ICC United Kingdom launches major report on benefits of digitalisation of trade

November 28, 2023

ICC United Kingdom launches major report on benefits of digitalisation of trade

ICC United Kingdom and the Centre for Digital Trade and Innovation have launched a major report – Seizing the moment: Unleashing the potential of trade digitalisation - which for the first time sets out the tangible benefits of the Electronic Trade Documents Act and the opportunities this offers international trading companies.  

The report is aimed at key decision-makers in corporate finance and strategy teams within companies, and policymakers within governments. It highlights how the change in law now enables transactions to happen in minutes, not weeks and months, allowing companies to handle finance with much more agility. Evidence shows that this can result in a 100% increase in trade flow, 15% increase in profitability and an 18% reduction in shipping costs. 

A total of 16 case studies are included in this report, covering UK imports and exports, digital transactions across other jurisdictions, delivering a paperless trade ecosystem, and innovations in trade finance.

The report also acknowledges that though momentum on trade digitalisation is growing, barriers still remain. The fragmented nature of trade processes within companies mirrors that across government departments and the wider trade ecosystem. To capture and scale the benefits requires stronger coordination. 

The law aligns the UK to Singaporean and US trade regimes enabling 80-90% of all international trade transactions to now be handled digitally including 60% of global trade finance. This represents a potential $10 trillion in trade growth across the G7 and Commonwealth.  

Chris Southworth, Secretary General ICC United Kingdom said:

“We believe the time is now for a much-needed overhaul of the way we trade. It is time to remove paper and antiquated processes once and for all and use far more effective ways of operating using technology. This report begins to set out the scale of the opportunity on offer.”

Lord Offord, Minister for Exports and Parliamentary Under Secretary of State said:

“The Electronic Trade Documents Act is a game changer for both the UK and world trade, cutting costs for businesses and helping to grow the UK economy. We’re backing British businesses by knocking down trade barriers, signing new trade deals, giving expert advice via our Export Support Service and funding through UK Export Finance – our award-winning export credit agency”.

The full list of case studies in the report can be found here.   

Editor’s Note:

Four case studies detailing the positive impact of the digitalisation of trade can be found below. 

 

  1. Importing / exporting to the UK

Melon & Co, a UK SME fruit importer, used an e-bill of lading to improve supply chain efficiency. The project was in collaboration with government as part of the Ecosystem of Trust programme. The technology partners were Octosense and Contained Technologies. 

By avoiding the conventional use of freight forwarding agents, the cost was significantly reduced from £49.50 per customs entry to a single software cost of £500 per month. This translates to an annual saving of approximately £174,000, 10–15% of Melon & Co’s pre-tax annual profit. The approach also reduced the generation time of a Goods Vehicle Movement Service (GVMS) reference number from four hours to four minutes.

Longer term, the project has laid the groundwork to creating a more transparent and compliant digital supply chain, which is expected to minimise border checks, save time, and ultimately, foster better relationships with shipping carriers, enhancing the entire supply chain’s efficiency and compliance with regulatory requirements. The initiative paves the way for improved food safety and consumer confidence, while also aiming to reduce waste and enhance commercial efficiency. 

  1. Digital transactions across other jurisdictions

ExxonMobil Asia Pacific Pte Ltd shipped liquid chemicals from Singapore to Thailand with VLK as the vessel owner, supported by VLK’s Protection and Indemnity Club. The project utilised an e-bill of lading made interoperable by the TradeTrust framework. The transaction was conducted by the industry players in partnership with Singapore’s Infocomm Media Development Authority (IMDA). The technology provider was BunkerChain supported by S&P Global Market Intelligence.

The transaction reduced the vessel berthing time from three hours to minutes, directly reducing the associated costs (terminal and vessel costs) for ExxonMobil, using an e-bill of lading. A Digital Passport for Ships was used which was tied to the International Maritime Organisation (IMO) number and ensured that the digital identity used in the signing was onboarded and verified.

This transaction, utilising the underlying TradeTrust framework, demonstrated interoperability across different systems without the need to develop intersystem connectivity protocols such as APIs as well as established the interoperability between digital and paper-based processes. The e-bill of lading was legally supported by statutory law without the use of any contract law or rulebook and was used in a non- MLETR jurisdiction i.e. Thailand. 

  1. Delivery paperless trade across the whole trade ecosystem

A partnership between BT Cargo Community Systems, Woodland Group, Singapore EES Freight, Singapore Airlines and Worldwide Flight Services enabled the use of an e-airway bill to digitalise an end to end transaction between the two jurisdictions. The technology providers were BT and Nexshore.

The objective was to enable the exchange of data of a cargo from Heathrow to Singapore and enable seamless transfer of the cargo between truck and plane. The project enabled effective pre-clearance of the cargo resulting in an up to 80% reduction in waiting times so that goods were released for onward transport much quicker.

The project also delivered a 70% efficiency improvement of the cargo reception process. The cargo movement was more transparent and visible in real time to all parties interested actors in a way that would not be possible using paper.

This project was deliberately designed to be consistent with IATA’s ONE Record system for the standardised management of airfreight documents. This approach is thus immediately ready for scaling across the industry. 

  1. Financial innovation

T3i Partner Network, a UK startup, is establishing a domestic e-bills marketplace to enable local government to streamline inter-local government finance transactions, reduce cost, improve liquidity and create the opportunity for local government to access to financial markets to fund local enterprise and growth.

 T3i Partner Network is at the helm of operationalising the eBills Marketplace, working closely with established Money Marketplaces, Instimatch, Munix, and Centralised Security Depository (CSD) Infrastructure providers.

The aim is to firstly facilitate short-term lending among UK Local Authorities through a structured eBills system, enabling peer-to-peer lending and borrowing, reducing the dependency on intermediaries and lowering the cost of financing. Secondly, to extend the eBills platform to the corporate sector, allowing corporate borrowers to leverage eBills for securing financing from a diverse range of lenders. This phase also introduces a mechanism for banks, development banks, and government agencies to guarantee eBills, enhancing their credibility and market acceptance. Lastly, to advance the use of eBills in trade and supply chain finance, facilitating both buyers and sellers in the trade ecosystem to secure financing through e promissory notes and e-bills of exchange.

This initiative will create a facilitation mechanism between investors and borrowers that is currently absent from the market.

 





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