Tradeshift CEO Christian Lanng joins Yahoo Finance Live to discuss the rise in global trade trend activity.

Video Transcript

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- Global trade recovered sharply in the fourth quarter, with the US the clear outperformer. Transaction volumes nearly doubled the growth rate we saw globally. That's at least according to a new report out from cloud business network and platform Tradeshift. Let's bring in the CEO of Tradeshift, Christian Lang. He's joining us from San Francisco today.

So Christian, before we get into the specifics of this, what kind of impact did you see overall timed with the rollout of the vaccine? Because we have been talking a lot about how that is likely to bring back demand, as people look ahead to a post-COVID world.

CHRISTIAN LANG: I think that first of, what's interesting-- and remember, our data sort of pre-reads GDP, in the sense that it's orders and invoices happening. Typically, it's GDP the following quarters, right? And I think what's interesting is that the industry is getting ready to get back to business. It's the first time that we have levels that are above activity levels we saw in March last year. So that really means that from a transactional level, we are starting to be back to the same level of invoices and purchase orders as we saw in March 2020. And I think that's very encouraging.

What's less encouraging is obviously that a lot of that growth has been led by the US and China, and not so much the Eurozone and the rest of the world, right? So there's still a lot of catch up. And I think what also might be a little worrying is actually UK, we've seen continued drops in that growth. So we're actually further away than we were last quarter from where we were last year.

- Yeah, there's been concern also of the impact on trade from Brexit as well over in the UK. When you talk about the US versus China-- China obviously has been able to recover in a much more rapid rate than other Western countries for their economy. The US specifically-- what did you see driving those trade volumes?

CHRISTIAN LANG: So what we hear from a lot of our customers is I think, you know, in a way the election, no matter what you believe politically, drove in a certain sense certainty, right? We knew that there was going to be a pandemic response that was probably a little bit more structured from a federal level. I think we also know that-- I mean, the big change for any economy is essentially vaccine distribution. We can only do so much-- the PPE, lockdown, social distancing. But the real driver in any kind of change is the vaccine.

And the US has access to a lot of vaccines. The main thing is distribution. Having the federal level step in with a viable policy I think also has driven a lot of certainty in retail and other areas. So I think that's been a big driver for the US for this jump. It's just the certainty we know where we're going.

- Yeah, and I mean, it would seem like an obvious point. It's something we've heard Fed Chair Jerome Powell kind of stress again and again whenever he's testifying here in front of Congress. But tying back a full economic recovery to seeing control of this pandemic re-instituted-- and when you look at the data we were just showing there, I mean, you know, the UK returning back to lockdown-- what seemed to be a pretty strong reason as to why growth might be slowing. Of course, China seeing a very different scenario play out there, with them kind of getting this under control earlier ahead of other countries. Are there exceptions to that rule that maybe you would stress when you look into this data, and project where growth goes from here?

CHRISTIAN LANG: No, I think it's very clear, right? And I think the problem in the UK is not just lockdowns, but it has been the sort of flip-flopping on policy, right? We go into lockdown, we open up, and then, oh wow, we're going back to lockdown. And I think that lack of certainty for industry, for retail, for restaurants, makes it extremely hard to predict growth, which makes it very, very hard to invest.

You can sort of see in the US, you know, good or bad, we haven't really-- there haven't been a lot of changes, in the sense that we've been going through the same, and we knew where we were. And now with the vaccine coming, I think there's a very clear path. China did lockdown the right way very early, and they were very clear in their communication, and that's what allowed them to come back to the level they have. I don't think any Western country could really replicate the version of the Chinese lockdown. I think that'd be extremely hard, and the pushback would be dramatic. But that's how they did it, yeah.

- Christian, let's talk specifically about Tradeshift. You have long been rumored as one of those unicorns that is expected to come to market-- rumored last year, didn't happen. We're looking at 2021 right now. As you look to the public markets and the environment, especially around some of these companies that have come to market, how are you seeing some of these movements right now? And how do you assess your company's path forward in the face of what some say is a potential bubble that's brewing?

CHRISTIAN LANG: Yeah, I think, you know, what's interesting is you've seen the B2B stocks continue to perform very strongly. I think, you know, if you have solid fundamentals-- we were just talking earlier about margins improving in tech companies-- that's something that's been a big focus for us in 2020, and continues to be a big focus in 2021. Our prediction is as well that the tech companies that have great margins, great growth, they will continue to be hot assets, no matter if there's a bubble or not.

So I think, you know, as long as there's strong revenue growth and improving margins, I think you're good. I think if you're one of the banks, et cetera, there's a very big run up in value. I don't know how to predict that from a consumer company perspective. But I definitely know that the B2B stocks seem to still be doing well, and I think have pretty solid fundamentals across the board.

- The CEO of Tradeshift, Christian Lang. Appreciate you coming on here and sharing with us the data you're seeing play out. Thanks again.