1. Digitalisation boosts the efficiency of cross-border transactions

Forbes has singled out digitalisation as the number one global shipping and logistics trend for 2024.

But digitalization isn’t new. The trend began in the 1970s with the development of maritime satellite communications. Since then, cutting-edge automation, real-time analytics, fast international payments, and even social media have played a role in reshaping how goods traverse the globe—and how they’re paid for.

Today, centennial shipping giant Maersk Line is one of several industry leaders advocating for digital excellence by calling on shipping and logistics providers to take advantage of the tools at their disposal. One of those tools is embedded cross-border payments solutions.

Consider, first, the status quo. Most global shipping and logistics providers use traditional banks to move money across international lines. But banks rely on clunky, outdated technology to make international transfers or perform foreign exchange (FX), driving their costs. As a result, banks take a formidable chunk of shipping and logistics providers’ total earnings. 

With fuel prices and regulatory taxes rising in 2024, global shipping and logistics providers are updating their fulfillment tech stacks to improve internal processes and capture more revenue. By integrating a digital global payment platform into their backend, these companies can redirect profits that would otherwise be lost to the banking system.

Digital global payment platforms enable shipping and logistics providers to quickly send, receive, and manage international payments. These platforms help shipping and logistics providers with a range of services, including payment processing, currency conversion, and fraud prevention. And they do it more cost-effectively than a bank.
 

Using a global payments platform, shipping and logistics companies can make transfers in local currency using local payment rails and international SWIFT transfers, offer multi-currency digital wallets, and set up multiple local collection accounts.‍

2. Saving on operating expenses helps organizations withstand economic volatility

In 2023, the World Trade Organization (WTO) flagged the global trade growth slowdown as a cause for concern, citing adverse implications for the living standards of people around the world. The WTO has called on members to strengthen the global trading framework by avoiding protectionism and fostering a more resilient and inclusive global economy. 

One way that shipping and logistics providers are doing this is by taking advantage of technology that lowers operating costs and improves cash flow. Global payment platforms can help shipping and logistics providers save in the following ways:

Operational savings like these come in handy, especially for an industry that is used to working with tight schedules, managing delays, and offsetting expenses. With tentative signs of a bounce-back for global trade in 2024, shipping and logistics providers can use a global payments platform to directly influence their cost structure, allowing them to retain a larger portion of the difference between contract and spot rates. 

Shipping and logistics providers don’t always have surplus cash flow. Depending on their business model, some providers will need to pay a supplier before they have received payment from their customer.

By cutting down on cross-border payment expenses, shipping and logistics providers can reduce the amount of working capital that has to be mitigated through commercial lending instruments like receivables financing. 

Shipping and logistics providers handling larger volumes stand to benefit even more from reduced transaction expenses. They can use these cost savings flexibly by choosing to maintain or increase their spread (the difference between contract and spot rates) to boost their financial position. For instance, a vessel management company could make their pricing more competitive for ship owners by reducing the amount of embedded fees (or, simply restructuring them). Not only does this boost economic resiliency, it also improves the customer experience.
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3. Payment automation reduces billing errors

The shipping and logistics industry is known to have a higher margin of error than others because of the volume of data that is entered manually. To combat this, shipping and logistics providers are looking to 2024 as a year to invest in automation processes. 

Carrier invoices frequently contain discrepancies, and almost 80% of logistics companies overpay for freight services. Inaccurate fuel tables, accidental charges for items excluded by contract, and improperly calculated freight values are just a few invoicing errors that can occur in shipping and logistics. According to a report by robotic press orchestrator Enate and digital transformation agent Happiest Minds, companies pay around 7% to 10% more in freight expenses due to routine invoice discrepancies.

Reconciling transactions across multiple payment methods can be time-consuming and prone to errors. By using a streamlined global payment platform, shipping and logistics providers can automate billing and payout processes, reducing the need for manual intervention.

Automating international payouts with a global payment platform can do more than simply prevent errors and save time; it also provides new opportunities to enhance the customer experience. 

For example, a maritime staffing agency might automate payouts to seafarers or freelancers directly to their local bank account in their local currency, or they might even direct a proportion to a prepaid card to use in multiple currencies while working overseas. This ensures the timely delivery of funds and removes unnecessary conversion costs. 

No matter where these critical workers land, a maritime staffing agency that uses secure multi-currency payouts via a global payments platform can automatically distribute wages to them whenever and however they need it. 
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4. Streamlined data makes for more accurate shipment timelines

One shipping and logistics provider that has made significant strides in digital transformation and data streamlining is MSC, a group of companies with divisions in cargo, terminal operation, tracking, rail services, and of course, passenger cruising.

Many of MSC’s services are accessible in-app, like instant quotes, payments, and bookings. Vessel schedules or cut-offs, exchange rates, and customs release statuses are among the information readily available from a unified location. From a customer experience standpoint, this pays off.

Shipping and logistics providers that streamline their data like MSC can expect to improve the timeliness of fulfillment and shipments. For instance, MSC has been named the most reliable top-14 carrier by Sea Intelligence, thanks in large part to its digital transformation and data streamlining practices. Not only is MSC still leading the pack in accuracy, it was the only carrier to achieve over 70% schedule fidelity by August 2023.

Digitisation is not just about adding on apps. It’s about building a centralised ecosystem with the best tools available. 

