Standard Chartered: What the Future of Trade Looks Like

Standard Chartered has released its latest report, detailing what global business leaders are saying about the outlook of global trade.

Examining key issues and risk factors to trade, the report also explores what business leaders are doing to mitigate risk.

Although key concerns include tariffs and technology, leaders are also welcoming new strategies to build resistance. 

The global trade outlook

Standard Chartered is an international banking group, dedicated to driving commerce and prosperity. It delivers innovative solutions to companies around the world, creating long-term value for clients. 

Its recent report, Future of Trade: Reliance, brings together the thoughts of 1,200 C-suite and senior leaders representing multinational corporations with revenue exceeding US$250m.

Leaders were based in 17 key markets across four sectors: consumer and retail; energy; power and diversified industries; technology, media and telecommunications.

Each executive was asked for their outlook on global trade was and related strategies over the next three to five years.

Rethinking risk mitigation

Over the past 12 months, companies have witnessed the significant impact of geopolitical volatility on business. Trade has been hit by rising tariffs, conflict, disrupted trade routes and extreme weather.

Organisations have therefore been forced into rethinking risk mitigation, ensuring they stay flexible and adaptable rather than reactive. 

"World trade, alongside supply chain resilience, is facing an uncertain future and, due to its significant importance, is provoking intense scrutiny," says Sunil Kaushal, Co-Head of Corporate & Investment Banking and CEO, ASEAN and South Asia at Standard Chartered. 

"Global supply chains have faced considerable disruption over the past year, primarily due to tariffs. However, while they may have been dominating headlines, tariffs are not the only factor that is top of mind for corporates."

Leaders highlighted three primary themes impacting the future of trade.

Tariffs

More than half (53%) of respondents pointed towards tariffs as a top-three major concern. Tariffs have been imposed on certain industries and various countries over the last 12 months, impacting costs and leading to supply chain disruption. A fifth of respondents survey ranked tariffs as their top concern. Almost two-thirds of respondents in Malaysia and Vietnam gave tariffs as a top-three concern. 

Emerging technologies

The same proportion (53%) said emerging technology was an important factor impacting the future of trade. Almost three-quarters (74%) of respondents in Nigeria saw tech as a top-three issue, while three in five in the UAE and Saudi Arabia believe technology is a top-three driver of trade transformation.

Global economic growth

The survey average of those who viewed global economic growth as a top-three factor was 53%. In India (60%) and Mainland China (59%), the markets are set to remain resilient and leaders believe global trade will increase as a result of economic growth.  

Sunil adds: "We are seeing strong demand from clients to evolve their global trade and supply chain ecosystems and accelerate the adoption of smart manufacturing and AI to drive efficiencies and offset rising costs.

"Although trade fragmentation is likely to hinder global growth in the short term, rising prosperity in developing economies and emerging technology means that the picture, while complex, is still compelling."

Strategies for resilience

Sunil continues: "The Future of Trade report offers a forward-looking perspective on global corporate priorities to build resilience. It serves as a strategic compass, highlighting the top destinations that multinational companies are considering for realigning their sourcing, manufacturing, and exports.

"It also provides actionable insights to shape decision making, such as investing in supply chain finance platforms and digitalisation to improve treasury management, corporate cashflows, and supply chain diversification.”

More than half (57%) of leaders are adjusting treasury management strategies, making monetary investments into their resilience by altering cashflow and inventory management. 

The same proportion are adopting new technologies like AI and cloud computing in order to increase digitalisation efforts. This route is particularly popular for leaders in ASEAN, with 78% of Malaysian leaders choosing it as a top three strategy.

Geographic realignment of supply chains is the number-one choice, with 23% of corporate leaders putting this as their top strategy and 56% placing it in their top three. 

Building resilience, however, comes at a high cost, particularly with supply chain geographic realignment. 

As a result, more business leaders are turning to supply chain finance (SCF) platforms to help tighten their treasury management while making necessary transformations in order to build resilience amid volatility.

This creates a trickle-down effect. As big corporations better-manage their budgets, they can finance suppliers and help smaller businesses gain access to finance solutions themselves.

Although the initial cost of transformation is high, leaders have a clear plan to maintain business resilience amid an uncertain future for trade.