Banking and Payment Solutions for the Shipping Industry

A look at shipping and logistics companies' unique needs and borderless banking solutions designed to meet them.

Shipping and logistics are true heroes of international trade—no wonder they’re responsible for moving over 80% of the volume of goods worldwide. However, navigating this industry goes beyond plotting a course and moving heavy cargo across it. More is involved to ensure shipping operations are steady and overall profitable. This is surely a big task for shipping companies. Yet, they can achieve smooth sailing by leveraging efficient banking and payment solutions. But where can these corporations find them? The answer is through modern financial platforms. They make it seamless for logistics providers to accelerate their business growth. Furthermore, they help boost operational efficiency and avoid liquidity issues that could otherwise sink these shippers’ operations. This guide will cover how modern banking solutions can help freight management companies keep their financial engines humming. Ready to explore these financial solutions? Let’s set sail.In This Article:

Common Banking Challenges in Shipping
Modern Banking Solutions for Logistics
- Cross-Border Payments
- Cash Flow Management
- Trade Finance Tools
- Insurance Solutions
- Digital Tracking & Dashboards
Narvi's Banking Solutions for Shipping

Key Takeaways:

The shipping and logistics industry, responsible for moving over 80% of global trade volume, faces unique financial challenges that traditional banking systems struggle to address effectively.
According to the World Bank, inefficient payment processing alone can cost logistics providers up to 10% of their annual revenue, highlighting the critical need for specialized banking solutions.
Modern financial platforms are transforming the industry by offering dedicated services tailored to shipping companies' needs.
These solutions include faster cross-border payments with reduced fees (up to 40% cost reduction), real-time payment tracking, trade finance tools, and specialized insurance products.
With over 80% of global trade relying on some form of trade finance, these digital banking solutions are becoming essential for shipping companies to maintain operational efficiency and manage international transactions effectively.

Getting Down to the Matter:

Is Banking Essential for Logistics?

Can you imagine moving about 10,000 TEU (or 20ft) to 20,000 TEU of cargo across oceans without financial support? This is a daily situation many shippers face. And sadly, one delay or failed payment terms can ripple through the entire supply chain.This situation aligns with a World Bank report, which noted that inefficient payment processing can cost logistics providers up to 10% of their revenue annually. Indeed, this calls for effective banking solutions that provide more than just convenience!As the saying goes: ‘Modern problems require modern solutions.’ Financial institutions step in to offer essential funding to support shippers’ operations. These financial institutions help pay for vessel repairs, cover operational costs, and provide finance tools like letters of credit. These tools act as safety nets, protecting all parties (buyer, seller, and freight carriers) during international transactions.With this seamless financing and trade support, companies can focus on keeping global shipping trade running like clockwork. However, you should note that while banks and their solutions are crucial in this landscape, there’s always room for improvement. This is especially evident when dealing with international transfers and ensuring quick, secure transactions.

Notable Challenges Shipping Providers Face With Traditional Banking

Despite numerous modern banking solutions available, they don’t always meet the needs of shopping companies’ needs. We’re talking high-volume transactions in multiple currencies across numerous countries. That sounds terrific, right? Well, let’s explore common challenges these businesses have to contend with:

Lengthy Cross-Border Payment Delays

Can you picture a situation where you urgently need to pay an overseas vendor through a wire transfer? Upon getting to the counter, you’re told the process could take up to two business days (or longer if extra approvals are required)—that’s a common theme with traditional banks.When considering cross-border payment, requests often pass through multiple intermediary banks before reaching their destination. This then adds time and processing fees. The implication? Logistics companies handling thousands of transactions see these delays as a halt in operations. This will result in penalties from ports and an increase in freight spend.

High International Transfer Fees

For logistics companies, transferring millions in payments across borders is a routine. However, traditional banks often charge 3-4% per transaction for these transfers, incurring extra fees for currency conversion.These costs may seem minimal for smaller transactions but can quickly stack up as you deal with multi-million-dollar invoices. Imagine paying an extra $30,000 on a $1 million transfer, which could have been used to support other key areas in the transportation business. And don’t forget how fluctuating exchange rates can result in unforeseen losses, further eating into profits.

Inefficient Payment Tracking and Transparency Issues

Shipping carriers often need to monitor real-time payments that flow in and out of multiple countries. Yet a problem exists- traditional banks lack proper tracking capabilities. When a payment leaves your account, you may not know how soon it will be credited to other accounts. Even if it does, the process isn’t always instant.These blind spots often make it challenging to align financial transactions with cargo shipping, thereby complicating cash flow forecasting. As a result, logistics businesses are often left in the dark when there are no transparent transportation management systems. This makes them scramble to cover missed or delayed payments.

Limited Digital Integration and Flexibility

In this digitally connected world, logistics firms need banking solutions that seamlessly connect with their financial systems and offer accessible dashboards to monitor in real-time. Unfortunately, traditional banks often employ older technology, which is a hassle for firms.Thus, these institutions can’t integrate with modern software or provide online solutions that meet the industry’s needs. This lack of digital integration slows operations as finance teams start to resort to manual updates for proper transaction management. Keeping these potential hurdles in mind, it’s easy to understand why shipping companies are enthusiastic about finding faster, more cost-effective, and innovative advanced banking solutions. These options can empower them to run operations smoothly, streamline cross-border payments, and manage cash flow effectively.

