Across Asia, large companies are responding to these challenges by diversifying supply chains, experimenting with digital trade finance and supply chain solutions, and taking steps to ensure they have access to affordable credit at acceptable terms.
After the COVID-19 crisis, the supply chain disruptions that plagued companies during the pandemic were starting to recede. From 2022 to 2023, the share of Asian companies experiencing supply chain disruptions declined from 66% to 58%. In 2024, however, that trend reversed, sending the share of companies experiencing supply chain disruptions to 64%—nearly back to pandemic-era levels.
What is causing supply chain disruptions in 2024? In a recent Coalition Greenwich study, approximately 42% of Asian companies cited transportation issues, many related to the conflict in the Red Sea. Corporate supply chains are also feeling the effects of elevated interest rates as one-third of Asian corporates experienced financing issues in 2024, up 12% from the prior year. Companies also cited challenges including high financing costs, FX volatility, payment delays, and a lack of credit availability.
“Corporates are responding to prolonged high rates amid geopolitical uncertainty and muted growth, and increasingly accessing cash on their balance sheet or looking for alternative sources of cheaper liquidity,” says Ruchirangad Agarwal, Relationship Director and Head of Corporate Banking – Asia and Middle East at Coalition Greenwich and co-author of Asian Trade Finance: Facing Challenges, Corporates Diversify and Digitize.
Diversification is seen as a key strategy for making supply chains more resilient. More than half of large Asian corporates are working to diversify supply chains into new markets. For companies throughout Asia, Vietnam and India are top destinations.
The vast majority of large companies in Asia have adopted digital channels for at least a portion of their trade finance business. However, nearly half are still employing analog channels and tools.
“We see this as a major opportunity for banks to step in and help by expanding and upgrading their digital trade finance platforms and by rolling out programs that educate companies about available tools and teach treasury staff how to use them,” says Elijah Lim, Asia-Pacific Digital Benchmarking Lead at Coalition Greenwich.
Asian Trade Finance: Facing Challenges, Corporates Diversify and Digitize explores the challenges facing Asian companies and treasury staffs, analyzes trends in trade finance/supply chain finance product usage and bank selection, and discusses strategies large Asian companies are taking to make supply chains more resilient.
