GTR Asia 2024: Highlights and key themes
(Photo credit: GTR Asia)
Source: GTR
The annual GTR Asia event returned to Singapore on September 3-4, 2024 to reflect on a period characterised by supply chain disruption and slow trade growth, but also technological innovation and trade digitisation.
In this post-event wrap-up, we pick out five conference highlights and key themes that emerged during discussions.
Supply chain disruption
One of the recurring themes at this year’s event was the impact of supply chain disruption on international maritime trade. Over 60% of maritime trade passes through the Indo-Pacific, yet separate crises to the east and west have restricted traffic through the Suez and Panama Canals, forcing shipping companies, financiers and insurers to adapt.
Peter Tirschwell, vice-president for maritime and trade and S&P Global Market Intelligence, told delegates that supply chains for seaborne containerised trade “have gone from a pre-Covid scenario of being predictable, reliable and low cost, to a current scenario – even several years after Covid at this point – of being unpredictable, disrupted and costly”.
Tirschwell said the disruption in the Red Sea, which has caused a dramatic drop in Suez Canal traffic, is “a classic example” of the kind of unforeseen disruption companies are grappling with.
“The possibility that the Houthi rebels in Yemen would start firing on container ships as an outgrowth of the Israel-Hamas war was not anticipated at all,” he said.
“As a result of that, all of the major container services are now wrapping around the Cape of Good Hope in Africa, adding two to four weeks of transit time to every containerised supply chain that formerly was using the Suez Canal for moving goods between Asia and Europe and Asia and North America.”
The result, Tirschwell said, is that financing has to be arranged earlier, demand forecasting is weakened, and companies have to manage extra inventory. “And our geopolitical analysts say that there is no indication that this is going to end anytime soon,” he added.
Dave Goh, vice-president and head of logistics and supply chain management at the Singapore Economic Development Board, said: “We have been hearing from many of the companies that we work closely with about their struggles to deal with the more frequent supply chain disruptions that are ongoing.”
Goh said one response in the Asia Pacific region has been to expand trade-related infrastructure. In Singapore’s case, this involved increasing handling capacity and reopening terminals at ports, and longer-term expansion plans have also been put in place.
Tirschwell added that accelerated developments are also underway in Thailand, Indonesia, Malaysia and Vietnam.
“This is the fastest growing region in the world for containerised trade, and it will be for many years to come,” he said. “That all is where [those nations] are following the example of Singapore, and trying to get out ahead of container growth.”
AI in trade
There is a great deal of excitement around artificial intelligence in trade and financial services, and speakers outlined specific use cases where the technology is already having an impact.
Hart Lestari, chief of staff at AI-driven intelligence company 6Estates, said improving operational efficiency is currently “the most obvious and most prevalent issue that financial services and trade companies can apply AI for”.
“We see this emerge in the areas of document handling and checks, mostly,” she said.
“And why? Because large language models (LLMs) can digitise, classify and pull information from all kinds of documents, from letters of credit, financial statements, invoices, to near perfect accuracy – something that wasn’t possible before, using the earlier iterations that we had.”
LLMs, Lestari said, can be trained to understand data from various different templates or formats, while also tapping into live data sources such as changes in the regulatory landscape.
Maurits Quarles Van Ufford, credit specialties growth leader for Asia at Marsh, said the company is actively looking to find AI solutions to improve operations, including in document handling, translation and consolidating data sets.
The technology’s ability to digest a large amount of information can also support credit limit decisions, for instance, by more accurately tracking the probability of company default.
“I think the next step will be moving to automated credit limit decisions, or appropriate default issues,” he said.
A challenge, however, is that AI for data analysis only takes information that already exists, and there is typically less available data for SMEs compared to larger corporates.
“In that sense, the complexity probably is around getting the data sets large enough to learn to give good responses to questions raised,” he said.
Know your cargo
Financial institutions, insurers and shipping companies are under growing pressure to identify attempts to evade sanctions imposed by G7 and European Union member states.
