Pioneering Paperless Trade: The way covered and the way ahead

UN/CEFACT

UNECEUNECEUNECEUNECE

Pioneering Paperless Trade:The way covered and the way ahead

A Community Model for Paperless Trade Development

Experience of theDigital Trade and Transportation Network

Peter StokesCEO, Digital Trade and Transportation

Network Ltd

Less and Better Data to build Trust and Efficiency

UN/CEFACT

UNECEUNECEUNECEUNECE AgendaAgenda Tradelink Highlights and Single Window for

Hong Kong SAR Government Trade Documents Evolution to Community Single Window Digital Trade and Transportation Network

(DTTN) Community Model Functions and Features of the DTTN Costs and Benefits

Model for Worldwide Paperless Trade Interconnections

Inhibitors and Success Factors for the Development of Paperless Trade

UN/CEFACT


Single Window for Single Window for Hong Kong SAR Government Hong Kong SAR Government

Trade Documents (B to G) Trade Documents (B to G) and Tradelink Highlightsand Tradelink Highlights

UN/CEFACT


Tradelink’s Shareholders

The HKSAR Government42.49%

Banks 10.33%

Terminal Operators15.29%

Industry Associations7.78%

China 5.30%

Airline5.30%

Textile Industry 4.73%

Telecommunication8.78%

UN/CEFACT


Original 7 year franchise (1997 - 2003) for Government trade documents, with mandatory electronic submission extended as a license for 2004 - 2008– Over 53,000 company subscribers– 17 million transactions/year– All documents digitally signed & encrypted

for open network transmission, using Recognized Digi-Sign Certification Service’s certificates

HKSAR Government Trade Document Single HKSAR Government Trade Document Single Window via Tradelink (1/2)Window via Tradelink (1/2)

UN/CEFACT


Network of 27 Service CentersPaper to electronic conversion for organizations

who have not “computerized”Key factor in mandatory electronic submission

program

HKSAR Government Trade Document Single HKSAR Government Trade Document Single Window via Tradelink (2/2)Window via Tradelink (2/2)

UN/CEFACT


Tradelink’s Electronic Services

Trade Related Government Services as the Basic Building BlockAll Traders

Import & Export Declaration Certificate of Origin Dutiable Commodities Permit Shipping Order Service Trader Documentation Service for

Regional/Global Trade China Processing Trade/Cross Border

Documentation Service

Textile Traders & Manufacturers

Production Notification Textile Trader Registration Scheme

(TTRS) Notifications Certificate of Origin

Forwarders & Carriers Carrier Notification Shipping Order / US Customs AMS Manifest Textile Trader Registration Scheme Notifications

UN/CEFACT


Pan Asian e-Commerce Alliance (1)

Established in July 2000, aims to facilitate secure cross

border paperless electronic services for efficient global trade

Members Number of Customers

CIECC (China) 10,000

KTNet (Korea) 30,000

CrimsonLogic (Singapore) 25,000

Trade-Van (Taiwan) 25,000

Tradelink (Hong Kong) 53,000

DagangNet (Malaysia) 2,000

TEDMEV (Macau) 2,000

CAT (Thailand) 2,000

TEDI Club (Japan) 80

149,080

UN/CEFACT


Pan Asian e-Commerce Alliance (2)

Trust in cross border transactions through:• Legal framework for electronic Cross Border trade

transactions• Mutual Recognition of Digital Certificates amongst

members of the Alliance, Six Certification Authorities recognized (HK, Taiwan, Korea, Singapore, Japan, China)

Secure Cross Border Trade Transaction Service• Commercial invoice, ASN/Packing List, Scan / Pack• Import Pre-Declarations based on Export data

UN/CEFACT


Trade, ManufacturingLogistics,Finance,Commercial

Evolution from Government Single Window to

Community Single Window

Start Electronic Submission of Government Trade Documents

- Trade Declaration

- Export License

Mandate Electronic Submission ofTrade Declarations

Initiate Cross Border Paperless Trade Projects

- Pan Asian E-commerce Alliance- Bolero- TradeCard

Community Single Window forPaperless Trade with WorldwideInterconnection

- Certificate of Origin

- Production Notification

US Customs AMS ManifestTextile TradeNotifications

- Shipping Order- Commercial Invoice- Packing List

GovernmentDocuments

19971997 200620062003200320002000

UN/CEFACT


The Digital Trade and Transportation

Network (DTTN)

A Community Model

UN/CEFACT


Guiding Principles for the DTTNGuiding Principles for the DTTN

Public/private sector Logistics Development Council initiative to improve HK’s competitiveness and to make HK the regional e-Logistics hub of choice

