Danish liner company Maersk Line has expanded into the trade finance business by allowing customers to finance their operations as long as they are shipping with Maersk.
The financing scheme works because Maersk has a rich trove of customer information from which to base a decision on the customer's creditworthiness, according to the Copenhagen-based company. This enables companies to manage their shipping and finance needs with one provider, rather than using one vendor for shipping and another vendor—normally a bank—for trade finance, Maersk said.
All onboarding and transactions are handled digitally, and the platform offers pre-shipment and post-shipment credit facilities, said Shoby Jose Ephrem, a Mumbai-based Maersk spokesman.
Maersk's goal is to "provide a single window for flow of goods and money, thus simplifying the trading landscape for our customers," Ephrem said in an e-mail. The service, launched last year in India, has recently been expanded to five U.S. states: Georgia, New York, New Jersey, Florida, and Texas. It is also available in Spain, the Netherlands, and Singapore. It will soon be launching in the United Arab Emirates. Maersk plans to expand the offering in the U.S. and Europe.
According to a report yesterday in Global Trade Review, Maersk has about 150 customers and has lent about US$100 million. The company expects that number to hit US$200 million over the next 18 months, according to the report.
Though finance is a necessary component of commerce's three-legged stool, along with goods and information, it is uncommon for shipping companies to bundle trade finance by leveraging customer transactions. In the late 1990s, Atlanta-based UPS Inc. launched a trade finance arm called "UPS Capital" that operated in a similar manner to Maersk's offering. UPS Capital remains in business.