News / How embedding finance into logistics can unlock trade

For many small manufacturers in emerging markets, winning an international contract is only half the battle. The real challenge lies in financing it.

A case-study shared by Sinan Ozcan, senior executive officer and director of DP World Trade Finance, on The Loadstar Podcast illustrates how embedding finance into logistics can unlock trade that would otherwise stall. 

On the recent podcast, Mr Ozcan describes a small manufacturer in northern India that had secured a contract to supply pipes for mid-income housing projects to a reputable, mid-sized buyer in Dubai. The demand was real and the end use essential, but despite the confirmed order, traditional trade finance failed to materialise. 

“This is a very small company,” Ozcan explains. “They had secured the contract, but they had scarce capital. They could do only one shipment, even though the contract required ten.” 

The problem was timing. The manufacturer had enough capital to purchase raw materials and produce one shipment at a time, but payments from the buyer would only arrive 30 to 45 days after delivery. That delay created a cashflow gap too large for the business to bridge on its own. Without additional financing, the remaining shipments – and the contract itself – were at risk. 

Initially, a financing partner on DP World’s trade finance platform rejected the deal, as the investment was deemed too risky, but the company then approached DP World directly for help. 

DP World Trade Finance redesigned the transaction by embedding financing into the physical movement of the goods. The manufacturer was onboarded to the platform and DP World took control of the cargo from start to finish. The pipes were collected from a DP World inland container depot in northern India, transported by DP World’s private rail network to port, shipped on its feeder service to Jebel Ali, and stored in a DP World-owned free zone warehouse. 

“The seller already got the payment at day zero when we picked up the cargo,” Mr Ozcan said. By removing the 45-day waiting period, the manufacturer could immediately reinvest in raw materials and begin production on the next shipment. 

Risk for the lender was mitigated through full visibility and control of the cargo.

“We handled the cargo end to end,” Mr Ozcan noted. “We held the cargo until the payment is received. So, we had the cargo as collateral. So, all those milestones in a transport event we are able to track and trace. We are able to carry, we are able to collateralise.” 

The result was a transaction that had been deemed unbankable became bankable. The buyer paid upon cargo release, the lender was protected, and the SME manufacturer was able to complete the contract. 

According to Mr Ozcan, the transaction later received recognition from the United Nations Economic and Social Commission and remains cited in a white paper as proof of what can be achieved when logistics and trade finance are fully integrated. 

“It’s about addressing the collateral trap,” Mr Ozcan said, “and making trade that doesn’t happen today actually happen.”