Influenced by the Covid-19 pandemic, the cross-border trade market has experienced significant change over the past few years. The Regions Bank Global Trade Finance team supports clients’ cross-border activities related to risk management and working capital financing.
Part of the Treasury Management group, the Regions Global Trade team led by Carson Strickland across the 15-state footprint supports businesses with cross-border financing needs in import and export related transactions.
While supply chain challenges and inflation dominate the economic headlines, tariffs continue to have a heavy influence on international trade.
“In the past 24 months, container prices on imported goods increased tenfold,” said Strickland. “The products we import are more expensive and the countries the U.S. puts heavy tariffs on retaliate with their own tariffs, making American export products cost more.”
At Regions we are providing financing solutions to companies, so that their cash isn’t tied up in paying for imports from overseas.
Thomas Matthias, senior vice president, Regions Global Trade Finance
While the global supply chain gridlock has started to loosen, in many cases, buyers have had to adapt their purchasing patterns in order to keep inventory on the shelves. One of the ways companies are adapting is moving away from the practice of maintaining “just in time” inventory. Companies began holding more inventory in warehouses to weather supply chain challenges, ordering months of inventory rather than just enough to keep up with demand.
“The increased inventory impacts working capital for businesses,” said Strickland. “Our clients are buying four months’ worth of inventory rather than four weeks – keeping their shelves and warehouses packed.”
Time is money – and in importing products, that can mean 35-60 days of ocean transport or “dead money” that leads to additional financing needs for businesses. The 2021 Suez Canal blockage and backlogs in U.S. ports caused this time to more than double.
“At Regions we are providing financing solutions to companies, so that their cash isn’t tied up in paying for imports from overseas,” said Thomas Matthias, senior vice president with Regions Global Trade Finance.
Matthias was recently appointed to the Export-Import (EXIM) Bank’s Council on China Competition. In 2020, Regions was named Export Lender of the Year by EXIM Bank.
Regions Bank has been an EXIM Delegated Authority Lender since 1994 and an EXIM Letter of Credit policyholder since 1991. In February 2020, EXIM’s Board of Directors unanimously approved an increase in the delegated authority for Regions, allowing the bank to increase support for exports of U.S. goods and services from small and medium-sized companies in the states in which it operates throughout the South and Midwest.
“Inflation was a key topic in our recent Ex-Im Council meeting,” said Matthias. “It is important to note that two of the main drivers of U.S. inflation are driven by global dynamics: tariffs on imports from Asia and the impact the supply chain system has on container prices. These will be key discussion topics where I hope to bring perspective to the Ex-Im Council meetings.”
Despite tremendous American purchasing power, 95% of the world’s consumers are outside the U.S. Educating businesses and our commercial banking partners on the purchasing power and product demand outside of the U.S. is key.
“There is great demand for quality U.S. products and buyers are willing to pay a premium,” said Strickland. “We come in to help navigate financing terms and manage payment risk to make it easier for buyers and sellers to engage and help businesses improve their customer service. As a result of the pandemic, we are seeing more international trade engagement with the growth of virtual meetings between buyers and sellers, leading to increased activity.”
Strickland is a member of the Alabama District Export Council. In addition to the new role on EXIM Bank’s Council to China Competition, Matthias is a member of the Georgia District Export Council. In St. Louis, Global Trade Finance banker Al Li was recently named to the Missouri District Export Council, where he was appointed as vice chair. Strickland’s team as well as associates of Regions Commercial Banking team are active in regional District Export Councils throughout the company’s footprint.