- The coronavirus crisis has revealed the fragility of the modern supply chain.
- Recent data shows the devastating economic impact as week-on-week trade in China, the US and Europe halved because of the crisis.
- Diverse sourcing and digitization will be the key to building stronger, smarter supply chains and ensuring a lasting recovery.
The COVID-19 pandemic has hit global trade and investment at an unprecedented speed and scale. Multinational companies faced an initial supply shock, then a demand shock as more and more countries ordered people to stay at home. Governments, businesses and individual consumers suddenly struggled to procure basic products and materials, and were forced to confront the fragility of the modern supply chain. The urgent need to design smarter, stronger and more diverse supply chains has been one of the main lessons of this crisis.
What the data tells us
Recent data from Tradeshift, a global platform for supply chain management, reveals the magnitude of the impact on trade and demand. It suggests the effects of the initial shock may continue to linger for the coming months. In China, domestic and international trade transactions suffered a week-on-week drop of 56% beginning mid-February. The United States, United Kingdom, and Europe followed suit, with a combined initial drop of 26% in the beginning of April, and a continuing decline of 17% in late April.
Furthermore, trade has flatlined in every region affected by the lockdown. Overall weekly transactions on the Tradeshift platform since March 9th are down by an average of 9.8%, compared to pre-lockdown figures, with a pronounced decline in invoices and orders since the end of March...
This was excerpted from a 6 May 2020 article from the World Economic Forum.