A provider of sensor-based cargo tracking and monitoring services to shippers has developed a way to let beneficial cargo owners (BCOs) and trade financiers link visibility data to working capital strategies.
Zurich, Switzerland-based Arviem said Thursday its offering will enable its shipper customers to use data collected through monitoring the movements of goods with its sensor devices to be used to optimize working capital in two primary ways: faster access to financing and reduced inventory. On the lender side, banks and other trade financiers would gain access to data around shipments and BCOs they might not normally do business with due to a higher perceived risk.
The service essentially allows goods in transit to be “financeable from the container doors closing,” Aidan Shilling, Arviem’s director of working capital services, told JOC.com. Arviem said this would allow financiers to release funds for the goods weeks earlier than they typically do.
Arviem has been actively piloting the product with its existing BCO customers but aims to market the data directly to banks and less traditional lenders as well. “Banks and financial institutions can also leverage our services to decrease their risk exposure by having access to an independent, real-time, and cost-efficient verification tool to monitor the goods involved in their supply chain financing programs,” said Shilling.
The idea is that banks and other trade financiers, which typically wait until a bill of lading is issued for a shipment to finance the buyer, will be better able to assess the risk of a given shipment and, therefore, more willing to provide financing, if they have a higher level of visibility into the cargo. “For banks, financing goods in transit today is a risk that they are not willing to take,” said Shilling. “They have no idea what is happening to the goods, where they are, and in what condition.”
The solution is particularly suited to smaller shippers that have difficulty getting early access to capital from banks, or whose financing terms suffer as a result of the bank viewing them as a higher risk. Shilling said the ability for a shipper to tell its bank that it “knows where the goods are, that they are safe,” minimizes that risk.
He said the working capital product also has relevance for large shippers seeking a financing solution to reduce inventory from their balance sheets. “Because Arviem can monitor goods all the way from supplier to buyer, it is able to offer a structure in which it takes ownership of the goods while working with financial institutions to finance them,” he said.
Arviem provides shipment monitoring sensors and associated location and condition tracking, as well as analytics, as a bundled service. Shippers don’t pay for sensor hardware as a discrete cost but rather for the service as a whole. Arviem, founded in 2008, competes in an increasingly competitive space of sensor-based cargo monitoring service providers.
More broadly, visibility providers are finding new ways to tether the value of their services beyond simply helping shippers determine where their freight is. Those efforts include providing predictive estimated times of arrival, analytics to support future procurement cycles, and spend management tools.
Linking visibility to trade finance is a next logical step, particularly since third-party logistics providers are now eyeing ways to help their import customers shoulder the financial burden of sourcing and moving goods internationally as part of packaged logistics services offerings.