The Swiss Commodity Industry
I was recently invited as a Media Partner to the inaugural FT Global Commodities Summit in Lausanne and discovered a more vibrant – and open – Swiss commodity business sector than I’d encountered previously. But whether this dominant position in the physically traded natural resource world will continue will largely depend on the extent, and reach, of international regulation and the attitudes and engagement of this traditionally secretive environment.
By Guy Isherwood
THINK SWITZERLAND AND many are quickly transported to a land of Yodelling, cuckoo clocks, Julie Andrews and ... skiing. However, today’s Swiss Cantons are alive to the sound of an altogether different kind. Computers, servers and smartphones are humming with the next trade, finance deal, insurance document, inspection guarantee – and everything in between – in what has become the world’s leading hub for commodity business. The Swiss-based commodity industry handles around a quarter of the world’s commodity flows
Global Commodity Hubs London Amsterdam Chicago New York Houston
Shanghai Hong Kong
Singapore
after experiencing exceptional growth in recent years. The University of Geneva puts the number at 22%. However, on any measure (particularly difficult to make in this market) Switzerland is now a powerhouse in the commodity trading and finance world. A recently published book reviewing the sector,
Commodities: Switzerland’s Most Dangerous Business, now in English and written by NGO the Berne Declaration (BD, which takes a critical view of the industry) has again highlighted the importance of this landlocked, resource dependent nation and its influence on commodity markets and trade flows.1 “All the world’s largest trading houses operate
partly or mainly out of this seemingly peaceful and innocent country,” it says. These include major operators Glencore, Gunvor, Bunge, Trafigura, Vitol, Louis Dreyfus and others, as the rise of commodity trading and management centres in Geneva, Zug
Switzerland has played an important role in European trade since the Middle Ages
etc. have expanded further over the last decade. Even those companies without a presence in Switzerland regularly find themselves on a flight to meet these titans of the commodity business world. Little surprise then that when deciding on a
Geneva has attracted a steady stream of traders of physical commodities since the middle of the 20th
century. Today all the
major trading houses have offices in Geneva and surrounding Cantons. They count for around 400 companies with activities directly related to trading and shipping.
8,000 Employees
No. 1 in Inspection & Certification 22% of Global Movement of Commodities No. 1 in Commodity Trade Finance
Source: Berne Declaration, University of Geneva 76 June 2012
venue for their inaugural (and impressive) Global Commodities Summit earlier this year, the Financial Times chose Lausanne. [The conference is being repeated at the same venue in April 2013].2
Why Switzerland? The area now occupied by today’s Switzerland has
played an important role in European trade since the Middle Ages. Last century saw the development of the traditional trading houses in agricultural and soft products. During the latter part of the 1900s ‘harder’ commodities – metals and minerals – were added. Finally, in the aftermath of the oil crisis in the 1970s, the first oilmen settled in Switzerland.
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