New orders crumble as global economy slows

New orders recorded in Tradeshift data fall by the largest amount since the height of the pandemic in Q3 2022

The Tradeshift Index of Global Trade Health has recorded a 5-point fall in supply chain activity in Q3 2022 compared to the baseline as the global economy slows, with the main culprit Europe’s ongoing energy crunch.

The Index found a wide ranging drop in activity across retail, manufacturing and transport & logistics, with uncertainty and costs hitting new orders for goods in particular. Their data infers a 7 point fall in global order volumes below expected levels in Q3. That declines comes on the heels of a 6-point drop in the previous quarter, the most significant six-month fall since the height of the pandemic.

Additionally, manufacturing came in 11 points below the expected range in Q3 and the retail supply chain activity was 9 points below the baseline, the slowest growth in 18 months.

This weakness in the upstream of supply chains has pushed activity in the transport and logistics sector 8 points lower than expected in Q3, marking two quarters of declining growth.

Hardest hit is European trade, as supply chain activity across the Eurozone was down 6 points more than the global average in Q3, but the UK situation is even more concerning, as trade activity fell by a further 5 points in Q3.

For the US and China, the situation is less severe. Total transaction volumes were 2 points below the expected level in the US in Q3, and local supply chain activity in China came in just 1 point below the expected range.

Tradeshift did warn that Chinese activity was volatile, however, and everything could change depending on local lockdown policies.

“Supply chains in the US seem to have stabilised,” said Christian Lanng, CEO of Tradeshift. “As long as consumers keep spending, they may even start to see an upside from lower operating costs. Europe faces a much harder road ahead. The energy crisis comes down to a failure to maintain the balance between access, sustainability and security of supply. As organisations take a hard look at the resilience of their supply chains, maintaining this balance should be front of mind.”

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