The Tradeshift Index of Global
Trade Health Q1 2024

Fueling global trade’s
nascent recovery
We’ve been deliberately cautious about making
any predictions over the timing of a global trade
recovery, especially given numerous false dawns
amidst four years of intense macroeconomic
volatility. So whisper it for now, but the outlook
appears to be getting a little brighter.
After two years of dwindling demand and tepid growth,
our data showed order volumes surging upwards atthe end of 2023. This trend persisted into Q1, with
the number of new orders processed through theTradeshift network continuing to exceed expectations.
China stands to benefit greatly from any uptick inglobal goods demand. Despite its anticipated recovery
faltering in 2023, Q1 witnessed a turnaround in
trade activity, with transaction volumes rising attheir swiftest pace in over two and a half years.
Government subsidies1 geared towards the
manufacturing sector are helping stimulate therecovery in China. Something similar is also happening
in the US, where we saw trade activity begin to
move into a higher gear in Q1. Order volumes roseat 7 points above expected levels while total tradeactivity rose by its highest margin in nine months.
Even the Eurozone, battered by a combination ofrising energy markets and weak demand, is beginningto build momentum, with trade activity climbing towithin a hair’s breadth of the expected range in Q1.
We’re not the only ones to observe a potentialchanging of the tides. A recent report by theUN2 predicts a rebound in global trade in 2024,

while Oxford Economics 3puts the risk of a
global recession in 2024 at 7.2%, less thanhalf of what it was at the end of 2023.
So why aren’t we shouting from the rooftops?
Every recovery is fragile and external factors likethe ongoing Red Sea crisis, disrupting supply
chains, pose a threat. Economists warn that thiscrisis could reignite inflation and impede growth.
It’s also important to understand that ramping
up capacity to meet fresh demand may
prove challenging for businesses that havebeen forced to run down cash reserves tocompensate for the recent downturn.
Liquidity remains a concern across the supplierbase, with the rate of cash reaching suppliers
crucial for supply chain resilience. Although
payment times have decreased from their 2022
peak, suppliers still face prolonged waiting
periods compared to pre-Covid times.
For supply chains, cash is akin to fuel. The steadier
it flows, the better the engine will run. Keeping
cash flowing through supply chains is one of the
key areas we are addressing through our joint
venture with HSBC and which will play a vitalrole in ensuring there is sufficient fuel in the tankfor global trade to hit the accelerator pedal.

James Stirk
CEO
Tradeshift

1 The National, 16th September 2023: How China
is incentivising production of electric vehicles
2 UNCTAD, March 2024: Global Trade Update

3 Grant Thornton, March 2024: Analysis: Riskof global recession falls substantiallyp.3

The Tradeshift Index of Global Trade Health | Q1 2024

Key findings
at a glance

1. Global trade activity recovered to 3
points short of the expected range in
Q1, the highest level in five quarters.
2. Order volumes tracked 1 point above the expected
range, maintaining the high momentum they
achieved following a surge in activity during Q4
3. China’s economic recovery sprang intolife with trade activity growing at 2
points above the expected level.
4. The US gained further momentum in Q1 as total
trade activity rose at 1 point above the baseline.
Order surged to 7 points above the expected level.

6. As global order volumes rise, cashflow pressure on
suppliers is also beginning to ease. New analysis
shows invoice payment times falling steadily fromtheir peak in Q3 2022. Suppliers are still waiting
6% longer to receive payment on their invoices
than they did prior to the pandemic, however.
7. Transaction growth within the manufacturingsector climbed back into the expected range for the
first time in a year. Demand across the transportand logistics industry rose at a similar pace.
8. The UK was the only territory where order volumes
lost momentum in Q1, dipping 5 points below
the baseline. Total transaction volume growth
tracked 4 points below the anticipated level.

5. Trade activity across the Eurozone is benefitingfrom improvements to global demand. Ordervolumes grew at 6 points above anticipatedlevels, lifting total trade activity across the region
to within touching distance of the baseline range.

p.5

The Tradeshift Index of Global Trade Health | Q1 2024

Volatility
snapshot
Quarterly growth in world tradeactivity across the Tradeshift network
indexed against historical trends.

p.7

US and China benefit most fromrebound in global demand

Order recovery holds its ground

Transaction volumes - quarter on quarter
growthvolumes
indexed- against
historical
trends indexed against historical trends
Transaction
quarter onquarter growth

Invoices and orders, global - cumulative performance (QoQ, indexed against expected growth

