The Tradeshift Index of Global
Trade Health Q2 2024

Navigating the uneven path
to global trade recovery
Global trade’s path to recovery was nevergoing to be easy. After two straight quartersof solid upward momentum, the results of our
Q2 Index of Global Trade Health inject a doseof reality into the overall improving outlook.
Transaction volumes across the Tradeshift
network have been inching closer to normalization
against expected levels over the past six months.
However, trade activity remains three points shyof the anticipated level in Q2, so the champagne
will have to stay on ice for another quarter.
A steep reversal in ordering activity dashed hopes ofending an eighteen-month sequence of lower-thanexpected growth. Order volumes fell six points below
the expected range in Q2, having peaked at five
points above the expected range at the end of 2023.
Is global trade about to slip back into reverse gear?
We believe this is unlikely. It’s more probable thatordering activity is levelling off after accelerating at a
rate that would never be healthy or sustainable in thelong term. Supply chains may benefit from this coolingoff, giving suppliers time to adapt to a new rhythm.
This quarter’s report highlights a widening performancegap between the US, where activity levels exceeded
expectations, and Europe, where trade activity remains
three points below the baseline. Europe continues tofeel the effects of price pressures triggered by the war
in Ukraine and weakened demand for manufactured
goods. Conversely, a robust domestic economy has
been the United States’ secret weapon. High consumer
confidence underpins this, though another four yearsof uncertainty now seems assured, whoever wins
the presidential election, given the unpredictabilityof Trump’s decision-making and Biden’s health,
could disrupt domestic and international stability.

China is also at a critical juncture. Transaction
volumes grew above expected levels for thesecond successive quarter. Unlike the US, wheretrade activity has been stable, China’s recent
growth follows a turbulent two years of sharp
declines and false dawns. To maintain its position
as the world’s leading manufacturing hub,the country must accelerate its trade volumes
amidst rising competition from new players.
The US-China trade war has highlighted the risksof over-reliance on China, prompting businesses todiversify their supply chains. Countries like Vietnam,
Malaysia, and India are benefiting from this shift.
Our data shows transaction volume growth inthese countries is outpacing the global average.
The increasing competition among global
powers is fragmenting the global economy,
with clear winners and losers emerging. At thebusiness level, success will depend on how
quickly organizations can establish new trading
relationships without getting entangled in a web oftariffs, taxes, and regulations. Despite formidable
challenges, significant opportunities await those
who navigate this transition successfully.

James Stirk
CEO
Tradeshiftp.3

The Tradeshift Index of Global Trade Health | Q2 2024

Key findings
at a glance

1. Global Trade Activity: Total transactions
remained three points below anticipated levelsin Q2, indicating that the recent recovery
in global trade activity is leveling out.
2. Order Volumes: Order volume growth cooledsignificantly in Q2, dropping 6 points below
the baseline after peaking at five points
above expected levels at the end of 2023.
3. Two-Speed Recovery: Recovery is not being
spread equally, with differences between
regional winners and losers becoming
more pronounced. Trade activity in the US
exceeded expectations, while the Eurozone
remained three points below the baseline.
4. UK Trade Activity: Trade activity in the UK
reversed, with transaction volumes ending
Q2 five points below anticipated levels.

5. China’s Recovery: Transaction volumes in Chinagrew slightly above expected levels, suggesting a
recovery that may be steady rather than spectacular.
6. Emerging Market Winners: Vietnam, Malaysia,
India, and Mexico are emerging as winners from
Western companies’ accelerated push to diversify
supply chains and reduce reliance on China.
7. Sector-level Performance: Demand for
freight capacity remains elevated despite aslight decline in manufacturing activity, while
growth in the retail sector remains subdued.
8. Supplier Cashflow: Cashflow pressure on
suppliers has continued to ease, but buyers
still take an average of 5% longer to pay
invoices compared to pre-pandemic periods.

p.5

The Tradeshift Index of Global Trade Health | Q2 2024

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

p.7

Order slowdown may be a blessing in disguise

Global trade activity shows signs ofstabilizing
amid mixed recovery
Transaction volumes - quarter on quarter

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

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

40

20

20
10

0

0

-20

-10

-20

-40
Q1’21 Q2’21

Q3’21 Q4’21

Q1’22

Q2’22 Q3’22

Q4’22 Q1’23 Q2’23 Q3’23 Q4’23

Q1’24

Q1’24

-30
Q1’21 Q2’21

Q3’21 Q4’21

GlobalQ1’22

Q2’22 Q3’22

US

Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Q2’24

EUR

UK

Invoices

OrdersCNY

Despite strong beginnings, global trade activity failed to

In China, transaction volume growth mirrored the pattern seen

sustain its recent momentum, ending three points below thein the US this year. Trade activity exceeded anticipated levels by

anticipated range in Q2. Activity levels started the quarterone point in Q2, following a two-point rise above expectations inrobustly but waned in June due to a sharp decline in orderthe previous quarter. However, China needs to accelerate after its

volumes. This latest data halts a six-month growth streak,initial recovery attempt faltered in the second half of 2023. Whilesuggesting that the recent acceleration in global trade activity

the latest figures are encouraging, progress remains steadymay be leveling out.

rather than spectacular.

