Citi GPS: Supply Chain Financing ? Building Resilience as the New Definition of "Global" Emerges

Today, Citi has launched the fourth edition of its Global Perspectives & Solutions (Citi GPS) report titled: Supply Chain Financing ? Building Resilience as the New Definition of "Global" Emerges. Its key findings show that global trade is undergoing a period of transformation ? the focus on supply chain resilience has led to businesses and countries building new trade corridors, or new relationships between dominant cities, economic development agencies, and rural areas, as well as the diversification of their supply chain partners.

The report provides industry insights from Citi's proprietary Global Supply Chain Pressure Index, which covers trade flows and survey responses from multinational corporations and small- and medium-sized enterprises (SMEs). More recently, shipping costs have been boosted by disruptions in major canal routes, including conflict in the Red Sea. While it is unclear how long these disruptions will last, the Index shows shipping costs are still far below levels reached during the pandemic and are not far removed from typical pre-COVID-19 levels. The Index also indicates that while corporates looked to move back towards just-in-time inventory practices, they strategically held larger inventories for components that are hard to source. Corporates continued to diversify their supply chain resources by utilizing suppliers and nearshoring, as well as creating new trade corridors.

In her foreword to this year's Report Jane Fraser, CEO of Citi noted:

"Today, amidst the backdrop of transformative technological innovations, increasing resilience is the clear and resounding call. We see nearly every country and company focused on security ? be it food, water, energy, cyber, financial, or operational security. And consequently, they're reconfiguring supply chains to meet the demands of customers and other stakeholders. This heightened focus on resilience has given birth to a new era of diversification, and as businesses and countries adapt to this era, we're starting to see clear benefits in economic growth."

For the first time, Citi asked respondents if they were considering adopting a China Plus One strategy as a way to diversify their supply chains. Over half of global respondents indicated that they already had, or were considering, adopting such a strategy, with North America leading other regions with 63%. Vietnam was the preferred secondary destination, except in Latin America, where respondents favor bringing production back to their home market. Supply chain financing solutions are adapting to boost resiliency strategies across the supply chain, especially for SMEs and companies in emerging markets.

Chris Cox, Global Head of Trade and Working Capital Solutions at Citi, said:

"Technology is at the heart of many new developments in trade finance. Innovations such as artificial intelligence and blockchain can enhance corporate operational efficiency, cut costs, reduce fraud, and augment transparency throughout supply chains. Transparency and mitigation of risk should help improve access to efficient capital for corporates around the world."

The digital copy of the report is available: here.

About Citi Global Perspectives & Solutions (Citi GPS)

As our premier thought-leadership product, Citi Global Perspectives & Solutions (Citi GPS) is designed to help readers navigate the most demanding challenges and greatest opportunities of the 21st century. We access the leading elements of our global conversation with senior Citi senior professionals, academics, and corporate leaders to anticipate themes and trends in today's fast-changing and interconnected world.

About Citi

Citi is a preeminent banking partner for institutions with cross-border needs, a global leader in wealth management and a valued personal bank in its home market of the United States. Citi does business in more than 160 countries and jurisdictions, providing corporations, governments, investors, institutions and individuals with a broad range of financial products and services.

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