20

40

10

20

0

0
-10

-20
-20

-40

-30
Q4’20 Q1’21 Q2’21

Q3’21 Q4’21

Q1’22

Q2’22 Q3’22

GlobalUS

EUR

Q4’22 Q1’23 Q2’23 Q3’23 Q4’23

UK

Q1’24

CNY

Global trade appears to be inching closer to a recovery,

activity at the beginning of 2024 suggests businesses are now

buoyed by robust growth in both China and the US, alongsidegearing up for a broader recovery in demand beyond US borders.

indications of a rebound in global demand for manufactured

Transaction volumes across US supply chains grew at 1 point

goods. Total transaction volumes across the Tradeshift network

above the expected range in Q1 thanks in no small part to arose slightly, landing 3 points below the anticipated range insustained surge in fresh orders over the past six months.

Q1.
Europe’s factories are also beginning to hum again, albeit
While this marks the ninth consecutive quarter of growth

not at quite the same velocity as those in the US and China.

below expectations, it also signifies the third consecutive

Trade activity across the region finished Q1 3 points below thequarter of improving momentum after a prolonged period of

expected range, having sunk as low as 9 points below that level

sluggish activity. China’s long-awaited economic recovery

just six months ago. Data from Eurostat2 shows the Eurozone’s

appears to be gathering a head of steam having petered out

trade surplus rose to a record high in January with export-

alarmingly in the second half of 2023. Trade activity exceededfocused Germany accounting for much of the improvement.

anticipated levels by 2 points in Q1, the highest quarterly
growth rate in two and a half years. China’s official purchasing

The UK, which is less heavily weighted towards the export

managers index for the manufacturing sector moved out ofof manufactured goods, posted the weakest growth in Q1.

contraction territory in March for the first time in six months.

Transaction volumes were 4 points below the baseline, a1

marginal improvement on the previous quarter and largely
The US had its strong domestic market to thank for relatively

consistent with the subdued growth patterns we’ve observed

robust growth in trade activity in 2023. A fresh surge inover the past year.

1 Bloomberg, 31st March 2024: China Factory
Activity Expands for First Time in Six Months

2 Eurostat; 18th March, 2024: Euro areainternational trade in goods surplus €11.4 bn

Q1’21 Q2’21

Q3’21 Q4’21

Q1’22

Q2’22 Q3’22

Q4’22 Q1’23 Q2’23 Q3’23 Q4’23

Invoices

OrdersOrder volume patterns serve as a leading indicator forthe trajectory of global trade in the coming six months.
Order growth had appeared to be in freefall for muchof 2023, but regained significant momentum in Q4,
surpassing expected levels by 7 points compared tothe previous quarter. Order volumes subsequently
maintained this higher growth rate in Q1 2024,
providing a strong indication that businesses are
optimistic demand levels will continue to climb in the
coming months.

Q1’24

Invoice traffic fell by a further 5 points in Q1 as a resultof the dearth of fresh orders during the first nine monthsof 2023. A second successive quarter of strong orders
should begin to filter through to suppliers over the next
quarter, but the loss of momentum over the past two
years has left supply chains with a mountain to climb
before activity begins to normalise.

If order volumes illuminate the path ahead, theninvoice volumes act like a rearview mirror, reflecting
the challenging macroeconomic conditions that haveshaped the prevailing narrative thus far. Changes toordering patterns take time to filter through supply
chains with factors such as fulfillment times andpayment terms creating a lagging effect on invoicetraffic of up to six months.

p.9

The Tradeshift Index of Global Trade Health | Q1 2024

Liquidity pulse
Analysing how external pressures
impact the average time to pay an
invoice.

p.11

Pressure on cashflow could slow thepace of recovery

3

Q
4’
2

Q
1’
21
Q
2’
21

Q
1’
20
Q
2’
20

36

3

-5.00%

Q
3’
20
Q
4’
20

37

0.00%

3

38

Q
3’
2

39

5.00%

3

Average days to pay - yearly comparison versus all-time average time to pay

10.00%

Q
2’
2

than the all-time average.

Q
1’
2

invoices has steadily increased. This trend seemingly peaked in Q3 2022, with the average time to pay a supplier standing 16% higher

Q
3’
22
Q
4’
22

Since the onset of Covid and the imposition of worldwide lockdown restrictions in Q1 2020, the average time taken to settle supplier15.00%

Q
1’
22
Q
2’
22

during challenging and uncertain times.