Evidence of a two-speed recovery is becoming more

Additionally, signs are emerging that China’s factories are notpronounced. In the US, trade activity continued to exceed

yet operating at pre-pandemic levels. China’s official purchasing

expectations, rising one point above the baseline for the

managers’ index1 indicates that the manufacturing sector fell

second consecutive quarter. Conversely, Europe’s recovery isback into contraction in May.

struggling to gain further traction, with trade activity remaining
three points below the expected range—a level it has not

The World Bank anticipates2 that the global economy will

surpassed for over two years.

stabilize in 2024 for the first time in three years, albeit at ahistorically weak level. This quarter’s data could be an early

Order volumes dropped six points below the baseline
in Q2, ending six months of frenetic growth thatpeaked at five points above anticipated levels in Q4
2023. Alarming though this may seem, it may notnecessarily be such a bad thing over the longer term.
The recent surge in order volumes has left suppliers
struggling to meet demand. Recent history reveals
the consequences of an uncontrolled rise in orders.
In 2021, the lifting of lockdown restrictions triggereda consumer spending spree. As companies rushed
to replenish inventory, this placed immense pressure
on suppliers who were already stretched thin. Thisphenomenon, known as the bullwhip effect, describes
how small increases in demand can cause significant
disruptions further down the supply chain.

Last quarter, a significant gap emerged between ordervolumes and invoices, indicating that suppliers were
struggling to keep pace with demand. Attacks onshipping on the strategic Red Sea route have further
complicated matters, leading to delays and rising freightcosts. If left unchecked, these issues could recreate thebottlenecks that plagued supply chains throughout 2022.
The current decrease in orders may reflect buyers’ efforts
to prevent a recurrence of such disruptions.

indication that global trade is finding its equilibrium.

06/01/2024: National Bureau of Statistics of China;
Purchasing Managers’ Index, May 20241

06/11/2024: World Bank Group; Global Growth Is
Stabilizing for the First Time in Three Years2

p.9

Geopolitical tension prompts shift todiversified supply chains
Transaction volume growth - year-on-year comparison acrossTransaction
volume growth- year on year
comparison
acrossselected
selected markets,
benchmarked
againstthe rateof growth
globallymarkets, benchmarked against the rate of growth globally

Growth multiple compared to global average

8

6

4

2

0
MexicoVietnam

Malaysia

India

Increasing geopolitical tensions and economic considerations

Other Southeast Asian countries are also reaping the benefits.

are accelerating the shift towards reshoring, nearshoring, andOur data indicates that trade activity in Malaysia is growing

what some call ‘friendshoring’ of production.

at four times the global rate over the past year. India, with theworld’s largest pool of English-speaking STEM graduates, is

Nearshoring and reshoring present significant challenges forquickly establishing itself as a significant player in the global

companies in Europe and the US due to cost issues and theelectronics market. U.S.-based semiconductor companies Micron,availability and quality of local suppliers. Consequently, many

AMD, and Applied Materials have all announced substantial

companies are increasingly adopting a strategy known as

investments in India.

‘China Plus One’ to diversify their supply chains.
Mexico has also emerged as a key China Plus One market,
Vietnam has been a major beneficiary of multinational

offering competitive labor costs, low distribution expenses forcompanies’ efforts to diversify their manufacturing hubs. Our

North American brands, and streamlined logistics by avoiding

data shows that trade activity in Vietnam has been growing at

Pacific Ocean routes.

a remarkable rate, eight times faster than the global averageover the past year. Notably, Apple has invested more than $16
billion3 in establishing manufacturing facilities in Vietnam.

04/18/2024: CNN Business; Apple plans to spend
more in Vietnam as it looks beyond China
3

The Tradeshift Index of Global Trade Health | Q2 2024

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

p.13

Shortened payment times signal
recovery, but challenges remain
The time suppliers wait to get paid has shortened over the past quarter, continuing a positive trend observed in recent periods. This
improvement in payment times signals enhanced liquidity and financial stability across supply chains.

