected level in Q3, compared to a deficit of 3 points in the previous quarter.” In China, transaction volumes fell “to 6 points below the baseline level, the first time activity has fallen into contraction territory this year.”
US trade activity also softened in Q3, but “the rate of decline was far milder than in other markets.” Transaction volume growth dropped “to 3 points below the expected level in Q3, having surged to 3 points above the baseline in the previous quarter.”
James Stirk, CEO (interim) at Tradeshift, said:
“Globally, we’re seeing mounting evidence of an economy that’s preparing to land. Traditional manufacturing powerhouses across the Eurozone and China are facing a lot more turbulence than the US, where a robust domestic market means a softer landing seems more likely.”
While the fall in trade activity has been consistent across the majority of major economies, others are benefiting “from a reconfiguration of supply chains that has gathered momentum since the pandemic.”
Tradeshift’s data shows Vietnam in particular profiting “from an accelerating ‘China +’1’ production policy among Western companies.” Transaction volumes have “risen seven times faster than the global average over the past year”
India, Malaysia and Mexico are also benefiting “from supplier diversification with activity levels in each country rising at three times the global average over the past year.”