20.00%

Q
3’
21
Q
4’
21

Extending or delaying payments to suppliers are common strategies large organisations employ to safeguard their working capital

Deviation in time to pay from pre-Covid average

Quartely increase/decrease in time to pay versus pre-Covid average = shown cumulatively

35

33
32
31
2016

2018

2020

average time to pay - all

Faced with a combination of low orders and lengthy payment
periods, many suppliers have been forced to dig deep into
existing cash reserves just to make ends meet. As ordervolumes show signs of recovering, the good news is that thetime businesses are taking to settle outstanding invoices is also
coming down. Nevertheless, businesses still take an average2022

all time averageWith high interest rates and ongoing restrictions
on bank lending, businesses’ options to financenew orders are severely restricted. Pressuring largeorganisations to pay their suppliers quicker may
seem rational, but the reality is that businesses
rarely pay their suppliers late out of choice.

of 6% longer to pay suppliers than before the pandemic. The
genuine risk here is that the influx of new orders could outpace
the availability of working capital to meet demand.
Recent trends suggest that the time to settle payments should
continue to decrease over the next six months. However, thismay not be fast enough to prevent fulfillment issues from
hindering the overall pace of recovery.

Our analysis indicates organisations that typicallysettle payments the fastest - 30 days or less - have
faced the greatest challenges in adhering to theselimits. Businesses in this category (40% of total) took
5% longer to pay in 2023 compared to the all-time
average. Conversely, businesses paying suppliersin 60-120 days (21% of total) have managed toreduce payment times by 3%.

Deviation in time to pay versus all time average

Changes in average time to pay within different payment segments

34

10.00%

5.00%

0.00%

-5.00%

20182019

average time to pay - all

2020

2021

0-30 days

30-60 days

2022

2023

60-120 days

Accelerating cash flow necessitates a solution that meets the needs of both suppliers and buyers in any transaction.
Traditional supply chain financing methods have struggled to fill the gap, particularly for smaller businesses. A new
wave of innovative financial services offers a solution, leveraging data derived from transactions between businesses
and their customers to make access to financing options faster and far more inclusive.

p.13

Q4
momentumdeep-dive
Quarter-on-quarter world tradeperformance across key territories

p.15

US: Setting the pace for global recovery

Eurozone: Firmer ground in sight

US trade activity - quarter on quarter index scores

Eurozone trade activity - quarter on quarter index scores

Swing vs previous quarter:

Transactions

Invoices

A robust domestic market has shielded the US economy
from macroeconomic turbulence seen elsewhere
globally. Supply chains across the nation now appear to
be revving up in anticipation of higher demand for USmanufactured goods in overseas markets.
Apart from a minor hiccup in Q3, US order volumes
have been growing at just below expected levels formuch of the past year. This stands in stark contrast toexport-dependent markets like the Eurozone, whereorder volumes remained low for much of the same
period. In Q4 2023, we saw a notable shift as ordering
activity within the US surged to 6 points above thebaseline.

Swing vs previous quarter:

OrdersTransactions

This momentum continued into Q1, with ordering
activity accelerating further, climbing by 7 points above
the anticipated level.

A second successive quarter of strong orders
saw trade activity across the Eurozone
inching ever closer to normalisation.

Suppliers are reaping the rewards of the relative
stability in US ordering activity compared to most othernations. Invoice volumes, which experienced a slight
dip following the Q3 decline in orders, returned tothe expected range in Q1. With a significant influx offresh orders now reaching suppliers, invoice volumes
are poised to grow even higher next quarter, leaving
supply chains well-positioned to profit from a wider
resurgence in global trade.

Order volumes tracked at their highest
rate of growth in three years during Q1,
outpacing an already impressive performancein the previous quarter by 3 points.
Relatively low invoice volumes suggest thatthe recent resurgence in orders has yet totrickle down into the wider supply chain.

Invoices

OrdersRecent heavy declines in invoice traffic across theEurozone did appear to stabilise in Q1 however,and should start to trend upwards in the coming
months provided order growth remains strong.
An upswing in global demand will be welcomedby key industrial heartlands across the Eurozone,
which have been hammered by a combination ofrising energy prices and stagnant exports. Data
from S&P1 shows manufacturing activity contracted
for the 11th consecutive month in March, but therate of contraction is showing signs of slowing
1 S&P Global, 07th March, 2024: Trade
downturn continues to ease in Februaryp.17

UK: Still waiting for thetides to change

Trade recovery lifts manufacturing
and logistics sectors

UK trade activity - quarter on quarter index scores

Quarter-on-quarter transaction volumes - Index scores by sector

Swing vs previous quarter:

Transactions

Invoices

The UK has long been the outlier in our analysis ofglobal trade trends. Unlike the US, China, and even
the Eurozone, UK businesses failed to reap the same
dividends of the brief post-pandemic rebound. Basedon our latest data, they may be about to miss out again
as the world gears up for a recovery in global demand.
While Q4 showed some encouraging signs withorder volumes surpassing expectations, mirroring
global trends, Q1 2024 presented a different
narrative. The UK emerged as the sole region
where orders grew below the anticipated range.

