October 26, 2022 | Stamford, CT — Robust trade flows and lingering supply chain disruptions are driving up demand for bank trade finance services among Europe’s largest companies. 

Over the past 12 months, the number of large European companies citing the need for cross-border trade finance into and out of other Western European countries increased by three percentage points, and by three to four percentage points for trade into North America, Asia-Pacific, the Middle East and Africa.

“The growing demand for international trade finance services has been driven by both the overall recovery in global trade and the continuing need to revamp supply chains,” says Dr. Tobias Miarka, Head of Corporate Banking at Coalition Greenwich and author of European Corporates Shuffle Trade Finance Business in Challenging Times.

Three-quarters of large European companies report they are currently experiencing supply chain disruptions and the most common negative impacts have been price increases, especially for energy. Companies have also battled freight and logistics snags, and shortages in products, components and raw materials. 

Price is Back, as Business Shifts
As large European corporates work through supply chain issues and manage expanding international trade volumes, many are shifting their trade finance business among bank providers. About 40% of European companies say they expect to increase or decrease the amount of business they do with current trade finance providers in the year ahead. 

The one important factor influencing the way large European corporates allocate their trade finance business this year is price. During the pandemic, concerns about pricing on trade finance often took a back seat to the more pressing imperative of securing the financing and other essential services needed to keep businesses operating. Today, with the business environment largely normalized and inflation surging, companies are closely scrutinizing prices charged while prioritizing banks with quick turnaround times and existing relationships in ancillary products like cash management and FX. 

European Corporates Shuffle Trade Finance Business in Challenging Times analyzes the current factors driving the European trade finance industry, including trade flows, corporate needs and technology platforms. The report provides a detailed examination of continued supply chain disruptions and presents the five main strategies companies are using to make supply chains more resilient. The report concludes with a look at sustainability, analyzing how ESG concerns are influencing, or not influencing, corporate supply chain management and trade finance.