This latest data halts a six-month growth streak, suggesting that the recent acceleration in global trade activity may be leveling out, said the report by the cloud-based business network and platform for purchase-to-pay automation, supply chain payments, marketplaces, virtual cards and supply chain financing. Evidence of a two-speed recovery is becoming more pronounced.

Order volume growth cooled significantly in Q2 2024, dropping by 6 points below the baseline after peaking at five points above expected levels at the end of 2023.

Recovery is not being spread equally, with differences between regional winners and losers becoming more pronounced.

Trade activity in the United States exceeded expectations, while the eurozone remained three points below the baseline, the ‘Tradeshift Index of Global Trade Health Q2 2024’ revealed.

UK trade activity reversed, with transaction volumes ending Q2 five points below anticipated levels.  

Transaction volumes in China grew slightly above expected levels, suggesting a recovery that may be steady rather than spectacular.

Vietnam, Malaysia, India and Mexico are emerging as winners from Western companies’ accelerated push to diversify supply chains and reduce reliance on China.

Demand for freight capacity remains elevated despite a slight decline in manufacturing activity, while growth in the retail sector remains subdued.

Cashflow pressure on suppliers has continued to ease, but buyers still take an average of 5 per cent longer to pay invoices compared to pre-pandemic periods.

In the US, trade activity continued to exceed expectations, rising one point above the baseline for the second consecutive quarter. Conversely, Europe’s recovery is struggling to gain further traction, with trade activity remaining three points below the expected range—a level it has not surpassed for over two years.

However, China needs to accelerate after its initial recovery attempt faltered in the second half of 2023. While the latest figures are encouraging, progress remains steady rather than spectacular.

Additionally, signs are emerging that China’s factories are not yet operating at pre-pandemic levels. China’s official purchasing managers’ index indicates that the manufacturing sector fell back into contraction in May, the report noted.

Increasing geopolitical tensions and economic considerations are accelerating the shift towards reshoring, nearshoring and what some call ‘friendshoring’ of production.

Nearshoring and reshoring present significant challenges for companies in Europe and the United States due to cost issues and the availability and quality of local suppliers.

Consequently, many companies are increasingly adopting a strategy known as ‘China Plus One’ to diversify their supply chains. Vietnam has been a major beneficiary of multinational companies’ efforts to diversify their manufacturing hubs, the report added.

Fibre2Fashion News Desk (DS)