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Tradeshift report finds Global Trade Activity falls 14.8% in Q2

Thursday 23rd July, 2020

According to the latest data from Tradeshift, global trade fell 14.8% in the second quarter of 2020. But evidence of an upward curve in June suggests the impact of the COVID-19 pandemic could bottom out at the lower end of the 13-32% range predicted by the World Trade Organisation.

According to Tradeshift’s Global Index of Trade Health report, the UK experienced the biggest drop in trade among western economies during Q2, with transaction volumes falling by 23.1%. Transaction volumes across the Eurozone fell by 21.9%, while activity in the US was down 16.1%.

Whilst China, which experienced the most significant impact on trade in Q1, saw trade activity rise by 31.8% in Q2.

The research found for economies in the West, the green shoots of recovery have begun to emerge, but the overall picture remains volatile. After record lows through April and May, order volumes have begun to trend upwards over the past month. The Eurozone has benefited the most from a “post-lockdown bounce,” with the number of orders rising 24% in June compared to lows in April.

Order volumes in the US and the UK have also begun to increase since the end of May, but the surge in activity has been far less pronounced.

Tradeshift said, and while order volumes are trending upwards, payments to suppliers are not keeping pace with the recovery. Invoice volumes across the EU, UK and US fell by 19% as a whole in Q2, and while activity is picking up heading into Q3, it is doing so slowly. With many suppliers running low on cash after a prolonged period of inactivity, lack of working capital flowing through supply chains could well prevent these suppliers from fulfilling orders, putting a brake on recovery.

“Trying to restart supply chains without fast and predictable access to working capital is a little like trying to start a car without any gas in the tank. It doesn’t get you very far,” said Lanng. “Government stimulus has done a great job insulating businesses from the very worst of lockdown. But as we enter a new chapter in the pandemic, we need to start looking at fresh ways to unlock liquidity and get it flowing quickly to cash-starved suppliers.”

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