Europe's Q3 order volume suffered a disastrous defeat! The US is stable this time

As inflation continues to rise and the economic situation changes, global commodity orders have fallen rapidly.

According to the Global Trade Health Index released by Tradeshift , the world's largest business collaboration platform , global commodity trading volume fell another 5% in the third quarter, a 7% decrease compared to the expected trading volume.

Global commodity orders have been slowing down for three consecutive quarters, with global commodity trading volume falling by 6% in the second quarter.

It is worth noting that the decline in orders in the manufacturing industry was particularly obvious. In the third quarter, the total order volume of the manufacturing industry was 11% lower than expected, and the growth rate reached the lowest level in nearly 18 months.

The decline in orders in the manufacturing sector has had a direct impact on the transportation and logistics industry, which handled 8% fewer parcels than expected in the third quarter, marking two consecutive quarters of decline.

The decline in order volume has an advantage for the manufacturing and logistics industries as it reduces transportation costs.

According to the latest data released by the Shanghai Shipping Exchange , freight rates on the four major routes to Europe and the United States have plummeted. The US West Coast line and the European line have fallen 74% and 67% from their highs respectively. The weekly decline has even exceeded 12% . Recently, the price of sea transportation has fallen to a new low this year.

The continued decline in freight rates means that global consumer demand is gradually decreasing. Overall, this trend is not conducive to the development of the industry.

European order volume dropped significantly, but sales of some retailers grew against the trend

According to Tradeshift 's survey data, the decline in order volume in the European market was particularly obvious.

The Russia-Ukraine war triggered an energy crisis in Europe, which had a direct impact on the supply chain. Coupled with the intensification of inflation, the cost of living for Europeans has soared, forcing them to cut back on their daily consumption.

The total volume of goods traded in the euro area as a whole fell by 6% in the third quarter, with a 5% drop in the UK.

But looking at September, according to the latest data released by the UK National Statistics Office, retail sales in the UK market fell by 1.4% compared with the same period last year, which was the first time since February 2021 that it was lower than the pre-epidemic level.

At the same time, inflation continues to soar. The latest data shows that the inflation rate in the eurozone rose to 9.9% in September, significantly higher than 9.1% in August. The inflation rate in the UK rose from 13% in August to 13.2%.

As inflation intensifies and prices continue to rise, the UK consumer confidence index has declined for five consecutive quarters, from -9.7 in the same period last year to -20.

Consumers have to cut back on their daily spending. According to statistics, 29% of British consumers are currently reducing their daily spending. According to Kantar’s survey data , about half of British people plan to reduce spending during the holiday season .

However, sales of some discount retailers have bucked the trend.

According to the latest sales data released by Pepco Group, the parent company of the British discount chain Pepco, Poundland and Dealz , the company's total revenue in the nearly one year ending September 30 increased by 17.4% year-on-year.

Sales data released by Danish grocery chain Flying Tiger Copenhagen also showed that sales in September increased by 23% compared with the same period last year.

For retailers and sellers, continuous discount promotions can drive sales growth.

At the same time, it is worth noting that after the winter, Europeans' energy demand has also increased sharply. However, energy prices continue to soar, and Europeans have begun to turn to buying low-priced Chinese heating products.

The explosive popularity of China's heating products is also a business opportunity worth seizing.

US sellers' orders saw a slight increase

Compared with the bleak situation in the European market, the US market has obviously been less impacted. In the third quarter of this year, the total volume of US commodity transactions was only 2% lower than expected, so major sellers can still look forward to it.

A group of sellers even said that the orders have seen a slight increase recently. "Although it is not as high as the previous order volume, it has increased a lot compared to the recent order volume, which is really gratifying," said one seller.

In fact, the sellers who have the same situation as the above sellers are not isolated cases. A seller who has also experienced a sales increase speculated, "The orders for one day have returned to the original level. Is it because the peak season is coming?"

The slight increase in sellers' orders may be related to the upcoming holiday. According to the annual report of the National Retail Federation, participation in Halloween-related activities will return to pre-pandemic levels. In a survey conducted by relevant institutions, 69% of consumers plan to celebrate the holiday this year, which is higher than the previous two years. With the surge in the number of participants, total consumer spending on Halloween is expected to reach a record $10.6 billion, exceeding last year's $10.1 billion.

Additionally, Americans are expected to increase their online spending on Black Friday and Cyber ​​Monday by 25% and 14%, respectively, this year, according to Webloyalty’s 2022 Black Friday Report. Online orders are expected to grow 23% on Black Friday and 12% on Cyber ​​Monday.

Webloyalty also predicts a significant increase in the number of buyers: especially during Black Friday, when new buyers increased by 18%, and during Cyber ​​Monday, when new buyers increased by 11%.

Although the peak season of the US market is coming, according to the editor's investigation, there is no consensus on whether the orders of related products in the US market are increasing or decreasing. It is reported that the US durable goods orders in September increased by 0.4% month-on-month, an increase from the previous value of -0.2% (revised to 0.2%), but lower than the expected 0.6%. Judging from the data, the new orders for durable goods in the United States in September showed a general decline in manufacturing confidence.

In addition, the number of retail orders in the United States is declining at a free-falling rate, and major retailers in the U.S. market continue to sell excess inventory at discounts, which indicates that in the upcoming peak season, many U.S. retailers will still focus on clearing inventory.

According to Morgan Stanley's latest shipper survey, the gap between inventory levels and sales growth of US retailers is as high as 19%. In the report, we can see that order volume has dropped to the lowest point in the 12-year history of the survey, down 40% year-on-year. It is reported that the survey surveyed the transportation expectations of about 100 companies, and nearly half of the respondents said that their focus is still on reducing inventory, and the number of new orders is at a low level.

In the report, home furnishings were deemed at "higher risk," while the situation with apparel imports was "concerning." Morgan Stanley noted that Williams-Sonoma, Gap and Best Buy had the highest inventory risk, while retailers such as Ross, Burlington Stores and TJX Cos were the companies that could benefit most from the current retail environment.

According to the U.S. Office of Textiles and Apparel (Otexa), imports of cotton sheets fell nearly 10% year-on-year in the first eight months of 2022, and imports of sheets containing man-made fibers (MMF) fell nearly 21%. Imports of towels fell 8% and imports of man-made fiber curtains fell 23%.

This means that many offline platforms in the United States are still clearing inventory to maintain high inventory costs, and will also take more discounts. This is undoubtedly a huge challenge for the online market in the United States. We don’t know what will happen when the peak season comes.

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