Russia has sought to reduce its reliance on western-linked maritime trade services by purchasing large numbers of vessels, typically ageing tankers. These so-called shadow vessels often switch off or manipulate location transmissions to avoid detection when loading, unloading or transporting cargo connected to sanctioned countries or entities.
Cichen Shen, Apac editor at Lloyd’s List Intelligence, says its information suggests there are now more than 600 such vessels, equivalent to around 13% of all global oil tankers.
“That’s quite massive,” he said. “It’s a portion of the global fleet that is actually engaging trade with Russia, Venezuela and Europe… and that shows the extent to how quickly the market can react to sanctions.”
Charles Ike, vice-president for maritime trade at vessel analytics firm Pole Star, said keeping on top of these changes has created a significant regulatory burden on financial institutions and large corporates.
For example, checking whether a vessel is already on sanctions watchlists is relatively straightforward and a standard part of transaction screening processes. Checking whether a vessel is likely to be involved in illicit activity based on its historic behaviour is more challenging, and requires more sophisticated technology.
“Looking at the ocean history for frequent changes, things like flag-hopping, or company-hopping, where – particularly after the Russian sanctions came in – we saw a lot of shipping companies re-registering in different locations in order to hide their true nationality, using shell and shelf companies,” he said.
“Being able to perform that sort of due diligence in advance, but also looking at the previous trading history of that vessel in terms of the areas it has been trading in will give you real indicators whether or not that vessel could end up being sanctioned based on past activity.”
China’s slowdown
The impact of the economic slowdown in China remains a source of uncertainty in global trade.
A recent report by Credendo warns that the country’s real estate crisis has significantly weakened demand for steel, resulting in oversupply and a price crash that “echoes the devastating slumps in 2008 and 2015”.
Data provider Kpler says in a separate report that Chinese product demand “is simply not living up to expectations”, resulting in lower fuel consumption and oil imports. The country “faces a difficult path ahead”, it says, following heavy debt accumulation and flatlining industrial production.
Shan Aboo, chief commercial officer for Asia Pacific at Allianz Trade, told the event that real estate remains a problem and “we see that impacting a little bit in terms of insolvencies”.
However, he said China remains a “very, very important market” that will continue to attract investment.
“Exports from China are still growing at 4.2% on average,” he said. “If you look at exports to the US, we’re talking about 7.2% [growth] last month, before that it was 8%, so we’re still talking about China being China,” Aboo said. “GDP growth for 2025 is expected at 4.3%, which is more than the EU, the US and Brazil.”
Ahmed Madkour, director for legal at Recovery Advisers, added: “About China, there’s not really much to be concerned about.”
Milestones for digitisation
The event hosted the launch of a report produced jointly by the UK government, British Chamber of Commerce Singapore and blockchain-based supply chain solutions provider LogChain that touted the benefits of digitised end-to-end trade transactions.
The report follows three pilot projects for moving goods between the UK and Singapore, and the UK and Thailand, through both air freight and containerised cargo shipment, while seeking to digitise documents at every stage of the process – from consignment notes and packing lists to waybills and customs declarations.
Louise Beazor, head of trade services at the British Chamber of Commerce Singapore, said the Thailand transaction – a shipment of food and beverage products from the UK to Thailand – reduced the use of paper trade documents by 86%, and email traffic by 91%.
UK government official Martin Kent, trade commissioner for Asia Pacific within the Department for Business and Trade, told the event the findings “demonstrate that trade digitalisation is not only an achievable goal for businesses today, but it brings plenty of benefits”.
Currently, 28.5 billion paper trade documents are printed and moved around the world each year, and a single shipment can require up to 15 sheets of paper, exchanged with as many as 30 different stakeholders, Kent said.
“It will bring down transaction costs, shipping times, and ultimately increase profits and competitiveness of firms that decide to trade through trade digitalisation,” he said.
The consortium’s report says further pilot projects are expected in different geographies, spanning various company sizes, sectors and shipment types.