The findings, published by Tradeshift, a
cloud-based supply chain payments platform for a number of clients, including
apparel, show global supply chain growth remained flat in Q4 2021 despite
Omicron, however the slowing of China’s supply chains due to lockdowns could
still have a knock-on impact for the rest of the world.
The report states: “A spate of lockdowns in key
industrial regions across
China could trigger more shortages of crucial manufacturing components and
extended order backlogs.”
It adds: “Omicron may not have been quite the Grinch
that stole Christmas, but don’t be surprised if it has a sting in the tail.”
The report highlights that disruptions caused in the
early stages of the pandemic have shown pressures in one country have
significant knock-on effects both up and downstream.
“The coming months could turn out to be critical for
supply-chain leaders. Some companies will build upon the momentum they gained
during the pandemic, with decisive action to adapt their supply-chain
footprint, modernise their technologies, and build their capabilities. Others
may slip back, reverting to old ways of working that leave them struggling to
compete with their more agile competitors on cost or service, and still
vulnerable to shocks and disruptions,” Tradeshift CEO and co-founder
Christian Lanng says.
China’s tough stance on containing the spread of
Covid, including factory shutdowns led to a slow down of its trade activity in
Q4 2021. China exports to the US were also affected by a bill banning the import
of all goods from its Xinjiang region, following claims of forced labour.
China’s Tradeshift index score dropped by 10 points to
86 – the lowest it has been since the beginning of the pandemic.
Tradeshift explains a reading of 100 indicates growth
in line with expectation against historical trends, while readings greater than
and below 100 indicate above trend and below-trend growth.
The index scores are created by comparing
business-to-business transaction volumes (orders processed from buyers and
invoices processed from suppliers) submitted via the Tradeshift platform since
Q1 2020 against a ‘baseline’. The baseline was created by analysing medium-term
season trends in its transaction data that flow across its platform.
The report explains that US supply chain activity
appears to be largely unaffected by spiking Covid cases as it finished 2021
with an overall index score of 97, which is just 3 points below the level
Tradeshift had forecast for the period prior to the pandemic.
The recovery in supply chain activity across the
Eurozone however, stalled in Q4 and dropped 8 points compared to its expected
range, while UK supply chain activity dropped by 9 points.
Low invoice volumes across almost every region act as
a reminder that while fulfilment issues may be easing, suppliers still face
significant cash flow and capacity pressures. This will continue to have a
knock-on effect on global trade in the quarters to come.
On the plus side, the report suggests that activity
across the worldwide transport and logistics sector climbed above the expected
range for the first time in six months during Q4, which supports claims that
supply chain bottlenecks are beginning to ease.
Lanng concludes: “It might seem madness to make
predictions in the middle of a pandemic, but here’s one I will hang my hat on.
At some point in the next 12 months an event will unleash disruption that will
once again test the resilience of global supply chains. Experts now expect a
major shock to hit supply chains once every 3.7 years. Heading into a third
year of a global pandemic, our index suggests businesses have learned a number
of lessons which are enabling them to become better problem solvers in the face
of fresh challenges.”
By Just Style