Article by Shoby Jose - Head of Operations and Technology, Maersk Trade Finance
Allow me to illustrate the scale and complexity of the global trade eco-system. The world economy continues to exponentially expand and lengthen already complicated value chains. As result of this further globalization and the lowering of transport costs, as well as the information and communication technology revolution, companies are working to more efficiently outsource their production across regions and countries. These value chains add to the complexity with multiple goods and lending intermediaries, information asymmetry, and paper intensive processes, amongst others. These are all woven in a complex web of regulations, customs and currencies across geographies. These multiple barriers to enter global trade are especially taxing for smaller and medium-sized customers.
The Organisation of Economic Co-operation and Development (OECD) estimates that 15% of the overall cost of traded goods around the world is comprised of hidden costs, much of it a result of the manual processes still used by companies and vendors worldwide. Hurdles such as finding buyers, accessing funds, finding means to transport goods and managing risk can pose considerable stress and man power. I’ve worked in the Steel Industry, consulting and supply chain management – and no matter which customers I work with, they are faced with similar issues when it comes to global trade.
Recently, for one of our large retails clients we simplified both the flow of goods and flow of money. It was critical for them to simplify their physical supply chain processes with manual B/Ls, manage the complexities of the L/C process to cover for risks with their distributors, while also helping their distributor’s working capital requirements. All of this is essential for any healthy supply chain. We worked together to create a solution which entirely removed the standard L/C process while ensuring faster digital B/L releases. Using our digital trade finance platform, resulted in a smoother transactional process with zero paper
Inefficiencies such as these, present opportunities to simplify global trade further. Maersk has continued to invest in digital innovation focused on developing a faster, more efficient customer supply chain. At the same time, we at Maersk Trade Finance, have worked to co-develop simple solutions with our customers. We’ve now worked with customers across India, Singapore, UAE, The Netherlands, the US and Spain. And while every market has it’s unique nuances, the truth is that there are considerable commonalities across the world. This makes our Maersk network of global offices that much more powerful for you.
We continue to work with our customers to co-create simple solutions and enable global commerce.
Supply chains go beyond ocean shipping. We help propel your business by financing where you need it most.