20.00%

15.00%

10.00%

5.00%

0.00%

3
Q
1’
24

3

Q
4’
2

3

Q
3’
2

3

Q
2’
2

Q
1’
2

Q
3’
22
Q
4’
22

Q
1’
22
Q
2’
22

Q
3’
21
Q
4’
21

Q
1’
21
Q
2’
21

Q
3’
20
Q
4’
20

-5.00%

Q
1’
20
Q
2’
20

Deviation in time to pay from pre-Covid average

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

Faster payments enable suppliers to invest in production, hireTo sustain the momentum of economic recovery, it ismore workers, and meet demand more effectively, especiallycrucial that payment cycles return to pre-pandemic

as order volumes begin to stabilize. However, suppliers are still

norms, ensuring suppliers’ financial stability. Buyers must

waiting an average of 5% longer to get paid compared to pre-prioritize faster payment processes, leveraging technology

pandemic times. This lingering delay reflects the financial strains

to streamline transactions, while financial institutions canand disruptions businesses endured during the pandemic. Many

provide crucial financing support with solutions like supply

companies continue to manage cash flow cautiously, extending

chain finance programs.

payment cycles as they navigate ongoing supply chain issues,geopolitical tensions, and demand fluctuations.
For small and mid-sized enterprises (SMEs), which often operatewith tighter cash reserves, these extended payment periods
can strain working capital, hinder investment, and increase
vulnerability to financial instability.

p.15

The Tradeshift Index of Global Trade Health | Q2 2024

Q2
momentumdeep-dive
Quarter-on-quarter world tradeperformance across key territories

p.17

US: In the driving seatEurozone: Trade activity hits a plateau

US trade activity - quarter-on-quarter index scores

Eurozone trade activity - quarter-on-quarter index scores

Swing vs previous quarter:

Transactions

Invoices

US trade activity remained remarkably consistent in Q2,
thanks in no small part to a steep rise in the volume of
invoices from suppliers.
Suppliers are reaping the rewards of the relative
stability in US ordering activity compared to most othernations. While our Q2 data shows a notable softening
in order volume growth over the past quarter, it’s
important to recognize that this follows several quartersof rapid acceleration. Orders might be cooling, but
overall volumes remain healthy and broadly sustainable.

Swing vs previous quarter:

OrdersThe American economy started the year relatively
slowly but grew at a 1.4% annual pace from January
through March. Most economists believe growth
has accelerated in Q2, fueled in part by continued
spending among American consumers.
With the US increasingly the key driver of global
economic recovery, many will wonder how much gas
is left in the tank. Although consumer confidence4 saw
a slight dip in June, it remains relatively strong. The
big question is what will happen in November when
America goes to the polls.

06/25/2024: The Conference Board; US Consumer
Confidence Weakens Slightly in June
4

Transactions

Trade activity across the Eurozone started
the year brightly but has now settled into a
more pedestrian rhythm, ending the quarter
three points short of the expected range.
However, it wasn’t all bad news. Invoice volumes
climbed to within anticipated levels for the first timein two years as the recent resurgence in orders
worked its way through supply chains. Yet, this may
be as good as it gets, as the volume of new orders
dropped back into contraction territory in Q2.

Invoices

Orders

Factory output5 across the region fell to its lowest level insix months in June, with new orders, purchasing activity,and employment all declining sharply. Political uncertainty
in France has significantly impacted local businesses,
leading many to delay placing new orders. Meanwhile,
Germany is struggling to gain momentum as it faces
stiff competition from China in the automotive sector.
Most forecasters still predict a recovery for the Eurozone in
2024, albeit at a level weak by historical standards. As theaxis of global trade increasingly pivots to the global South,
the Eurozone must find its place in this evolving landscape.

507/01/2024: HCOB Eurozone Manufacturing PMI June 2024

p.19

UK: In need of a new plan

Manufacturing declines amid
consistent transport demand

UK trade activity - quarter-on-quarter index scores

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

Swing vs previous quarter:

Transactions
When it comes to assessing the UK, we risk sounding
like a stuck record. Much like the Eurozone, tradeactivity has failed to establish anything close to themomentum we’re seeing in other markets, such as the
US or new players in Vietnam, India, or Malaysia.
Q2 gave us more of the same—not quite terrible,
but not very good either. Order volumes had
already started to weaken in Q1, contributing toa slight fall in invoice traffic over the quarter.

Invoicessignificantly
below expectation

OrdersIf there are positives to take away, then the UK
certainly gets the award for the most consistency
shown over the past two years. Total trade activity
finished the quarter slightly below the level it
had reached the previous quarter, a level fromwhich it has scarcely budged for two years.
The precipitous decline in Britain’s post-Brexit tradeis one of the biggest challenges in the new Labour
government’s agenda. Fresh economic approaches
are clearly needed to break the UK’s current cycleof mediocrity, but something more drastic may stillbe needed. Please send answers on a postcard.

below
expectation

withinexpected range

Manufacturing activity decreased in the second
quarter due to a general reduction in order volumes
across most major markets. The most notable decline
occurred in the Eurozone, where forecasts indicate a
relatively muted recovery in the second half of the year.
Despite the decrease in orders, demand in thetransport and logistics sector remained consistent withthe previous quarter. High demand for freight capacityand disruptions in the Red Sea have caused a sharp
increase in container prices6. Some analysts suggestthat the crunch on shipping capacity is approachinglevels last seen during the pandemic.