Orders

It’s never wise to draw firm conclusions froma single quarter’s data. The subdued ordering
activity in Q1 may yet prove to be a blip. Moreover,there are silver linings within the latest UK data.
Despite lower-than-expected order volumes,
invoice volumes are on the rise, indicating swift
transaction movement through the supply chain andbolstering supplier cash flow. If orders do begin torise again then suppliers should be comparatively
well equipped to handle the additional volume.

significantly
below expectation

below
expectation

withinexpected range

Manufacturing grew at its fastest rate in a year, as
both the US and China continued to pour significant
investment into the sector in a bid to stimulate
economic growth. Broader signs of an uptick in global
demand for manufactured goods are also emerging,with February’s worldwide manufacturing Purchasing
Managers’ Index1 edging closer towards expansion
territory.
The rise in goods rolling off production lines anddestined for overseas markets is one of the key factors
contributing to the recovery in demand for freightcapacity we observed in Q1.

above
expectation

significantly
above expectation

Demand for goods may be rising again on a global
level, but everyday consumers are still feeling thepinch from a protracted cost of living crisis. Retailers
are bearing the brunt of reduced consumer spending
power with trade activity across the sector sinking
further into contraction territory in Q1.
Technology spend dipped in Q1 having grown atabove-expected levels for the previous six months.
This mirrors a similar pattern we saw over thepreceding nine months, and we interpret this latest
data to be more of a one-off correction than the
beginning of a wider slowdown in demand across thesector.

1 S&P Global, 07th March, 2024: Trade
downturn continues to ease in February

p.19

FINAL THOUGHTS

Volatility hasn’t gone
away, but businesses
are learning to adapt
James Stirk
CEO
Tradeshift

War in Ukraine, snarled supply chains, geopoliticaltension and a trade war between the world’s twolargest economies. That was the picture two years
ago when we started to observe a steep decline intrade activity. Fast-forward to the present day andthe landscape has barely changed.
And yet, while the macroeconomic picture bears morethan a passing resemblance to the one we described
two years ago, the prevailing narrative within
business and across global trade is markedly morepositive. What’s changed?
Economists may attribute the current recovery tofactors like cooling inflation and declining energy
prices. Speaking to customers and partners on thefront lines of global trade however, it’s clear thatsomething more fundamental has shifted, and thatbusinesses are beginning to plot a path back to
growth amid a familiar set of variables.
A positive interpretation of this quarter’s positive
results is that they reflect systemic improvements inglobal supply chains undertaken in response to thetrauma of the pandemic. Looking back to the darkdays of 2020, it was remarkable how quickly supply
chains began to unravel. Businesses learnt valuablelessons about the opacity and fragility of linear supply
chain models whose function relied heavily on apatchwork of manual and paper-based processes.
Changing these models is complex and requires
time, so it’s no surprise that the quarter-by-quarter
progress we’ve seen has been fitful and slow. At
the same time, adversity is a great motivator of
creativity. The pandemic proved a catalyst for themost significant and sustained period of supply chain
recalibration and renewal we have seen since theintroduction of containerisation.
Resilience has become the yardstick by which
successful organizations are measured. Investment
in digitalizing previously disconnected supply chain
ecosystems is enabling organizations to identify andreact to emerging challenges in real time.
Automation of heavily manual processes iseliminating potential pinch points, enabling
businesses to accelerate and scale operational
processes that would otherwise begin to break downwhen faced with a sudden change in trading or othermacroeconomic conditions.
The long-delayed revolution in supply chain models
is not just a matter of technology, though; justas important is a change in mindset. To optimize
resilience and efficiency, global enterprises are now
prioritizing their the health and diversity of supplier
relationships. Single-sourcing models have given
way to a much more networked set of relationships
between large organizations and diverse groupingsof suppliers. Technology has of course played its partin facilitating this transition, enabling businesses to
identify, vet, onboard and manage suppliers on ascale that would have been impossible just a few
years ago.

