UPS Capital Cargo Finance

Back in September of 2006 we posted on the possibility of supply chain financing becoming the next frontier in supply chain management. It looks like that frontier has arrived as UPS will begin offering a finance option to small business importers by using in-transit goods as collateral. The new service will offer importers an option to finance their goods with UPS rather than relying on letters of credit and other international finance transactions.

Via UPS.com:

UPS Capital Cargo Finance is designed for U.S. companies with annual revenues up to $50 million that import 1-to-10 ocean or air freight containers of goods per month. Here’s how it works:

* A U.S. importer places an order for goods with an international supplier.
* Once the supplier fulfills the order and the bill of lading covering the goods is in UPS’s possession, the importer pays 50% of the cost to UPS Capital and UPS Capital then pays 100 percent of the cost of the goods to the international supplier.
* The U.S. importer then pays back UPS Capital according to the terms of the loan (usually within 60 days).

Official press release from UPS.