Import playing ground is changing says Blue Strata TradingPublished on: October 12, 2015
Although the BankservAfrica Economic Transaction Index (BETI) showed 2.4% year-on-year growth in July – the current depressed climate, exacerbated by additional challenges such as load-shedding, weak commodity prices, volatile Rand and looming labour action – is causing a stir in the logistics and import/export market says Blue Strata Trading.
“There is a definite paradigm shift being felt in the market as the industry moves towards a far more integrated, and therefore cost-effective, solution for the import process,” says Adam Orlin, CEO of Blue Strata Trading. “Market uncertainly is driving businesses to tighten control over their logistics process – where trade finance is now being viewed as a broader import finance solution rather than just a transactional one.”
Trade finance is not just for companies that need the funding. Even companies that are cash flush may wish to preserve their working capital for other projects or as a buffer in case credit becomes tighter. Continues Orlin: “When you add the funding component to the logistical component, you start to develop a really good idea of the working capital benefit that can be accrued and used elsewhere in the business. This flexibility is critical in uncertain markets and importers are looking for this option to mitigate risks. In fact, a many of our customers are looking at just this – indicative of the shift in the market.”
By coupling trade finance to value added services, as well as providing access to economies of scale, savings can be passed through to importers to improve working capital cycles and reduce capital tied up in the import transaction. The ability to integrate the full import cycle, including forex, funding and logistics – to better manage the risk outcome – is fast becoming the preferred way forward for many importers.
‘Like everything in business the traditional models of operating are being disrupted – be it by technology and digitisation or due to market conditions that force businesses to emerge from comfort zones to protect and win market share – and the import sector is no different. Market challenges and uncertainties are driving change not only in how importers view their supply chain, but also how they view funding and risk mitigation to ensure the impact of insecurity is felt as little as possible and they can weather the economic storm,” concludes Orlin.