In global shipping and logistics, it’s common for a SWIFT message to act as proof of payment. However, payment speed remains the most common pain point in cross-border trade, with over 70% of businesses experiencing delays of 2 to 10 days or more. Cross-border payment delays can cause ships, trucks, and air carriers to be held up until proof of payment has been confirmed.

When shipping and logistics providers own the entire payment cycle, vessel management companies, freight forwarders, and port payment providers can use global payments platforms to set up parent-child customer accounts within the same financial ecosystem. Not only does this make transactions fee-free for providers, it also makes cross-border payments instant.Owning segregated nested accounts serves another function: It helps protect shipping and logistic providers from having their assets frozen due to an invoicing, customs, or Know Your Customer (KYC) error.

Owning segregated nested accounts serves another function: It helps protect shipping and logistic providers from having their assets frozen due to an invoicing, customs, or Know Your Customer (KYC) error.

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If a vessel management company’s shipment is frozen, having segregated accounts ensures that only the shipment in question is impacted. The rest of the company’s assets remain accessible, ensuring that no other ship owners or customers are affected.
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5. As emerging markets gain traction, so do instant global payments

Despite a difficult economic climate, emerging markets are proving resilient. As these economies grow, so does the demand for better digital services and more frequent international transactions.

China’s Belt and Road Initiative (BRI)

Currently, one of the biggest global integration initiatives underway is China’s Belt and Road Initiative (BRI), which aims to revitalise a series of trading and infrastructure routes between Asia and Europe. With over 3,000 BRI projects valued at $1 trillion around the globe, the BRI—which celebrated its tenth anniversary in 2023—is one of the biggest development programs in history. 

The BRI includes a Digital Silk Road intended to improve recipients’ telecommunications networks, artificial intelligence capabilities, cloud computing, e-commerce, and mobile payment systems. It also includes maritime, land, and air trade components.

The BRI is delivering on its pledge to stimulate job growth across Asia. Take Myanmar, for instance, where China's maritime investments are projected to generate more than 100,000 jobs annually for local residents and accrue tax revenues of $15 billion over a 50-year span. This positive trend presents an opportunity for companies seeking to enlist international seafarers and coastal contractors in the upcoming years.

With the anticipated total trade value of the BRI set to exceed $32 trillion between 2024 and 2028, it becomes imperative for shipping and logistics providers to explore avenues for amplifying their profit margins within the spectrum of global payment revenue.

The EU’s Global Gateway emphasizes the power of digital shipping and logistics developments

The same month as China’s BRI celebrated its tenth anniversary, the European Union (EU) announced a raft of multimillion-dollar deals at a forum for its Global Gateway program, the bloc’s 2021 infrastructure partnership plan. Nearly half of the Global Gateway’s €300 billion budget is going to their Digital4Development Hub (D4D), which aims to step up the dialogue between the EU, Latin America, and the Caribbean. 

The D4D Hub is in line with the EU’s Sustainable Development Goals, the goal of this initiative being to close digital gaps by promoting human-centered, global digital transformation in emerging markets. 
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A “modern-day Spice Route” centers India’s global economy

Meanwhile, India and the White House unveiled a new initiative at the G20 Summit in New Delhi: the India-Middle East-Europe Economic Corridor (IMEC). A competitor to China’s BRI, IMEC has been billed as a modern-day Spice Route, seeking to reimagine the natural connectivity of past eras. Once completed, IMEC is estimated to make trade between India and Europe 40% faster.

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Despite Asia-Pacific contributing over 50% of all global payment revenue, strict currency controls make it difficult for shipping and logistics companies to transact with these markets. 

China and India are predicted to make up half of all global economic growth in 2024. As routes, ports, and maritime labor grow exponentially in Asia and worldwide, companies must embrace adaptable cross-border payments solutions. 

McKinsey predicts that cash-heavy developing economies are likely to make significant shifts toward instant payments before 2027. Shipping and logistics providers engaging with buyers, sellers, and seafarers within these economies should focus on refining their customer experience strategies to meet the demands of these essential Asian markets. Providing cross-border payment options in key international currencies like the Chinese Yuan, Indian Rupees, and the Philippine Peso is a powerful strategy to connect with these markets.

Utilizing local payment networks allows businesses to effortlessly transfer funds globally at minimal costs. This not only strengthens interpersonal relationships but also enhances customer experiences, both of which are fundamental pillars that drive the strength of the shipping and logistics industry.

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6. Shipping and logistics providers explore financial alternatives

Over the course of a century, the shipping and logistics industry has seen one of the most creative financial and technological evolutions of any industry. From commodity money to consignment, cash, and SWIFT messages, international logistics providers have adapted over time to meet the needs of their customers and stakeholders. 

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In 2024, it’s predicted that businesses will onboard new digital products to keep up with changing industry needs. Among those are third-party payment service providers. 

While SWIFT payments are widely used, they can be impacted by geopolitical forces like sanctions, meaning that they aren’t always available. For example, the EU banned several Russian banks from the SWIFT payment system following the military invasion of Ukraine in 2022. This affects how stakeholders with Russian bank accounts can access, store, and retrieve their funds. 

Vessel management companies, freight forwarding platforms, and shipment marketplaces know that the need for cross-border payments doesn’t stop with sanctions. Shipping and logistics providers are increasingly recognizing the need for more cost-effective, reliable, and steadfast international payments worldwide.

By optimising global payment processes and reducing transaction costs, shipping and logistics providers can look forward to the following benefits: