Geopolitical tensions and supply chain diversifications have resulted in a “complex rewiring” of trade flows, increasing demand for and usage of working capital tools, research by Citi has found.
Following an assessment of goods flows between 2019 and 2024 and multiple industry surveys in the US, Citi said the world has moved towards a “multipolar trade landscape”, with new regions emerging as production centres, logistics hubs and strategic intermediaries.
It found US imports from North and East Asia – including China – have grown by 32% over the five-year period studied. That figure is dwarfed by a 50% surge in imports from South and Southeast Asia, and a 43% increase from Latin America.
“This points to a concerted effort among US companies to diversify sourcing and reduce single-region dependence,” Citi said in a report published this month. Both China and the US are “relying on a broader set of partners”, it said.
Other structural shifts include an 82% rise in Latin America’s exports to South and Southeast Asia – the highest increase seen in any trade corridor – driven in part by the continent’s supply of critical minerals to Asia’s electronics sector.
Though the findings do not reflect the results of the US administration’s tariff regime, Citi said the near-term impact appears to have been “relatively contained”.
“It will likely take time to unravel the complexity of supply chains, which have been built up over decades,” the bank said. “Rather than completely rewiring such complex, regulated supply chains, a dual-track model is emerging.”
As a result of these shifts in the macroeconomic environment, Citi said working capital management has been elevated in importance.
“The last few years have shown that businesses do not stand still – and neither should their working capital strategies,” the report said.
For example, many companies are looking to hold more inventory rather than rely on just-in-time supply chains, meaning more capital is tied up in unsold goods.
Banks have historically been happy to finance receivables and payables, but were more cautious around raw materials and finished goods, the report said.
“That is changing. Inventory finance structures are emerging as a third pillar alongside payables and receivables solutions to bolster working capital,” it said.
In receivables finance, the report found securitisation structures are moving beyond sectors that tend to have large working capital swings, such as commodities or industrials, and “into the mainstream”.
On the payables side, the report found a 15-day extension in payment terms can create more value than a 2% price reduction, meaning companies that establish supply chain finance programmes can optimise cashflow without burdening suppliers with later payments.
One of the largest drivers of trade finance and working capital innovation is being driven by the data centre industry, Citi added.
Because build-outs straddle infrastructure, real estate and technology – requiring capital for land acquisition, construction, component imports and energy usage – companies are exploring alternative forms of finance that can bridge funding gaps.
Trade finance can play “an especially critical role” in this environment, Citi suggested, ensuring suppliers are paid quickly even for projects that have lengthy ramp-up periods. Financing packages also increasingly cover energy supply and cooling solutions, it added.
Once a data centre is running, operators often seek out refinancing options using lower-cost and longer-term options. By monetising receivables, operators can convert future payments from reputable buyers into immediate liquidity, it said.
“Financing structures that reflect the hybrid nature of AI data centres will be a key enabler of continued investment and long-term resilience,” Citi said.