Exploring Five Key Banking Solutions That Can Transform the Logistics Landscape

The shipping industry is long overdue for a financial revolution. Thankfully, new banking strategies for logistics are finally stepping in to change the game. While these firms report frequent cash flow issues, advanced digital payment solutions in shipping have become essential in keeping operations running smoothly.That’s why banking platforms like Narvi simplify transactions and process international fees at reduced costs, ultimately enhancing customer experience. Interestingly, they offer faster freight payment processing and real-time expense tracking. Let’s explore areas where these modern banking platforms are making waves to ensure faster and more efficient global logistics.

Cross-Border Payments: Slashing Costs for a Competitive Edge

For shipping companies, every dollar saved during transactions counts. While traditional banks can be slow to process these payments, we offer faster transfer times and reduced fees. Our payment platform allows companies to take advantage of favorable exchange rates to reduce losses during currency conversion.Interestingly, a report by McKinsey noted that cross-border payment options can reduce transaction costs by up to 40%. So, by working with these platforms designed for fast and low-fee international transactions, logistics companies can save significant funds and access funds faster.

what are best banking providers for shipping companies

Cash Flow Management: Enjoying Instant Payment Processing

Cash is king, and let’s be honest: companies face high expenses daily, such as fuel, vessel maintenance, payroll, and more. With so much money tied up in operations, any significant disruption in cash flow can be devasting.Sadly, traditional banks are known for freezing large inbound or outbound payments since they trigger compliance checks. This freeze can last for weeks, putting all operations on hold and causing costly delays. The solution?We offer personalized service that cuts through red tape — we aim to clear large payments within a day. Thus, logistics companies can rest easy knowing their liquidity won’t be interrupted by unnecessary delays.

Trade Finance Tools: Bridging Financial Gaps with Ease

Trade finance is indeed a lifeline for logistics companies. Since shipping goods globally requires significant capital (often before payments are received), tools like letters of credit, guarantees, and loans shine.Banks provide these services to help cover financial gaps, allowing shipping companies to pay their suppliers and keep things moving smoothly. The International Trade Center reports that over 80% of global trade relies on some form of trade finance, underscoring its importance.Consequently, finding a reliable banking partner is essential—companies can handle large freight payment costs without straining their cash reserves. Furthermore, businesses seeking to expand to more international waters can leverage these tools without stress.

Insurance: Safeguarding Against High-Risk Ventures

Shipping is a high-risk venture, especially considering unpredictable weather, piracy attacks, and political tensions. Since every shipment faces inherent risks, banks often offer insurance products tailored to the logistics sector that cover vessels and cargo from potential mishaps.Shippers can protect their assets and financial stability by securing insurance from modern bank groups, ensuring that one storm doesn’t sink the entire ship. This also fosters customer relationships as they focus on gaining ground in the industry.

Real-Time Tracking and Digital Dashboards: More Control at Your Fingertips

Keeping track of finances is crucial, especially when working across time zones and currencies. Modern banking platforms offer real-time digital dashboards, allowing shippers to monitor transactions, view exchange rates, and adjust.These tools are accessible on any device, ensuring that finance teams can work seamlessly, no matter where they are. As digital platforms evolve, logistics companies have more control and insight over their finances than ever before.Future-Proofing Logistics: Embracing Narvi as a Strategic PartnerThe logistics industry evolves fast, and so do its financial needs. As such, bank-like institutions that understand global logistics’s unique pressures and challenges are invaluable partners. By focusing on cost-effective payment options, better supply chain management, and innovative finance tools, financial institutions like Narvi are making life much easier for shippers.Our digital transformation tools are reshaping the logistics landscape, giving firms a faster, more efficient way to manage finances. With specialized banking features like digital wallets and supply chain finance solutions, we provide the operational efficiency needed to boost supply chain performance.Here are some features our platform offers to customers:

Dedicated International Bank Account Number (IBAN)

Narvi-issued dedicated IBAN simplifies transactions for logistics businesses, helping carriers manage inbound and outbound payments seamlessly. This dedicated system makes all funds easily trackable, enhancing operational efficiency for all transactions.

Multi-User Access

Narvi’s multi-user access feature streamlines operations, allowing carriers and logistics providers to control finances at various permission levels and making collaboration easy and secure.

Single Euro Payments Area (SEPA)

Logistics customers need quick and cost-effective payment options. Narvi’s SEPA Instant transfers offer precisely that, ensuring money moves quickly across the EU—ideal for fast-paced supply chain demands.

Additionally, Narvi provides the flexibility logistics companies need to manage customer payments and expenses efficiently. Thus, logistics providers can boost supply chain performance and financial resilience. Our customer-centric approach to business banking ensures logistics companies can maintain growth with reliable, efficient financial tools tailored to smoothen business operations. If you’re a logistics company seeking to future-proof its operations or enter freight management, embracing our specialized baking solutions will give you a strategic advantage.Final Thoughts: Leverage Narvi For Your Shipping NeedsThe growing landscape of global shipping calls for streamlined, responsive, cost-effective banking solutions and a strategic online payment partner. Thankfully, we offer tailored services to logistics companies to keep their financial operations smooth and stress-free.By leveraging these financial tools and solutions, carriers can focus on what they do best: moving goods worldwide and being prompt with customers’ deliveries. So, whether shipping electronics across the Pacific or raw materials to Europe, remember: the right banking solution can turn financial storms into smooth sailing. We invite you to learn more about Narvi and book a demo call via the link below.

Transfers Across 100+ Countries, One Euro IBANSet up your bank account completely online and access SEPA and SWIFT payments immediately. Click to get to know more and book a demo:

Published November 14, 2024Author:

Ayomide Adeleye, a writer with a strong focus on finance and technology who contributes to Narvi on the topics of banking services and select industries such as igaming and cryptocurrency.