Today, next-generation technologies like AI andmachine learning are poised to further enhance
the transition towards resilient supply chains. Their
impact goes far beyond improving processes,
transformative though this is, and extends into therealm of organizational strategy. The most valuableapplications of new technology in the supply chain
are when they contribute to the shift from staticor reactive models to ones that identify or evenanticipate emerging risks, based on real-time insight
between the participants of all-digital trading
networks. There is still some way to go before global
trade gets an ‘early warning system’ that would
eliminate all but the most cataclysmic events - but at
the same time, that’s clearly the direction of travel.
What does such a future look like? Imagine a scenario
where emerging risks or long-term vulnerabilities
would trigger an interactive dashboard to display
alternative sourcing options in different geographies.
The AI would pre-vet selected suppliers according
to pre-set criteria using data collected from various
sources. Organizations that engage in complex

manufacturing may establish controls for product qualityand design specifications. In light of the heightened
scrutiny that businesses face regarding sustainability intheir supply chains, many may also opt to select vendors
based on verified ESG credentials.
We’re already seeing this becoming a reality in digitalized
environments like B2B marketplaces, where there’s
ample clean, structured data on factors like cost, quality,
reliability, and carbon footprint. AI also has enormous
potential in embedded finance, analyzing vast data sets
to identify issues that may impact supplier cash flow andoffer financing options to vulnerable suppliers.
While the backdrop remains fraught with uncertainty
and complexity, the metamorphosis underway inglobal supply chains is unmistakable. Technologies
like generative AI promise to take this to another level
entirely. Adaptation, resilience, and digitalization are
not just buzzwords but imperatives for survival andsustainable growth.

p.21

AboutTradeshift’sIndex ofGlobal Trade
Health

Purpose

Methodology

Many of the world’s largest buyers and their
suppliers use Tradeshift’s trade technology
network to exchange digitized purchasing andinvoicing information. The data these transactions
yield provides us with a unique awarenessof trading activity between businesses.

The Index of Global Trade Health compares B2Btransaction volumes (orders processed from buyers
and invoices processed from suppliers) submitted
via the Tradeshift platform against a ‘baseline’ we’vecreated by analyzing medium-term seasonal trends inthe transaction data that flows across our platform.

Tradeshift’s Index of Global Trade Health analyzes
anonymized world trade data flowing across
our platform to reveal a timely perspective of
how external events are impacting businessto-business commerce around the world.

A reading that meets the baseline indicates growthin line with expectations against historical trends.
Readings greater than and below the baseline
indicate above-trend and below-trend growth.

We acknowledge that there are limits to how
accurately our view of what’s happening on our
network can reflect how complex global supply
chains are reacting to a variety of external factors.
What our world trade data does provide is a
useful snapshot that offers clues as to whatmight be happening to the global economy.
The patterns we see in our data become morevaluable as we combine them with other thirdparty data and expert insight, something which
you will see us draw on throughout this report.

Looking at the data in this way helps give asense of how volatile activity is across different
sectors and geographies. For example, a sudden
rise in orders might trigger orders to jump at
a rate that exceeds what we would consider
normal. By contrast, waning demand might
trigger volatility in the opposite direction.
We consistently strive to improve and evolve
the accuracy of our analysis. As a result,it’s possible that from time to time you may
see small revisions to historical numbers
reported in previous versions of the Index.

p.23

About Tradeshift
Tradeshift is the business commerce platform that redefines the way
B2B buyers and suppliers connect, transact and grow. We’re a leader ine-invoicing and AP automation, offering tools for compliant e-invoicing in
50+ countries, including China. We’re an innovator in B2B marketplaces
and embedded fintech services that bring value, opportunity andgrowth to any business that joins the network. Tradeshift’s vision is toconnect every company in the world, creating economic opportunity
for all. Today, the Tradeshift platform is home to a rapidly growing
community of buyers and sellers operating in over 190 countries.
Find out more at: www.Tradeshift.com©2024 Tradeshift Holdings Inc. or a Tradeshift affiliate company. All rights reserved.
The Tradeshift Global Health of Trade Index and this report are copyrighted
works. This document is protected by U.S. and international copyright andintellectual property laws. It may be linked to and referenced with thefollowing attribution: “Tradeshift © 2024 Tradeshift Holdings Inc.”
Tradeshift is a registered trademark or trademark of Tradeshift Holdings Inc.
in the United States and/or other jurisdictions. All other marks and names
mentioned in this article may be trademarks of their respective companies.
This report is intended for information purposes only, is based on a segment of industry
data, and may not prove to be an accurate representation of total trade volumes.
Tradeshift makes no warranty or representation as to the accuracy of this information.