Thursday 21st July, 2022
According to the latest Index of Global Trade Health from Tradeshift, global supply chain activity slowed for the second quarter in a row in Q2, dropping by a further 6 points against forecast estimates.
The index finds, 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.
“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 labour 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.”