Neutrality Non-exclusivity Transparent, accountable & responsible

operations Minimum intervention to any participant’s

business processes & relationships Facilitate & respect market forces Easy to access & use

UN/CEFACT


Governance FrameworkGovernance Framework Digital Trade and Transportation Network

Limited ownership principle 51% by Tradelink 21% by Government 28% by industry associations

Operating Agreement to assure a neutral and community focused DTTN operating framework

Industry Based DTTN Standards Advisory Group – advise, review and endorse document structure and interconnection standards

UN/CEFACT


Three Layer DTTN ModelThree Layer DTTN Model Value-added services such as

financial products, multi-modal integration, distribution management

Value-added

Services

Core Messaging

Infrastructure(DTTN Ltd)

Open, neutral, secure, reliable and shared electronic infrastructure messaging

Local and international standards for security, trade documents, codes, protocols

Layer 3

Layer 2

Layer 1

Standards and Protocols

UN/CEFACT


Community Role of the DTTNCommunity Role of the DTTNSellers Carriers / Portals

(Inttra, GTNexus)Buyers FreightForwarders

DocumentExchange &

Transformation

CommunicationsGateway

CustomerManagement

SecurityServices

Support & Operations

Management

WebServices

DTTN Core Messaging Infrastructure

Banks & Financial

Institutions

TerminalsInspection Agencies

Insurance Institutions

Government& Agencies

Value AddingService

Providers

e.g. Tradelink

R egional/G lobal Service

Providers

UN/CEFACT


Functions and Features Functions and Features of theof the

Digital Trade and Digital Trade and

Transportation Network Transportation Network (DTTN)(DTTN)

UN/CEFACT


Reliable, secure transformation and delivery of legally recognized electronic documents

Reliable, secure delivery – local, China, globally Any-to-any protocol & document transformation

Excel; XML; EDIFACT, ANSI X12; Flat file, Cargo-IMP; e-Mail, FTP/S; HTTP/S; AS1, AS2, ebMS2, Multiple Character Sets

Documents stored on-line for 2 years, offline for 7 years Low Cost Single e-Channel to all trading partners

use existing in-house system with minimal changes

Community interconnections e.g.Tradelink’s 53,000 traders & forwarders; 30+ major ocean carriers via INTTRA/

GTNEXUS

DTTN Services – Core DTTN Services – Core InfrastructureInfrastructure

UN/CEFACT


DTTN Document Exchange Services (1/2)DTTN Document Exchange Services (1/2)Supports ten Supports ten major trade & logistics processesmajor trade & logistics processes for for import / exportimport / export between HK-PRD (truck, rail, river) & overseas via between HK-PRD (truck, rail, river) & overseas via Ocean / air;Ocean / air;

Purchase Process (Purchase / Sales Order; Order Confirmation)

Get products ready for delivery (Packing List / ASN; Commercial Invoice; Inspection Certificate; Insurance)

Local and overseas transportation (Booking; Shipping order; arrival notices; transport documents - Master / house waybill - sea / air; cargo receipt; transport set; Equipment Interchange Receipt; delivery / release order)

UN/CEFACT


DTTN Document Exchange Services (2/2)DTTN Document Exchange Services (2/2)

Integration with Government Trade document providers - GETS (Trade Declaration, Certificate of Origin, Textile Notifications, Dutiable Commodities Permits, Manifest…)

Settlement Process (Letter of Credit; Company Guarantee; Bill of Exchange; L/C collection letter; document arrival notice) [Depends on Bank participation]

Key document ownership transfer & “print right” with local on-line payments (transport documents e.g EIR; local trade services invoice; payment instruction / confirmation)

UN/CEFACT


Development of DTTN Canonical XML Development of DTTN Canonical XML

Document StructuresDocument Structures Following UBL Methodology to develop Canonical XML

Structures for over 60 major international / local trade documents

The DTTN Standards Advisory Group, comprising relevant industry associations, has reviewed and endorsed over 50 documents

Exploring the submission of these document structures to UBL for incorporation within UBL V2.0, as part of proposed alignment with UN-eDOCS under the UN/CEFACT

framework

UN/CEFACT


DTTN Interconnection Example – DTTN Interconnection Example –

Purchase to DeliveryPurchase to Delivery

Buyer 1 DTTN1. PO (X 12)

Buyer 2

Forwarders

Seller

ApplicationService

Provider 2

6. Shipment Status(Web)

1. PO (Excel)

2. SO, CI, PL (Excel)

5. BL (EDIFACT)

2. SO, CI, PL (EDIFACT)

5. BL (Excel)

4. Shipment Status(X 12)

SO - shipping orderCI - commercial invoicePL - packing listBL - bill of lading

ApplicationService

Provider 3

Carriers

3. Master SO (EDIFACT)

3. Master SO 4. Master BLShipment Status

4. Master BL,Shipment Status

(EDIFACT)

