The heading of an article co-authored by Matthew Parker‑Jones, Scotiabank’s Managing Director and Global Head, Global Transaction Banking Product Management (‘Global trade no longer plays by old rules’) reflects the growing importance of Latin America as a global trade corridor.

Parker-Jones makes the point that by 2035, as much as US$3trn in global trade is expected to reroute toward regional corridors and that the EU-LATAM-North America triangle is uniquely positioned to benefit.

What used to be viewed as secondary or adjacent markets are now emerging as critical nodes, demanding new levels of financial coordination and foresight.

As trade partially pivots away from pure Asia-centric routes, BNY is seeing growing LATAM-to-LATAM and LATAM-to-other-emerging-market corridors. It acknowledges that financing trade between Brazil and Egypt or Peru and India carries different risks than routes anchored by the US or Europe, while the reduced dominance of the US dollar in some bilateral deals challenges banks accustomed to dollar-centric operations.

“Overall, the data suggests that trade finance demand in Latin America is transitioning rather than contracting,” says Joon Kim, Global Head of Cash and Trade Platform, BNY. “Near‑term volumes are under pressure but the strategic role of the region in global trade supports sustained demand for more structured, risk-efficient and flexible trade finance solutions rather than pure volume growth.”

In addition to SMEs, he observes that for commodities and extractives companies, higher volatility, price/FX swings and ESG/sanctions considerations can tighten appetite at times, particularly where heightened controls apply.

“Bank partnership models are common and expanding, mainly because local institutions bring domestic reach, onboarding and client intimacy, while global banks contribute cross-border balance sheet, network coverage and product/structuring capabilities,” adds Kim.

His view of the progress that has been made towards trade finance digitisation is that it could best be described as accelerating from a low base.

“Momentum is strongest in standards and interoperability efforts and electronic bills of lading (eBL) adoption, where industry groups note a gradual shift and major carrier ecosystems have publicly targeted broad eBL adoption by 2030,” says Kim. “What still slows it down are legal/regulatory differences across jurisdictions, enforceability of e-docs and uneven acceptance by counterparties as well as fragmented platforms and the need to integrate banks, corporates, logistics providers and authorities.”

For CFOs, traditional banking relationships may prove insufficient for scaling operations. They must evaluate treasury infrastructure that enables real-time liquidity management to capture nearshoring opportunities without the drag of legacy settlement friction.

“Along with SME manufacturers, agriculture and commodities sectors face more acute challenges as they often lack the balance sheet strength or established banking relationships that larger multinationals leverage,” observes Mark Johnson, Chief Product Officer at GTreasury. “Coffee, soy, minerals and agricultural exports frequently encounter financing gaps despite strong underlying fundamentals and any cross-border transaction involving countries with currency volatility creates friction.”

One SME exporter that managed to secure funding late last year was a Latin America-based seasonal exporter of fast-moving consumer goods.

The company required a US$5m receivables discounting facility secured by verified eligible export invoices. Seasonality and buyer concentration required tighter eligibility and reporting.

The transaction – which was arranged through a private capital advisory firm – was finalised in October 2025 and took approximately five months to put together from initial structuring through to an indicative structure supportable for underwriting review, subject to standard receivables verification and legal enforceability of the collection’s controls.

“The benefit was predictable peak season liquidity to keep shipping, pay suppliers and freight on time and avoid cash crunches caused by slow pay events, deductions or buyer set offs, while giving lenders the reporting and controls needed to stay comfortable through seasonal spikes,” explains a company spokesperson.

Johnson agrees that major global banks are increasingly working with local institutions to extend reach – particularly in Mexico and Brazil – but cautions that these partnerships often come with standardised products that don’t address the specific needs of mid-market companies.

“Local banks frequently lack the balance sheet capacity to scale independently, creating dependency on global partners that may restrict liquidity during market stress,” says Johnson. “For corporate treasurers, relying solely on these chains creates concentration risk. The most resilient strategy is to decouple operational payment capabilities from financing sources to ensure continuity regardless of correspondent banking limitations.”

Latin America’s role as an alternative manufacturing hub is creating new trade corridors and a need for more flexible, diverse and secure financing solutions agrees Enrique Rico, Global Head of Trade & Working Capital Solutions at Santander CIB.

“As companies diversify supply chains to be closer to the US market, we are seeing a larger need for working capital and supply chain finance programmes to support new manufacturing hubs and increased cross-border volume,” he says.

Rico suggests that extending financing beyond the anchor buyer to the broader supplier base remains a key challenge and priority. “In response, we are increasingly focused on developing dedicated trade and supply chain finance solutions specifically designed to address the SME segment, leveraging simplified structures, digital onboarding and partnerships to improve access and scalability.”

He refers to pressure in industries with fast moving and complex supply chains, such as technology-related sectors, where securing quick inputs is critical. In these cases, trade finance increasingly needs to support supply continuity, for example through inventory finance or structured solutions that allow companies to manage volatility and procurement needs without placing excessive strain on their balance sheets.

Nearshoring is integrating new local and regional suppliers into global value chains, increasing the need for bank‑intermediated solutions such as letters of credit, receivables financing and supply chain finance.

