To have trade finance is one of the crucial challenges in global trade. Maersk has noticed this challenge in the market, and has created a product that can meet shippers and buyers needs. They are not promoting this in every country, but rather, in countries where there is too many bank transactions and paperwork requirements involved. Maersk Trade Finance combines the flow of goods and finances, supporting the businesses who import and export globally.
The banking industry itself is trying to find a solution that can simplify trade finance processes by developing blockchain technology.
While these developments are happening, this development by Maersk has the potential to save billions of dollars in costs, and speed up transaction times. We all know that most of the small and mid-size buyers are having financial issues when there is a payment due for a specific buying transaction. These issues are way more crucial in the countries where the U.S. Dollar is stronger than the local currencies.
In international trade, India is one of the most difficult countries to deal with when it comes to payment and finance, along with shipment requirements for the U.S. U.S. exporters still do not understand the concept of Letter of Credit requirements, especially Letter of Credit requirements for Indian shipments, as one may have experienced in the past on any Letter of Credit shipments that require a Vessel certificate, Free time certificate, Vessel Seaworthy certificate, Vessel age certificate, etc. I do not want to blame any party here, since I don’t think anyone wants to deal with too much paperwork in transactions, and discrepancies that delay payment and cause extra costs in releasing shipments.
This solution helps facilitate Maersk customers’ simplification efforts, enable global commerce, and speed up and simplify access to capital, while removing the paper trail from traditional financing options.
With this development, Maersk is also one step ahead of their competition. Maersk is not going to be competing with the major steamship lines to provide better rates, space, and service to get more market share. However, this will make a solid customer portfolio for Maersk to support Maersk Line for a lifetime, as long as Maersk is the only option that offers both finance and shipping.