06/27/2024: The Economist; Boom times
are back for container shipping
6

above
expectation

significantly
above expectation

The upcoming holiday rush is expected to add morepressure to already stretched supply chains. That said,
demand in the retail sector continues to lag behind
expected levels, showing little indication of breaking
the slow growth pattern that has persisted for overeighteen months.
On a positive note, spending on technology increasedback to the anticipated range in Q2 after declining in
the previous quarter. According to Gartner7, global IT
spending is projected to reach $5.06 trillion in 2024,
marking an 8% increase from 2023. This growth islargely driven by companies preparing to implement
AI-supported systems, an area in which Tradeshift has
a particularly strong track record.
04/17/2024: Gartner; Planning for GenAI Initiatives is
Helping to Drive IT Spending in 2024 and Beyond
7

p.21

FINAL THOUGHTS

Bridging the P2P TechGap in B2B Trade

James Stirk
CEO
Tradeshift

Free trade has largely defined the global
economy in recent decades. Today, however,geopolitical tensions and economic fragmentation
have placed new demands on the finance,
procurement, and supply chain management
functions of large, global businesses.
The ability to react quickly to changing circumstances
is often the difference between success and failure.
Pivoting, making informed decisions, finding
alternative suppliers, or adjusting production basedon real-time, predictive data can—and does—significantly impact bottom-line performance.
Executives are increasingly focused on removing
latency and friction from the procurement process
to speed up decision-making and improve response
times in the face of the myriad forces shaping global
business today.

Procurement teams recognize the need to rethinktheir sourcing approach, aiming to build supply
chains that are more resilient to geopolitical tensions
and potential disruptions. This shift requires buyers
to develop and manage a significant expansion in
their trading relationships. However, this transitionis fraught with challenges. Many organizations areexperiencing firsthand the difficulties of scaling
existing processes to accommodate an increasingly
diverse range of suppliers.
One critical hurdle lies in technology, particularly
integrating procurement and finance systems that
underpin key aspects of relationships between largeorganizations and their extended supplier bases.
These systems and processes, long overlooked
during periods of growth and stability, have become
outdated and inadequate. The resulting disconnect
between procurement and finance functions creates
inefficiencies, increases the risk of errors, andhampers swift responses to supply chain changes.
Such challenges are particularly acute among midmarket and upper-mid-market organizations. Rapid
growth often results in a patchwork of disparate
software and processes struggling to keep pace withexpanding needs. According to a recent study, 84%of mid-market organizations report outgrowing their
existing processes, while 75% claim their technology
is not adequately enabled for their business size.

The technological gap in Purchase to Pay (P2P)
systems is a significant issue in an environment
where agility and precision are crucial. The
benefits of getting this right are clear, however.
Integrating procurement and finance effectively can
automate routine tasks and speed up transaction
cycles. Real-time data and analytics provide
comprehensive insights into procurement activities,
spending patterns, and supplier performance,
allowing businesses to make informed decisions
and anticipate disruptions. Timely and reliable
payments facilitated by an integrated P2P system
help maintain strong supplier relationships.
Advanced P2P solutions are scalable andadaptable, essential in a dynamic global market.
Additionally, P2P systems streamline compliance withprocurement policies and regulatory requirements,
reducing the risk of fraud and legal issues.

Transitioning to new systems is often seen as a big
investment, requiring lengthy integrations and a complex
change management process. This can be daunting formany organizations, especially those in the mid-market,
where resources are limited. At Tradeshift, we arecommitted to ensuring that every business can accesstechnology and tools to handle change. With this goal inmind, we have developed a dedicated purchase-to-pay
offering for mid-market organizations, delivering all thebenefits of a fully digitized P2P environment within 90
days.

p.23

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 businessto-business transaction volumes (orders processedfrom buyers and invoices processed from suppliers)
submitted via the Tradeshift platform against a‘baseline’ we have created by analysing medium-termseasonal trends in the transaction data that flows
across our platform. This methodology enables us toevaluate quarterly trends against the expected range

Tradeshift’s Index of Global Trade Health analyzes
anonymised world trade data flowing across
our platform to reveal a timely perspective of
how external events are impacting businessto-business commerce around the world.
We acknowledge that there are limits to how
accurately our view of what is 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.

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.
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
is possible that from time to time, you may
see small revisions to historical numbers
reported in previous versions of the Index.

p.25

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.