Data from Tradeshift reveals that B2B trade activity across U.S. supply chains accelerated past China in Q2, with the world’s largest economy now setting the pace for global trade recovery heading into the second half of the year.
According to Tradeshift’s latest Index of Global Trade Health, which analyzes transaction data between buyers and suppliers, activity levels across U.S. supply chains rose by a relatively modest 2.4 percent quarter on quarter. This was sufficient to overtake China in terms of cumulative growth compared to pre-pandemic levels.
Transaction volumes across Chinese supply chains had been growing at a phenomenal rate in the second half of 2020, but Tradeshift’s data suggests a significant slowdown since the beginning of 2021. Transaction volumes in China dropped 22 percent in Q2, the second quarter in a row that activity levels have fallen by a double-digit margin.
According to China’s National Bureau of Statistics, Chinese factory outputs have been affected by supply chain bottlenecks. Tradeshift’s data suggests supply chains in the U.S. and the Eurozone could also start to encounter challenges as suppliers struggle to keep up with demand.
Walking a tighrope
“The recent slowdown in China shows how quickly external factors can start to impact momentum,” said Christian Lanng, CEO, Tradeshift.
“Supply chain operators are walking a tightrope in order to keep recovery on track. Large buyers are understandably keen to capitalize on the current spike in demand, but if suppliers are left to pick up the check then the whole system will start to cave in to pressure.”
Total order volumes rose 35 percent in Q2 compared to the previous quarter. By contrast, the number of supplier invoices processed during the same period grew by just two percent, well below the rate seen in previous quarters.
The more this gap widens, the more challenging it becomes for suppliers to build up sufficient cash reserves to fulfil new orders. Tradeshift’s data suggest that this imbalance is particularly acute across supply chains in the Eurozone where order volumes rose 62 percent in Q2 while the total number of invoices rose just eight percent during the same period.