Ocean shippers' digital payment platforms fill post-recession banking void

Dive Brief:

CMA CGM announced the pilot-phase launch of its SHIPFIN Trade Finance service Monday, an all-digital platform that offers a variety of payments, invoicing and financing services to importers and exporters.
Through SHIPFIN, importers will have access to supply chain financing, which includes extended payment deadlines of up to 120 days and digital payment tracking. Under cargo financing, exporters will have the option to accept upfront cash payments (up to 90% of the invoice value) after loading their goods and simplified currency exchanges, among other services.
In a video announcement, CMA CGM said it is rolling out the platform to streamline global trade transactions and offer some financial relief to companies working to mitigate the instability of the current trade environment.

Dive Insight:

The majority of ocean shippers did not expect to receive traditional financing through banking institutions in the medium term, a 2017 study from Norton Rose Fulbright found. And only 27% thought the situation would improve over the next five years. Banks have been seeking to downsize their maritime portfolios since the 2007-08 financial crisis, when many major ship financing institutions sustained significant losses. Furthermore, banks are not seeking new business as a result of increased regulatory scrutiny, according to the study.

Amid this downward trend — and disruption caused by the U.S.-China trade war — carriers like CMA CGM have an opportunity fill the void by offering financial services of their own.

SHIPFIN is available in seven pilot markets: Dubai, India, Singapore, Malaysia, Indonesia, Hong Kong and the Philippines. CMA CGM said it will roll out the service to other countries later.

Maersk also runs a digital trade financing service. In addition to offering lending options for importers and exporters similar to SHIPFIN, Maersk Trade Finance includes in-transit options that allow shippers to borrow against inventory that's still on the water or obtain pre-approved lines of credit from Maersk to pay suppliers or vendors upfront, and then repay the debt to Maersk on an extended timeline.

Offering financing services could help ease the impact of the unstable global trade environment for shippers and provide a needed cash infusion to help shippers move past any supply chain bottlenecks that have come up as a result of rapidly pushing or pulling inventory in response to market shifts. At the same time, by offering greater liquidity to shippers, carriers could potentially see a benefit in the form of higher freight volumes, easing their own challenges with overcapacity and negative trade shifts.