TT Talk - Has e-Day arrived?
The TT Club has confirmed approval of the IATA electronic air waybill and also followed the International Group of P&I Clubs in covering cargo liabilities arising from the carriage of cargo under the two approved electronic trading systems, Bolero and ESS.
Is there a wind of change for electronic trading in the unit load supply chain?
In this digital age, the exchange of data is commonplace. Most consumers are used now to purchasing supplies or carrying out bank transactions over the internet, with fairly high degrees of certainty that the processes will complete satisfactorily and securely. When it comes to commerce, this individual comfort is, however, only a small part of the jigsaw.
Trade facilitation is an enormous task and multi-faceted – and has been the focus of much attention over many decades. One of the elements, commonplace in international trade, but still troublesome, concerns effective data interchange. The challenge to reach commonality between differing data requirements around the globe (let alone between system applications), and what a particular piece of data actually means, has led to a veritable industry, specifically housed by UN/EDIFACT – the United Nations rules for Electronic Data Interchange For Administration, Commerce and Transport. These rules ‘comprise a set of internationally agreed standards, directories and guidelines for the electronic interchange of structured data, and in particular that related to trade in goods and services between independent, computerized information systems’. Ensuring common understanding of terms and accommodating differing and evolving trade or administrative practices is an unenviable task.
Any person who has become involved in a collaborative project will know how difficult it is to translate a vision of simplicity and efficiency into reality. All too quickly specific requirements emerge, which become immutable in negotiations. As good as EDI (Electronic Data Interchange) and its successors have become, the human element continues to be critical. In the early days, when communications bandwidth was narrow and available processing memory small, the necessary emphasis was towards compact syntax, sacrificing human intelligibility. Decoding required strictly enforced standards. This has loosened with more modern developments, such as XML (Extensible Mark-up Language), resulting in a more verbose but humanly understandable message, taking advantage of faster computers and significant bandwidth.
Naturally, many advances have been made in electronic trade processes, as exemplified by the comfort provided to users of the IATA e-AWB, Bolero and ESS. However, much more has been happening that could offer greater benefits to the unit load industry, with the likes of INTTRA and e-title TM each providing important parts of the jigsaw puzzle, along with putative developments in customs administration, such as the EU integration project Cassandra. Success for any of these initiatives would seem to be as much integration with and aggregation of the various parts of the supply chain processes as achieving critical mass from key adopters.
The arguments in favour of electronic processes have been thoroughly rehearsed over years, including cutting administrative costs, reduction of opportunities for fraud, increased process transparency, and certainty of outcome and timeliness. It would seem, however, that most companies have built up substantial proprietary legacy IT systems, with the inevitable euphemistic ‘provisional’ fixes, and corporate priorities may commonly be elsewhere. There can be no doubt that process and system re-engineering requires investment, perhaps less these days in hardware and software, but very much in terms of brainpower to ensure that any implementation is optimised.
Balancing risks in electronic trading
Inevitably, there are risks involved in elements of electronic trading, as explained by the International Group FAQs on Paperless Trading. Obvious concerns that the electronic media do not achieve the desired legal result – such as transfer of rights in goods or effective incorporation of carriage terms – are the subject of detailed analysis by any provider. Many recognise that there may always be exceptions in some jurisdictions, for example the requirement of Islamic law for physical documents, which need to be accommodated in any trade solution. And although cyber risks (eg. ‘hacking’, accidental release or theft of information, or transfer of viruses) can never be fully discounted, all major solutions trade on the integrity of their system and user agreement.
Emerging business priority
The e-balance must inexorably be favourable. The power, sustainability and neutrality of e-solutions in the unit load supply chain is already in place. The cost/benefit arguments are well-prepared. The opportunity to migrate to replacement systems’ infrastructure and reap the process advantages available appear tangible. Is this the decade of e-change?
We hope that you will have found the above interesting. If you would like further information, or have any comments, please email us, or take this opportunity to forward to any colleagues who you may feel would be interested...
We look forward to hearing from you.
Risk Management Director, TT Club