The world’s biggest container shipper, Maersk Line, is looking into trade finance to fill a lending gap left by indebted banks who are moving away from the this shipping industry. The company is offering to finance shipments and remove past paper financing deals.
Banks usually act as an intermediary for companies importing or exporting goods in trade finance but many are being drive out of shipping recently. The ones that remain have become more cautious in their financing, such as the small and medium sized enterprises, after some faced heavy fines for failing to spot abuses such as money laundering in their trade finance business. Shortage of trade finance is the second biggest obstacle to growth in global commerce where the banking industry is looking to simplify the trade finance processes by developing blockchain technology. This would help save billions of dollars in costs and could also speed up transaction times.
Maersk has extended $140 million in trade finance since last year to customers in the United States, India, Spain, Singapore, the Netherlands, and UAE. The company hopes to reach $200 million by the end of this year with customers reporting to have saved 15%-30% compared to traditional trade finance instruments. Maersk is also looking at partnering with a bank or creating their own financial institution to focus on transport and logistics. In September, the company plans on seeking alliances or a separate listing for its energy division that will include Maersk Oil.