Search DubaiPRNetwork.com

Home >> Banking & Investments

Global Supply Chain Activity Surges To Pre-Pandemic Levels In Q3, But Cash Crunch Leaves Suppliers Vulnerable

Thursday, October 22, 2020/ Editor -  

Share

Home >> Banking & Investments
● Release of pent-up demand triggers order volume surge in July before falling back in August and September.
● Trade activity in the Eurozone and the US beats the global average. UK struggles, China plateaus.
● Rising orders fail to address cash crunch across supplier ecosystems.
 
United Arab Emirates -  October 22, 2020:    The number of purchase orders and invoices exchanged across global supply chains rose by 15% in Q3 after falling by a similar margin in Q2, the latest Index of Global Trade Health from Tradeshift can reveal. 
 
The report, which is based on analysis of transaction data flowing between buyers and suppliers across Tradeshift’s network, suggests activity levels in major supply chain hubs in the West and China are beginning to stabilize after a tumultuous period. Transactions in the Eurozone grew by the greatest margin, up 26% in Q3 as supply chains in the region added further momentum to the recovery Tradeshift saw towards the end of Q2. Trade activity between buyers and suppliers in the US also exceeded the global average, growing by 17% in Q3. 
 
In the UK, where trade activity levels had dropped by 23% in Q2, the bounceback in transaction volumes during Q3 was much weaker. After a relatively strong July, a significant drop off in activity during August and September meant that UK supply chain activity finished the quarter just 6.1% up on Q2. 
 
Activity slows as pent-up demand recedes
 
Other regions also showed signs of a similar slowdown, suggesting the release of pent-up demand after lockdown restrictions eased in the West may have fuelled the early burst of activity across supply chains in July. 
 
Transactions on the Tradeshift platform surged 24% in July. But month on month activity subsequently fell by 12% in August, before recovering slightly in September.  In China, activity levels across the Tradeshift network looked on course to reach a level not seen since Q4 2019 in July. By September however, total transactions across the region’s supply chains had fallen by more than 18%.
 
“Global  lockdown restrictions created a pressure cooker environment for supply chains,” said Christian Lanng, CEO of Tradeshift.  “When the restrictions began to ease, we saw orders start to surge in June. This momentum continued into July before tailing off rapidly as supply lines normalised. Order volumes on our platform are comfortably ahead of where they were in Q2,  but supply chains will need to hit a higher gear again in Q4 before we can to point to a sustainable recovery. The next few months will be critical.”
 
Liquidity crunch putting supplier livelihoods at risk
 
A 20% rise in order volumes during Q3 should provide a welcome cashflow boost to suppliers towards the end of the year. But according to Tradeshift, action may be needed before then to address the current liquidity crisis affecting suppliers. A record fall in order volumes during Q2 meant invoice settlements remained low throughout the quarter. With the average small business having just 27 days of cash in reserve, many will be coming dangerously close to running out of money.
 
“Lack of digitization in global supply chains makes it very hard to unlock the liquidity that’s owed to suppliers,” said Christian Lanng. “ So, instead of getting paid quickly, suppliers have to wait months before orders translate into cash. We should start to see some of the current liquidity pressure begin to ease in Q4. Whether or not every supplier will make it that far is another question. If ever there was a time to rip up the old playbook and start doing things differently, it is now.” 

Previous in Banking & Investments

Next in Banking & Investments


Home >> Banking & Investments Section

Latest Press Release

Genesis Luxury Flagship SUV the GV80 Debuts in the Middle East & Africa

ENBD REIT Announces H1 NAV of USD 198 Million (USD 0.79 per share)

Shoppers Can Spend and Win Big With Top Promotions Over 3 Day Super Sale Weekend

Summary of Weekly Real Estate Transactions for the Week Ending 26 November 2020.

An Extended Weekend of Celebrations at the Waterfront Market

Dubai Gold & Jewellery Group Launches an Interactive Map for an Enhanced Gold So ...

Water Scarcity Issues in Middle East Countires Need Integrated Approach

International Air Connectivity Crisis Threatens Global Economic Recovery

HHC Organises Trial Race ahead of the Camel Trek Marathon for UAE Expats

Shop for Mega Deals at Big-name Stores With Up to 90 Per Cent Off for 3 Day Supe ...

Don't miss the last Ladies' Nights of 2020 at CLYMBâ„¢ Abu Dhabi

The Anti-Smoking International Alliance in London Re-elects its Emirati Presiden ...

Karl Lagerfeld Introduces a New Style in the Fall-Winter 2020 Eyewear Collection

HONOR Celebrates White Friday with Affordable Offers to Upgrade Smart Devices

ENEC Recognizes Stakeholder Commitment During Virtual Forum

Strides Ahead: How 5G Will Become the New Frontier of Sports

Rare Case of Bowel Obstruction, Treated Laparoscopically at Aster Hospital in Qu ...

Paymentology to Help Reshape the $5.4 Trillion Digital Payments Industry

Last Chance to avail Carrefour Friday's Unparalleled Discounts Across UAE

Discover Your Perfect Shade of Beige this Autumn/ Winter from Emilia-Romagna