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Trade Finance
Published  6 MIN READ

A Turning Tide for Trade

Ebru Pakcan has recently been appointed Global Head of Trade, Treasury and Trade Solutions, Citi. In this candid interview, she speaks about the impact of the coronavirus pandemic on trade, and airs her views on the digitisation of trade – from the milestones already reached to the areas still requiring improvement. She also shares her best advice for treasurers when preparing for a return to ‘normal’.

Eleanor Hill (EH): We can’t ignore the impact of Covid-19 on trade. What have been the major knock-on effects to supply chains, in your view?

Ebru Pakcan (EP): The situation is very dynamic but, broadly speaking, we see a three-stage impact. The first phase was the immediate shock to the global system. In the early part of 2020, Asia was significantly impacted by the virus. Financial markets then began experiencing volatility as questions arose over manufacturing capabilities in Asia and the robustness of global supply chains. The situation intensified as Covid-19 spread across the Middle East, Europe and US and companies grappled to ensure they had sufficient access to liquidity, and solid supplier relationships.

The second stage saw organisations focus on the creditworthiness of customers, and the impact of the crisis on global demand. As such, companies have been carefully reassessing credit limits for their clients and rethinking risk solutions. They have also been modelling the potential knock-on effect to demand and attempting to forecast their receivables as reliably as possible.

The third phase is adapting to the new normal as best as possible. Now that companies have assessed the potential impact on suppliers and buyers, they need to determine how much demand they are willing to supply in the months ahead – and what is realistic, factoring in a potential second wave of the virus. This is by no means an exact science, but companies would do well to start planning with six to 12 month horizons in mind.