The Covid-19 pandemic has affected most sectors of the economy, impacting global and local financial systems alike. As efforts to restore trade continue, the pressure that exists on trade finance globally has come to light, especially the increasing trade finance gap in emerging and developing markets.
This is concerning, says Gary Swinson, global trade head at RussellStone Treasury, as trade finance provides the essential short-term liquidity companies need without putting its cash f low under too much pressure.
“The current economic climate has seen healthy companies struggling to trade and recover from the hardest trading year in recent memory,” he told Freight News. “The banks and lending institutions are more cautious and struggling to see the value in companies as their trading history for the year has probably been unpredictable at best.”
Dealing with the aftermath that was 2020 will not be easy and trade finance is expected to remain under pressure for the foreseeable future, says Johan Coetzee, CEO of RussellStone Treasury. “Companies are also hard pressed to correctly forecast what volumes and demand will be as 2021 rolls in, as they have nothing to base things on due to the last trading year being so erratic.
Throw in the current rate of exchange volatility, the shortage of space available for inbound cargo, as well as the continuous climb in the freight rates, and the market is left wondering how best to move forward.” It was with this in mind that the RussellStone Treasury team set out to deliver a complete buying solution that would introduce stability to companies, reduce the level of uncertainty and minimise the number of variables at play.“Our market offering changes the outlook considerably,” says Swinson.
“The client deals with one entity through the entire trade transaction, from the placement of the stock order through to the last mile or shelf. We secure the best FX rate available for the stock payment. We offer the trade finance that covers the goods, freight, SA customs and local charges based on the days needed to turn or sell the goods. We work together to forecast the needs and offer the funding to have extra stock on hand, thereby eliminating the loss of sales and erratic costing due to the ROE and freight volati lity.”
According to Coetzee, it comes down to clients having liquidity, security of stock on hand as well as better control of their total landed costs. It also ensures companies an increased ability to confidently go to market.