3. Master SO(EDIFACT)

6. Goods / Shipment Status

(Web Services/XML)

6. Shipment Status (EDIFACT)

4. Master BL, Shipment Status (EDIFACT)

Goods Status (RFID / EPCGlobal)Goods

Tracking Locations

Physical Delivery

UN/CEFACT


Cost and Benefits of theCost and Benefits of the

Digital Trade and Digital Trade and Transportation Network Transportation Network

(DTTN)(DTTN)

UN/CEFACT


Charges based on each successfully transformed and delivered document

Initial connectivity, annual & customisation fees will apply

Final pricing details to be determined by DTTN Ltd Board closer to launch

Special Incentives for Pilot Users

Waive document charges for the duration of the pilot, waive initial connectivity charges

Rebates may accrue for each document transacted during the pilot

Be a part of the DTTN marketing program

Low Cost Community InfrastructureLow Cost Community Infrastructure

UN/CEFACT


Cut operation costs through reduced delays, double handling / data entry & minimized errors

Save time and cost for document delivery e.g.EIR, HWB Better financial management e.g. credit, cash flow Easy, cheap & fast to interconnect with trading partners – any-to-any protocol & document transformation Retain existing business against competition

more timely, accurate and value-add services Visibility along the supply chain Significant business and efficiency opportunities

“Just in time” supply chain management; e-access to more trading partners

What are the benefits of the DTTNWhat are the benefits of the DTTN

UN/CEFACT


Digital Trade and Digital Trade and Transportation NetworkTransportation Network

Model for Worldwide Model for Worldwide Paperless Trade Paperless Trade InterconnectionsInterconnections

UN/CEFACT


Interconnecting for Paperless TradeInterconnecting for Paperless Trade

UN/CEFACT


Oversease-LogisticsPlatform(s)/ or Direct

Buyers

Hong Konge-Logistics

Hubs(DTTN)

1a. PO

Suppliersin the

Mainland

Buyingoffices in

the Mainland

Nationaland

regional e-

Logistics Hubs in China

1a. PO

2a. SO, CI, PL

2d. BL

1a. PO

2a. SO, CI, PL

2b. SO Confirmation

2b. SO Confirmation

SO - shipping orderCI - commercial invoicePL - packing listBL - bill of lading

3a. BL, CI, PL

3a. BL, CI, PL

InternationalCarriers /Forwarders

2a. SO, CI, PL

1a. PO (copy)

2b. SO Confirmation

2d. BL

2d. BL

3a. BL, CI, PL

3a. BL, CI, PL4. Cargo Status,Shipment Advice

4. Cargo Status,Shipment Advice


2d. BL


1b. draft import Customs documents (for import of raw materials

1b. draft importcustoms documents

1c. import customsdocuments

MainlandCustoms1c. import customs

documents


(if export via HK)


(if export via HK)

HK SAR 3c. import documents

Overseas Customs

Model for Worldwide Paperless Trade Model for Worldwide Paperless Trade InterconnectionsInterconnections

UN/CEFACT


Lack of IT sophistication for Small and Medium Enterprises difficult to compete against multi-nationals

High cost in integrating with local and overseas trading partners

Government acceptance of electronic documents from overseas (e.g. Certificate of Origin) is limited

Inhibitors for Paperless Trade (1/2)

UN/CEFACT


No commonly accepted trust framework for cross border paperless trade

Paper documents dominate for payment and settlement

Lack of coordinated and neutral interconnected platforms to streamline the “total” trade chain for all parties

Inhibitors for Paperless Trade (2/2)

UN/CEFACT


Efficiency / competition for international trade

Government Mandate

Increasing drive towards integrated global digital supply chains

Metcalfe’s Law

Value of a Network = (Number of Connected Parties)2

Motivators for Paperless Trade

UN/CEFACT

UNECEUNECEUNECEUNECETo make Cross Border Paperless Trade

happen we need to……. Request US and European Governments to accept

electronic Certificates of Origin Support the Financial community’s drive to accept

cross border electronic documents for settlement Find ways to increase acceptance of a common cross

border trust framework for paperless trade Expand hub-hub interconnections between major

consumer markets (North America / Europe) and major supplier bases (Asia)

Show demonstrable benefits for “expanded pilot” project as a platform to develop a critical mass of users in focus areas

UN/CEFACT


The Digital Express Link to your Business Partners Worldwide