Tradeshift's Index of Global Trade Health Q1 2021

Beware the bullwhip as the economy springs back to life

• Global B2B transactions grew 10.2% in Q1 with order volumes jumping 16.9%
• Trade activity in the Eurozone grew 14.5% and increased 10.5% in the US
• Manufacturing order volumes on the Tradeshift Network were up 80% year-on-year in March, but suppliers are feeling the effects of increased demand. 1 out of 5 suppliers struggle to meet the increase of orders

Our latest Index of Global Trade Health presents a broadly optimistic view of the year ahead. Orders are rising at double-digit rates as consumer demand continues to accelerate. Cumulative transaction volumes on our platform are tracking 38% above their pre-COVID levels in March of 2020.

The Eurozone may be struggling with its vaccine roll-out plan but that hasn’t stopped factories there from producing at record rates since the beginning of the year. Total transaction volumes across the region rose 14.5% in Q1. Trade activity in the US is also settling into a high-velocity rhythm. Even the UK, which had appeared stuck in reverse gear at the end of 2020, now appears to be turning a corner.

Economists are predictably becoming bullish about the speed of recovery. Our own research of sentiment among suppliers suggests that roughly two-thirds are more optimistic about their business prospects than they were at the end of 2020. But there are signs that supply chains are beginning to creak under a kind of pressure few were expecting when the virus first hit.

Manufacturing orders on our platform were up more than 80% year-on-year in March but low invoice settlement rates across the sector suggest money is not flowing through to suppliers to support a corresponding ramp-up in production.

The effects of this imbalance are well-publicized, from just-in-time automotive assembly lines forced to lie idle, to delivery companies scrambling to source cardboard packaging. The recent blockage of the Suez Canal provides a further reminder of how susceptible modern supply chains are to a single point of failure. 2021 might well prove to be the curtain-raiser on a golden period of economic growth, but sustaining the current momentum is going to require a far more flexible and collaborative relationship between buyers and suppliers than was evident prior to the pandemic