The past year has fundamentally changed the world. Nearly all aspects of life and business have been impacted by extended disruption. Countries entered widespread lockdown, factories closed, and life in general was halted by a global health crisis that produced an economic environment unlike anything most people alive have seen. But as the saying goes, “the only constant in life is change,” and it is time to move forward.
In many ways, we are in the same position today as we were in March. And we will likely continue to be in the same position throughout the beginning of 2021. The fundamental difference is that despite this ongoing disruption, the world has adapted like it always does during challenging times. Resiliency is the key to survival and, especially in times like these, the only choice is to make lemonade out of lemons.
Fundamental Changes to Supply Chain Operations
Over the past 9 months, PrimeRevenue has analyzed our proprietary data to produce insights on the future of the global economy that help businesses make more informed decisions. A common theme we’ve seen throughout these analyses is resilience. People and businesses are adapting to the new normal – and our data validates this. While the economic challenges are far from over, the aggregated data proves that the global economy and its people are strong. Companies around the world are acclimating to the current climate and reshaping the way they do business. From developments in e-commerce to investments in infrastructure, the pandemic has prompted one positive change: innovation.
There must be a willingness to innovate and adapt to survive – and thrive – during times of massive disruption. Many businesses are rethinking how they can prepare for drastic shifts that happen seemingly overnight. What do you do when an entire jurisdiction goes offline or when your suppliers are struggling to keep pace with an unprecedented surge in demand? Companies must fortify their supply chains in the face of rapid and dramatic disruption, and they are putting measures in place to add more layers of protection for the business and their suppliers.
One of those layers is supply chain finance. We have seen a consistent uptick both in the number of suppliers registering for their customer’s PrimeRevenue-led early payment programs, as well as supplier demand for early payment. Thousands of new suppliers representing nearly 50 countries and billions of dollars in annual spend have registered for the PrimeRevenue platform between March and November. From the beginning of March to the end of October, suppliers opted to advance more than 85% of available invoice dollars.
Data Proves Companies Have Adapted
Our first dive into pandemic-related data showed early indicators that the first country hit with the virus was starting to come back online. We published a second post in April that reported further stabilization in China. Since then, we’ve kept a close eye on trade activity in China and we’re happy to report that the data is showing strong performance. Other than a dip at the beginning of October for China Golden Week (similar to the annual dip we see every year for Lunar New Year), trade activity for the weeks surrounding the festival were on par with 2019 levels. For the 30 days leading up to the start of China Golden Week on October 1, trade activity was up 13% year-over-year. According to this data, China has strongly recovered from the lows we saw in the spring.
PrimeRevenue also analyzed our data in EMEA. The overall consensus was that Europe is resilient – but liquidity would be key to economic recovery. After the initial lows observed in March and April, Europe’s trade activity has trended relatively close to 2019 levels. However, a second round of shutdowns has impacted trade activity in this region, with levels down 4% between September 1 and November 15 compared to 2019. Some companies, particularly in essential retail, are also seeing a second surge in demand. Beginning on November 9, trade volume increased 22% year-over-year for a select group of grocery retail in the U.K.
Most recently, we analyzed U.S. trade data, which showed that certain sectors were gaining momentum. For the period between September 1 and November 12, overall trade activity in the U.S. was down 12% year over year – but it is currently trending in a positive direction. This is a significant improvement from the slump seen earlier this year, when the consumer discretionary sector was down 30% compared to 2019. Despite the political environment and various stages of semi-lockdown that have contributed to continued uncertainty in the economy, the U.S. seems to be regaining the losses reported earlier this year.
Aggregated global data is trending similar to the above regions. We haven’t seen another large dip like we did in March and April, which means businesses around the world are navigating the volatility and innovating to consistently ship products to their customers. Overall global trade activity on the PrimeRevenue platform between March 1 and November 15 is only down 7% year-over-year compared to the lowest point of down 34% in April. It may sound odd, but in times like these, this is cause for celebration.
Throughout 2020 and heading into the new year, PrimeRevenue’s pledge is to support clients through whatever challenges they may face. We strive to provide businesses around the world the information and tools necessary to fortify the supply chain via our proprietary trade data and analyses, as well as expertly executed working capital solutions.
With our supply chain finance and accounts receivable finance solutions, suppliers and buyers of all sizes can strengthen their financial health to not only survive challenging times, but also thrive and innovate in the face of disruption.
As we close out 2020 and look ahead to a new year, PrimeRevenue is committed to helping businesses insulate themselves as much as possible from external factors and start the new year strong. From empowering suppliers to accelerate payment on available invoices to helping buyers support the supply chain while optimizing working capital, PrimeRevenue is your working capital partner both now and tomorrow.