The Role of Logistics Finance

"The future of logistics enterprises, who can provide financial products and financial services, who will be able to become the dominant player in the market, nowadays, logistics finance has become the first source of profit of certain international logistics giants. Logistics finance has become an important means of obtaining customer resources as well as monopoly resources. In the current process of logistics finance which has just emerged, whoever is able to intervene in logistics finance ahead of others will be able to take the lead in seizing the first opportunity."

"Logistics finance will closely link upstream and downstream enterprises and banks, banks can avoid risks to a certain extent, and enterprises can also achieve the integration of information flow, logistics and capital flow, accelerating the high-speed operation of logistics and capital flow." -- Huang Yimin, Vice President of Supply Chain Business Operations, UPS China

1, logistics finance in the macroeconomic structure of the function and role, it is in the national economic accounting system, improve the quality of distribution services to reduce the backlog of materials and consumption, to speed up the macro-currency back to the turnover of the irreplaceable leverage role.

2, logistics finance in the microeconomic structure of the function of logistics financial services, especially in the supply chain of the third-party logistics enterprises to provide a financial and logistics integration of innovative services, and its main services include: logistics, distribution processing, financing, evaluation, supervision, asset handling, financial consulting and so on. Logistics finance can not only provide customers with high-quality, high value-added logistics and processing services, but also provide customers with indirect or direct financial services to improve the overall performance of the supply chain and the customer's operational and capital operation efficiency. Logistics finance is also an innovative product of financial services in the supply chain. Logistics finance providers can provide integrated logistics and financial services for enterprises in the supply chain through their own or their close collaboration with financial institutions.

3, after the emergence of fourth-party logistics, logistics finance to really enter the "financial family" concept, where logistics will be regarded as a special "currency", along with the flow of logistics together with the occurrence of the financial transaction activities, "logistics finance". "Logistics finance" use its special identity will logistics activities at the same time evolved into a financial transaction derivatives activities, and "logistics finance" at this time into a unique financial business tools, a unique composite concept, a unique financial and logistics Cross-discipline of finance and logistics. Then, from this cross-discipline, we trace the feasibility, demand and even countermeasures of its existence and development. One of the causes of logistics finance is from these humble logistics original transaction, in a logistics, finance is not sound in the developing countries, the practice of valuable methods can not be abstract, effectively elevated to the academic level, is understandable.

The mutual needs and roles of logistics and financial services, in the course of the transaction has produced a logistics financial circle as a precondition for each other. From the perspective of the supply chain, the biggest threat faced by manufacturers in the process of development is the lack of liquidity, and inventory occupies a large amount of money makes the manufacturers may be in the plight of the lack of liquidity. Carrying out logistics financial services is a mutually beneficial choice for all parties, but what cannot be avoided is the issue of risk. To realize the modernization of risk management, first of all must make the logistics financial industry to establish the concept of comprehensive risk management. According to the new Basel capital agreement, risk management to cover credit risk, market risk, operational risk and other three aspects.

In the traditional logistics financial activities, logistics financial organizations are regarded as capital financing organizations and institutions; modern logistics finance theory emphasizes that: logistics financial organizations is the production of financial products, financial services, to help customers share the risk of being able to effectively manage their own risk in order to profit from the organization, logistics financial organizations, the source of profitability is to bear the risk of risk premium. Therefore, the connotation of logistics financial risk should be from the value of the benefit and risk value of the actuarial logic to dig, and do not lose the market for fear of risk.