Tradeshift Index of Global Trade Health

Q4 2020

As buyers focus on building resilience to future shocks, we need to consider how best to equip suppliers to come with them on that journey.

Technology can help to address this challenge, unlocking faster, more predictable cash flow, better access for diverse suppliers and increased optionality in the event of disruption. What’s good for suppliers, will be good for buyers.

Christian Lanng
CEO and co-founder, Tradeshift

Key findings at a glance

  • Global business to business transactions grew 14.8% in Q4,
    exceeding pre-pandemic levels for the first time since March.
  • The US was the standout performer in Q4. Transaction volumes
    were up 28.8%,
    almost double the growth rate globally.
  • Transaction volume growth in the Eurozone was also well above
    the global average at 22.1%.
  • The UK is still struggling to pick up momentum. Transaction volumes
    rose 7.3% in Q4,
    and overall activity remains some way below
    the pre-pandemic level.
  • In China, our data suggests trade activity is preparing to move up a gear.
    Total transactions in December were up 32% against pre-lockdown
    levels in January.
  • Retail (CPG) had the strongest quarter. Transaction volumes rose 34%,
    but the overall picture remains volatile across the sector.
    T&L transaction volumes rose by a more modest
    9.7%, manufacturing was up 16.3%,
    while transactions in the technology sector rose 16.9%.
  • Order volumes continued to show strong momentum in Q4, rising 22%
    across the Tradeshift network,
    suggesting a positive start
    to 2021 for supply chains.
  • Invoice volumes also grew at the fastest rate we’ve seen all year in Q4.
    But liquidity remains an issue for suppliers as order
    growth continues to
    outpace the rate of invoice settlement.

US soars while UK stutters

Transaction volume — quarter on quarter growth

Global UK US Eurozone China Q1 50.00% -50.00% 25.00% -25.00% 0.00% Q2 Q3 Q4 1.0% 8.9% 31.8% -41.1% 22.1% 25.6% -20.5% 1.8% 28.8% 17.2% -10.1% -5.0% 7.3% 7.8% -19.4% 4.7% 14.2% 17.9% -15.9% 3.7%

The US was the standout performer in Q4. Transaction volumes grew 28.8%, almost double the rate we saw globally.

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China’s almighty comeback leaves the west trailing

Transaction volume - Monthly comparison indexed against January transaction data

Jan (benchmark) Feb Mar April May Jun July Aug Sep Oct Nov Dec Global 50.00% -50.00% 25.00% -25.00% 0.00% UK Eurozone US China

China took drastic action to curtail the spread of COVID, with factories closed and millions told to stay indoors, business trade activity dropped by nearly half in February.

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Transaction volume - Quarterly growth shown cumulatively against Q1 2020

Global UK US Eurozone China 150.00% -50.00% 100.00% 0.00% 50.00% Q2 Q3 Q4

Suppliers left waiting for a return to predictable cash flow

Invoices and orders, global — month on month growth comparison

Jan Feb Mar April May Jun July Aug Sep Oct Nov Dec 40.00% -40.00% 20.00% -20.00% 0.00% Invoices Orders

Invoice volumes grew at the fastest rate we’ve seen all year in Q4. That’s good news for suppliers who have faced acute liquidity challenges over the past six months.

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Climate crisis

To understand the kind of damage that climate change will inflict, look at COVID-19 and spread the pain out over a much longer period.

Bill Gates, August 04, 2020

Measuring ESG performance requires better data across the value chain

Q&A with Saverio Lapini, Marketing Director, Normative.io

We’ve been talking about ESG reporting for years. What evidence are you seeing that sustainability is becoming a more strategic priority for businesses?
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There’s still a lot of debate over standards relating to how businesses report ESG. How much of an issue is that, and how close are we to agreeing on a common set of standards?
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How do companies typically measuring ESG performance today? How effective is that in providing an accurate picture of performance?
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Can you tell me a little bit about the work Normative is doing to help companies improve the way they measure sustainability?
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According to the Sustainability Consortium, just 25% of large organizations have visibility of their supply chain beyond tier one. Why do so many organizations find it so hard to gain a deeper level of visibility into their supply chains?
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Final thoughts — COVID is a test run for addressing the climate crisis

Perspective by Mikkel Hippe Brun, Co-founder, Tradeshift

Rising order volumes and the promise of a vaccine suggest a brighter 2021. It is clear however that the pandemic, far from being an outlier, is rather a harbinger of the sort of shocks we can expect in the years to come, as climate change and other disruptions take hold.

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