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Pioneering Paperless Trade: The way covered and the way ahead

Less and Better Data to build Trust and Efficiency. Pioneering Paperless Trade: The way covered and the way ahead A Community Model for Paperless Trade Development Experience of the Digital Trade and Transportation Network Peter Stokes CEO, Digital Trade and Transportation Network Ltd.

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Pioneering Paperless Trade: The way covered and the way ahead

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  1. Less and Better Data to build Trust and Efficiency Pioneering Paperless Trade: The way covered and the way ahead A Community Model for Paperless Trade DevelopmentExperience of the Digital Trade and Transportation NetworkPeter StokesCEO, Digital Trade and Transportation Network Ltd

  2. Agenda 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

  3. Single Window for Hong Kong SAR Government Trade Documents (B to G) and Tradelink Highlights

  4. Tradelink’s Shareholders • The HKSAR Government 42.49% • Banks 10.33% • Terminal Operators 15.29% • Industry Associations 7.78% • China 5.30% • Airline 5.30% • Textile Industry 4.73% • Telecommunication 8.78%

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

  6. HKSAR Government Trade Document Single Window via Tradelink (2/2) • Network of 27 Service Centers • Paper to electronic conversion for organizations who have not “computerized” • Key factor in mandatory electronic submission program

  7. Tradelink’s Electronic Services Trade Related Government Services as the Basic Building Block All 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

  8. Established in July 2000, aims to facilitate secure cross border paperless electronic services for efficient global trade Pan Asian e-Commerce Alliance (1) 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

  9. 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

  10. Evolution from Government Single Window to Community Single Window Start Electronic Submission of Government Trade Documents Mandate Electronic Submission of Trade Declarations Initiate Cross Border Paperless Trade Projects - Pan Asian E-commerce Alliance - Bolero - TradeCard Community Single Window for Paperless Trade with Worldwide Interconnection - Trade Declaration - Export License - Certificate of Origin - Production Notification US Customs AMS Manifest Textile Trade Notifications Government Documents Trade, Manufacturing Logistics, Finance, Commercial - Shipping Order - Commercial Invoice - Packing List 1997 2000 2003 2006

  11. The Digital Trade and Transportation Network (DTTN) A Community Model

  12. Guiding Principles for the DTTNPublic/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

  13. Governance 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

  14. Value-added services such as financial products, multi-modal integration, distribution management Value- added Services Layer 3 Core Messaging Infrastructure (DTTN Ltd) Open, neutral, secure, reliable and shared electronic infrastructure messaging Layer 2 Local and international standards for security, trade documents, codes, protocols Layer 1 Three Layer DTTN Model Standards and Protocols

  15. DTTN Core MessagingInfrastructure Communications Gateway Security Services Web Services e.g.Tradelink Banks & Financial Institutions Document Exchange & Transformation Customer Management Support & Operations Management Government & Agencies Inspection Agencies Insurance Institutions Terminals Community Role of the DTTN Sellers Buyers Freight Forwarders Carriers / Portals (Inttra, GTNexus)

  16. Functions and Features of theDigital Trade and Transportation Network (DTTN)

  17. DTTN Services – Core Infrastructure • 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

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

  19. 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)

  20. Development of DTTN Canonical XML Document 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

  21. Goods Status (RFID / EPCGlobal) Goods Tracking Locations DTTN Interconnection Example – Purchase to Delivery 6. Shipment Status (EDIFACT) 5. BL (EDIFACT) 2. SO, CI, PL (EDIFACT) Forwarders 3. Master SO (EDIFACT) Physical Delivery 4. Master BL, Shipment Status (EDIFACT) 1. PO (X 12) Buyer 1 DTTN 1. PO (Excel) Seller 4. Shipment Status (X 12) 2. SO, CI, PL (Excel) 5. BL (Excel) 3. Master SO 6. Goods / Shipment Status 4. Master BL Shipment Status (Web Services/XML) Application 3. Master SO 6. Shipment Status Carriers (EDIFACT) Service Buyer 2 Provider 2 (Web) 4. Master BL, Application Shipment Status (EDIFACT) Service Provider 3 SO - shipping order CI - commercial invoice PL - packing list BL - bill of lading

  22. Cost and Benefits of theDigital Trade and Transportation Network (DTTN)

  23. Low Cost Community Infrastructure • 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

  24. What are the benefits of the DTTN • 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 managemente.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

  25. Digital Trade and Transportation NetworkModel for Worldwide Paperless Trade Interconnections

  26. Interconnecting for Paperless Trade

  27. 1a. PO Mainland HK SAR 1c. import customs Customs 3c. import documents 1b. draft import Customs documents (for import of raw materials documents National and regional e-Logistics Hubs in China 2a. SO, CI, PL 1a. PO 1a. PO Overseas e-Logistics Platform(s) / or Direct Buyers 1b. draft import 2b. SO Confirmation Hong Kong e-Logistics Hubs (DTTN) 3a. BL, CI, PL customs documents 3b. draft import 2d. BL 1c. import customs customs documents documents Suppliers (if export via HK) 2a. SO, CI, PL in the Mainland 4. Cargo Status, 3a. BL, CI, PL Shipment Advice 2b. SO Confirmation 3b. draft import 2d. BL customs documents Overseas Customs (if export via HK) 3a. BL, CI, PL 4. Cargo Status, Shipment Advice 1a. PO (copy) 2a. SO, CI, PL 2d. BL International Buying 2b. SO Confirmation Carriers / offices in 3a. BL, CI, PL Forwarders 2d. BL the Mainland 4. Cargo Status, 4. Cargo Status, Shipment Advice Shipment Advice SO - shipping order CI - commercial invoice PL - packing list BL - bill of lading Model for Worldwide Paperless Trade Interconnections

  28. Inhibitors for Paperless Trade (1/2) Lack of IT sophistication for Small and MediumEnterprises  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

  29. Inhibitors for Paperless Trade (2/2) 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

  30. Motivators for Paperless Trade 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

  31. To 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

  32. The Digital Express Link to your Business Partners Worldwide

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