Switzerland, The Global Commodity Trading Hub
Switzerland has a long and varied history when it comes to commodity trading.
Its origins go back to the fairs of the 15th century, when merchants from South and North Europe met in Geneva and other Swiss market towns to trade goods.
The 19th century saw the development of powerful family-owned trading businesses, based in or around the country's main industrial and commercial centers. Some examples are the Volkart Brothers (1851) based in Winterthur, and the Nestlé (1839) and André (1877) families in the canton de Vaud.
Active in the trade of imported raw materials such as cotton, coffee or coca, these companies helped establish Switzerland as a global center of trade in the 20th century.
In the 1920s grain trading houses established themselves in the area, ostensibly to be closer to their major client, Nestlé. A number of ex-Ottoman Turkish traders also came at that time - the city of Lausanne being a convenient stop on the London-Istanbul Oriental Express. The creation of the League of Nations and such organisations as the International Labour Organisation heightened Geneva’s “neutral” and “international” profile.
In the forties, Switzerland was positioned to become the ideal location for business in Europe: the Swiss franc being, with the US dollar, one of the two currencies freely exchanged. Moreover, the Swiss’ telephone system, excellent for the time, was essential for international trading. Subsidiaries of US companies concentrated here throughout the 1940s and ‘50s. During the Cold War period, Switzerland offered a neutral place to establish relationships and accelerate administrative procedures for trade in the Eastern Bloc.
In the 1960s, Egyptian cotton merchants looking to move their operations out of Nasser’s Egypt came to Geneva. With the first oil crisis (1973-1974), a number of oil traders joined them. In the 1990s, it was the turn of the Russian oil companies to set up offices in the area, as well as in and around Zoug, not far from Zurich, and Lugano, in the Italian-speaking part of Switzerland.
Thanks to an extremely specialised expertise, an international openness, a political and economic stability and strong competences in the financing of commodity trading and shipping, the Swiss Commodity Hub has today a leading position in international commodity trade.
Share of global trade handled by Swiss-based commodity trading companies
Switzerland counts about 550 companies with activities directly related to commodity trading and shipping.
This activity provides over 35'000 direct jobs, with related services accounting for many more.
Fiscal contributions from commodity trading activity companies represent 22% of Geneva's budget, 10% in Zug and approximately 19% of the City of Lugano's income.
- 1/3 of world trade in Crude Oil and Products
- Number 1 worldwide in Grains and Oil Seeds
- Number 1 in Europe in Sugar
- Number 1 (tied with London) in Cotton
- Number 1 worldwide in the finance of commodity trading
Inspection and Certification
- Number 1 worldwide
- 22% of global movement of commodities
Switzerland is at the centre of Europe, it is a perfect location to communicate with the rest of the world: China in the morning and the USA in the afternoon.
Geneva, located at the Western end of the country, is a global city and a worldwide centre for diplomacy and international co-operation. Geneva is also described as the third European financial centre after London and Zurich.
The region offers a favourable environment for business with an excellent infrastructure and where English is commonly spoken.
There is here a highly qualified workforce as well as banks with expertise meeting the needs of commodity traders.
The commodity trading companies have also stimulated the development of a large network of services : banks, insurances, law firms, fiduciaries, forwarding agents, inspection and verification companies, ship-brokers, consultants.
Take a look at the main categories of players
A commodity trading hub can be described as a place offering all elements necessary to commodity trading and shipping: physical trading, risk management, freight and financial services.
All these elements are concentrated in Switzerland and particurly around Geneva. These companies can be categorised as follows: