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CCEWeb
will shortly launch an electronic documentary credit system that could well
rival Bolero.net for small to medium sized shipments not subsequently traded
'on the water'. Matthew Beddow reports. E-trading may be popular for normal trading, but
when it comes to international commerce conducted through letters of credit
(L/C's), there is still much to be done. Art Thomas, business development manager of
Toronto-based CCEWeb, a well known electronic service provider to the financial
world, lamented: 'The trouble with many international electronic business
processes is that they only go part of the way to eliminating the need for
paper. For international electronic trading to really take off the way many
would like to see, merchants must be able to conduct all business
transactions over the Internet, not just some of them.' This lesson was learnt by CCEWeb whilst
establishing a virtual commodity exchange for internationally traded goods in
1996 called Continental Commodity Exchange.
Since then, the fac-ility has evolved into a B2B network capable of
connecting trading partners more efficiently (www.cceweb.com). A particular problem for interna-tional trade
involving letters of credit (L/C) is that most buyers and/or their banks
still insist on seeing hard copy bills of lading (B/L) before agreeing to
transmit any money overseas. To over-come this, CCEWeb has come up with a
product called @GlobalTrade that is currently being tested in
the marketplace, and could go live with selected customers in March 2001. The key to the system for ocean carriers is an
electronic waybill that can be transmitted in much the same way as any other
document normally required to release L/C payments (i.e. in house packing
lists, certificates of origin, commercial invoices etc). |
P&O Nedlloyd, APL and Maersk Sealand have
already agreed in principle to the necessary clauses that can enable it to
used as a document of title for goods not traded enroute, and so be able to
transfer ownership of goods from seller to buyer. Others ocean carriers are
expected to follow suite. Patrick Burrows, P&O Nedlloyd’s (P&ON)
general manager of marketing systems, commented: 'The main benefits that we
foresee accruing to P&ON are productivity improvements for data entry to
our internal systems, and encouragement for our participating cust-omers in
the use of waybills instead of B/L. Moreover, the system could eventually
lead to automated and more timely collection of revenues.' In essence, once up and running, @GlobalTrade will
make it possible for a letter of credit to be issued over the Internet
anywhere in the world. Buyers will be
able to electronically verify in real time that merchandise has been shipped
on time, and in the quantities and condition agreed with the seller. Although Bolero.com can already achieve this,
both buyers and sellers have to belong to the club and transactions are said
to be expensive. Thomas elaborated: 'Bolero may be fine for those merchants
wanting to retain the option of buying and selling goods whilst still afloat.
It is also convenient for merchants who trade in commodities, such as oil,
where associated costs can be easily lost, but for smaller traders who are
not in this position, we think @GlobalTrade will be much more suitable.' Asked to comment on this possibility, Peter
Scott, commercial director of Bolero said: 'As CCEWeb has not yet gone live
or published a tariff, it is impossible to compare our respective
services. In general, though, the
facility does not appear as legally robust as Bolero.com. Our pricing structure is also very
flexible. |
For example, if one or the
trading partners is a big company, it may already use Bolero, and so be able
to bring in smaller sub-contractors on a marginal costing basis. For merchants to be able
to use the CCEWeb system, only Internet access is required, and the ability
to download Adobe Acrobat Reader so that all relevant in house documents can
be transmitted to a secure doc-umentation clearance centre controlled by
CCEWeb. The system conforms to all UCP 500 and Incoterms 2000 terms and
conditions. Banks also have to agree to outsource their L/C
document verification process to this centre, but according to Thomas, the
area is not perceived as a major problem. He explained: 'In general, many small
banks lose money on this time consuming and specialized process, and only
provide the service to retain the goodwill of their customers. Some of them
may, therefore, already outsource the function to other larger banks, and we
will be cheaper than them. An optional part of @GlobalTrade enables
traders to pay for their goods through a Visa approved credit card
system. Called eLCCard, the facility
works in much the same way as other credit cards, enabling companies around
the world to combine the convenience and trust of credit card purchasing with
the finality and security of an irrevocable letter of credit. This service similarly con-forms to all the rules
and regulations contained in UCP 500.
The card can be issued in a virtual or plastic form
depending on financial
instit-utions offering the service.
Credit card limits will be monitored by CCEWeb. It is expected that
cards will typically be used for purchases of over US $5,000. In summary, if @GlobalTrade gets off the ground later on this year as ex-pected, it will be a powerful tool indeed for global traders, and one that could usefully complement all of the elect-ronic shipping procedures already provided by many of the world's top ocean carriers. February
2001 Containerisation International |