Water Ship Whirlpool Whirlpool Ship Image by Andy from Pixabay Tradeshift has published its latest Index of Global Trade Health. The report looks at the trade activity across the US, Europe, the UK, China and the rest of the world for the fourth quarter of 2022. With concerns about the cost of living and inflation, this is a barometer for the global economy.

While the results show a continued decline, the slope of that decline is evening out. The volume of trade transactions globally was 3 points below the Q4 baseline, but this is higher than the 5-point deficit in Q3 2022.

The order volume in the US fell sharply; transaction volumes were 6 points lower than the baseline, and orders were 9 points lower. China also suffered from the continued covid lockdown ending 4 points lower than the baseline compared to 1 point in Q3.

There are signs of optimism in Europe. While the transaction volumes in the Eurozone and the UK broadly followed global trends, supply chains are recovering.  In Germany, only 50.7% of companies reported material shortages, 8.6% down from the previous month.

Christian Lanng, CEO of Tradeshift
Christian Lanng, CEO of Tradeshift

Christian Lanng, CEO of Tradeshift, commented, “This quarter’s Index data shows a shift in the poles compared to the rest of 2022. 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.”

The decline slows but is recovery imminent?

While tech transaction volumes are buoyant, 1% above baseline, the continued drop in transportation and logistics transaction volumes is cause for concern. This slowdown may indicate a protracted slowdown rather than a resurgence in volumes. In China, transaction volumes fell 4 points below the baseline. While the end of zero-covid across China might see a resurgence, with no vaccine policy in place and rising deaths, this may be a dawn that never arrives.

Lanng added, “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. Supply chain operators that were forced to find alternatives to China during the pandemic may think twice before returning, particularly as geopolitical tension rises.”

The challenge is that if consumer demand falls after the highs of Q4, as reported by Adobe, will this see a further decline in global supply chain volumes?

Enterprise Times:  What does this mean

The report ends with an interview with  Rob van Ipenburg, Co-founder & Managing Partner at  Quyntess. He gets out the crystal ball to add a prediction for the year ahead. He comments, “The Great Resignation will have the most profound effect on digital supply chains in 2023 and 2024. Automation and AI-guided decision-making are unavoidable: Companies understand that this is no longer about cutting jobs but cutting vacancies from their job boards and making sure the business continues to operate.”

While this may be a valid view, recent layoffs at global tech firms might indicate that 2023 could become the year of great layoffs rather than great resignations His other prediction, a rise in the services economy, will be seen by some vendors as good news. With 20-30% of orders now having services alongside products, companies such as FinancialForce could see higher demand with its solutions powering the connected services business.

The Tradeshift Index is a useful barometer for the global economy’s health.  The Q1 report will be interesting to see whether the economy is recovering post covid is continuing to spiral into recession.


Please enter your comment!
Please enter your name here