New Articles
  April 18th, 2024 | Written by

Resurgence in Manufacturing Boosts Transport and Logistics Sector

[shareaholic app="share_buttons" id="13106399"]

The transport and logistics sector has experienced a notable uptick in transaction volumes, reaching its highest levels in nine months, fueled by a resurgence in order volumes across the manufacturing sector.

Tradeshift’s Q1 Index of Global Trade Health reveals that activity levels within the T&L sector rose to within two points below the expected range in Q1, marking a significant improvement from tracking six points below that level over the previous two quarters. Meanwhile, demand signals in the manufacturing sector climbed to just one point below expectations, with new orders surpassing expectations by one point.

Across the Tradeshift network, total trade activity saw a one-point improvement compared to the previous quarter, although it remained three points below the anticipated range in Q1. Despite this being the ninth consecutive quarter of growth below expectations, it also signifies the third consecutive quarter of upward momentum following a period of sluggish activity.

Key highlights from the report include:

– China’s resurgence: Trade activity in China experienced a notable uptick, with transaction volumes growing by two points above the expected level, marking the highest rate in over two and a half years.- Momentum in the US: The US continued its momentum in Q1, with trade activity tracking one point above the baseline. Order volumes surged by an impressive seven points above expectations, building on the growth seen in the previous quarter.

– Eurozone improvement: Activity levels in the Eurozone improved to three points below the baseline in Q1, a significant turnaround from sinking as low as nine points below that level just six months earlier. New orders grew by six points above anticipated levels.

– UK struggles: While UK trade activity showed improvement, it remained four points below the expected level in Q1, with sluggish order volumes tracking five points below expectations.

James Stirk, CEO of Tradeshift, commented, “We’re witnessing consecutive quarters of robust order volume growth for the first time in two years, with the exception of the UK. While demand levels are on the path to recovery, normalization is still on the horizon. Short-to-medium-term recovery is likely to be fragile, with geopolitical uncertainty adding complexity.”

Despite the positive outlook, liquidity challenges persist for suppliers, potentially hindering supply chain activities. Although invoice payment times have decreased since their peak in Q3 2022, suppliers still face a 6% longer wait compared to pre-pandemic times.

Stirk added, “Cash flow is vital for supply chains, and many suppliers are running on empty after two challenging years. The longer payment delays persist, the greater the risk that an influx of new orders outpaces available working capital.”

A forthcoming joint venture between Tradeshift and HSBC aims to address these challenges by facilitating access to working capital through innovative financial services, including data-driven invoice financing.