Gerardo Gutierrez-Olvera, Executive Director of Foreign Trade and International Business, Banorte

According to Rico, digitisation in trade finance has progressed significantly but unevenly across product. “Supply chain finance is the most advanced area, with substantial investment in multibank platforms, automated onboarding and dynamic reconciliation processes improving transparency, scalability and efficiency for multinational corporates operating across multiple jurisdictions,” he says. “Documentary trade is also evolving with a growing proportion of transactions now processed digitally.”

Greater volatility – especially across energy, metals, and soft commodities – is increasing the need for risk distribution, liquidity buffers and margining while slower exports, longer cash conversion cycles and regulatory uncertainty are also reinforcing demand for traditional products such as letters of credit, supply chain finance and FX‑hedged facilities.

That is the view of Jean Paul Antelo, Head of Latin America Trade and Supply Chain Finance at Bank of America, who notes that as trade flows grow more complex, financing tied to inventory, receivables and logistics is becoming essential. “Export agency finance is increasingly relevant, offering flexible long‑tenor, capex‑oriented funding through export credit agencies, multilaterals and DFIs,” he says. “With more untied structures and blended frameworks, it provides a strong alternative for Latin America clients seeking strategic, long‑term financing.”

Antelo also refers to acute trade finance access challenges in manufacturing, agribusiness and natural resource supply chains. “However, access is improving through guarantee programmes, risk‑sharing arrangements, digital onboarding, e‑signatures and buyer‑anchored financing models,” he adds. “Export agency finance is also uniquely positioned to support SMEs, infrastructure, agribusiness and underserved sectors, particularly when MDBs and DFIs are involved, because its flexible structures can address risk mitigation needs where traditional trade finance falls short.”

Antelo observes that digitisation is accelerating rapidly, reducing structural barriers and improving efficiency and cash conversion cycles.

“Blockchain solutions, electronic bills of lading, AI‑driven risk tools and digital trade platforms are advancing quickly in Brazil, Mexico, Colombia, and Chile and have significantly improved front end transparency and processing speed,” he says. “Looking ahead, the shift from document‑driven to real-time data‑driven processes will further streamline operations, shorten revenue cycles, and enhance interoperability across platforms.”

Adoniro Cestari, Global Head of Trade at Citi refers to companies looking to avoid tariffs and reduce lead times increasingly investing in and sourcing from Latin American factories.

“Agriculture and food products in countries like Brazil and Argentina have seen an opportunity for new export markets,” he explains. “Chile, Peru, Brazil and Colombia, exporting raw materials like copper, iron ore and oil are sensitive to global industrial demand and therefore we have seen companies slowing down investments due to uncertainty in the sector. Meanwhile, services (logistics, IT) continue to expand aggressively.”

Within specific sectors, Cestari says access to trade finance is constrained for construction and infrastructure projects due to lengthy project cycles, large capital requirements, exposure to political and regulatory risks and susceptibility to economic downturns. These projects often involve multiple parties and jurisdictions, which creates additional challenges. “We are seeing global banks partnering with local institutions to offer tailored financing solutions,” he says. “Partnering with local banks helps global institutions navigate credit risks and specific regulatory complexities – for example, many countries have regulations that favour or require local participation in financial services.”

Local partners also provide access to infrastructure, distribution networks (branches, agents) and people as well as access to local funding, driven by a strong deposit base and access to local currency funding.

Cestari notes that Latin American countries are approaching digitisation at varying paces. In countries such as Brazil the regulatory push for the digitisation of trade instruments such as electronic trade receivables (duplicata escritural) is leading the way on the removal of traditional paper-based processes.

Mexico has continued to play a key role in the new international trade order through its commercial openness and geographic proximity and deep economic integration with the US over more than three decades.

That is the view of Gerardo Gutierrez-Olvera, Executive Director of Foreign Trade and International Business at Banorte, who says uncertainty around tariffs has seen some long-term capital investments placed on hold, while the shift in supply chains from just-in-time to just-in-case has impacted trade-related working capital needs of Mexican exporting and importing companies in a number of ways:

• If tariff costs rises and businesses cannot pass these costs on to consumers, they face cash flow constraints that limit their capital and operational expenditure capabilities.

• Additional financing to cover increased costs associated with tariffs elevates debt levels.

• The need to renegotiate payment terms with foreign suppliers or clients to allow for extended payment periods or to hold more inventory in order to mitigate the effect of tariffs.

• Adoption of a more proactive and predictive approach to risk management and financial planning to avoid potential losses due to supply chain disruption.

“In addition, nearshoring is integrating new local and regional suppliers into global value chains, increasing the need for bank‑intermediated solutions such as letters of credit, receivables financing and supply chain finance,” says Gutierrez-Olvera. “At the same time, global geopolitical uncertainty is elevating demand for risk mitigating structures.”

He adds that SMEs across key sectors such as agriculture, apparel, automotive parts and light manufacturing face the greatest obstacles to accessing trade finance and that many operate on open‑account terms, increasing liquidity and payment risk exposure.

“Collaboration between global and local banks has become a central component of the trade finance ecosystem,” concludes Gutierrez-Olvera. “Generating a network of global and regional partner banks is critical in order to mitigate risks and support our clients with international trade and supply chain finance requirements. Banking institutions positioned early to enable US-Canada-Mexico trade integration will drive growth post-USMCA review.”