Global Trade Activity Softens Amid Signs of Two-Speed Recovery

Tradeshift's Q2 Index of Global Trade Health reveals that the recent recovery in global trade activity is beginning to level off, with notable disparities emerging between regions.

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Tradeshift's Q2 Index of Global Trade Health reveals that the recent recovery in global trade activity is beginning to level off, with notable disparities emerging between regions. While trade activity in the U.S. and China continues to build on recent momentum, Europe is struggling to keep pace, and the UK is showing ongoing weakness.

Total transaction volumes between buyers and suppliers on the Tradeshift network remained flat compared to the previous quarter, with growth still three points below the anticipated level in Q2. Order volume growth dipped six points below the expected level, having peaked at five points above expectations at the end of 2023. 

“Order volumes have been climbing rapidly over the last six months, but we’re now seeing the rate of acceleration begin to cool,” says James Stirk, CEO at Tradeshift. “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. We’re already seeing evidence of supply chains struggling to keep pace with higher demand. A more measured growth rate can provide suppliers with the breathing space needed to adapt and stabilize, reducing the risk of bottlenecks and disruptions that have plagued the industry in the recent past.”

Key Takeaways:

  • U.S.  Maintains Momentum: Trade activity in the U.S. exceeded expectations for the second consecutive quarter, with transaction volumes tracking one point above the baseline. 
  • China's Steady Recovery: China's trade activity continued to rise, exceeding expected levels by one point in Q2. This follows six months of steep decline in the second half of 2023, meaning recent growth comes from a fairly low base.
  • Eurozone plateaus: Activity in the Eurozone remains three points below the baseline. Despite a bright start to the year, the region has not surpassed this level in over two years.
  • UK Trade Slows: The UK saw a reversal in trade activity, with transaction volumes ending Q2 five points below anticipated levels, reflecting ongoing challenges in maintaining growth momentum.
  • Emerging Market Winners: Countries such as Vietnam, Malaysia, India and Mexico are emerging as significant beneficiaries from the shift in global supply chains. Transaction volumes in these regions are growing at rates well above the global average.
  • Mixed bag across sectors: Manufacturing activity decreased slightly, while demand for freight capacity remained high. The retail sector continues to underperform, showing little change from its slow growth trend over the past eighteen months.
  • Supply Chain Liquidity: While cash flow pressures on suppliers have eased, payment cycles remain 5% longer than pre-pandemic levels, posing ongoing challenges for small and mid-sized enterprises.
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