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Making paperless trading a possibility

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INTERNET and information technology continues to infiltrate basic business practices.

A recently completed project addressed the need for exporters to electronically convey all relevant information needed for a bill of lading to the relevant shipping company.

The generated bill may then be made available over the internet by the shipping company to the exporter for their endorsement and subsequent use.

The bill of lading is a core document in the overall set of documents used by Australian product exporters and is usually initiated with a written “forwarding” or “shipping” instruction faxed from the exporter to the chosen shipping line.

Sending this instruction electronically and receiving the resulting bill of lading, also in electronic form, is a significant step towards reducing costs and achieving paperless trading.

The project was supported through the Supply Chain Capital Program under the Victorian Transport, Distribution and Logistics Industry Action Plan, administered by the Department of Innovation, Industry and Regional Development.

The Program is aimed at demonstrating how collaborative use of supply chain tools can enhance processes along supply chains reducing costs, improving business relationships, saving time and expanding sales.

The project commenced in late August 2004 and finished in early February 2005.

The core participants were Murray Goulburn Co-operative Company Limited , a major exporter of dairy products, using Dialectrics as its facilitator with various major shipping lines.

The benefits of electronic information communication arise from minimising data errors and decreasing the time needed to transfer this data, hence significantly reducing documentation costs.

The project built on existing international documentation procedures and essentially replaced the present paper based communication with electronic methods.

Thus it minimised staff training and provides immediate and potential future supply chain benefits by all participants in international trading.

The shipping bill of lading is a commercial document that is issued on behalf of the shipping line or carrier, describing the kind and quantity of goods being shipped from the shipper (consignor) to the importer (consignee), the ports of loading and discharge plus details of the carrying vessel.

It is the written evidence of a contract for the carriage and delivery of certain goods with any marks and numbers, sent by sea.

It usually comprises three parts - the original, one copy sent by mail to the consignee, and a third copy that is retained by the shipper.

The bill is assignable and the assignee is entitled to the goods, subject to certain rights.

The information contained in the bill originates from the exporter. Currently this is achieved by exporters like Murray Goulburn sending a paper based facsimile message to the chosen shipping line.

This message has all the necessary data placed into various pre-determined positions on the paper.

While these fields may be electronically extracted by computer systems, such a procedure is insufficiently reliable for wide ranging use and varying facsimile quality.

Therefore the challenge is to convey the discrete data elements from exporter to shipping line in a manner that allows the shipping line to access and unambiguously identify each data element for subsequent computer processing.

Various options were considered, however a practical solution necessitates the export company’s data to be in a form that is able to be received by as many shipping company’s computers as practically possible.

Of the many international data transmission standards, the Electronic Data Interchange (EDI) is at present the most widely used in the sea freight industry.

Unfortunately only a few shipping companies have standardised on a specific and closely defined EDI format.

Thus, this situation first requires computer software to extract and format the appropriate data details from the exporting company’s database into a suitable ‘standard’ EDI message. This message may then be transmitted directly to the shipping line or, because these lines have a wide range of interface ‘standards’, via an intermediate “translating” organisation.

To address the first part of this process Murray Goulburn employed <ul type="continuous"><cf number="2">&#8217;</cf></ul>Microforges Argosy export documentation software.

This software accepts data from the company’s SAP database and structures it into a defined EDI IFTMIN message.

The need to often convert this exporter’s electronic EDI message into a format suitable for a particular shipping line was recognised by a Melbourne commercial company and several major international shipping lines who established a specialised joint company, International Transportation & Trade (INTTRA), to provide this function and a range of other services.

When the shipping line receives the formatted electronic instruction from the exporter, the information may be passed directly into the company’s computer systems for subsequent processing.

The initial draft of the bill of lading may then be posted to a secured internet website under the shipping company’s home page.

The exporter may then view these bills and any amendments, changes or modifications may be sent by email to the shipping line for them to correct the draft.

If no amendments are required, the bill of lading is therefore ready to be issued, after vessel departure.

Major exporting organisations such as Murray Goulburn are authorised by various shipping lines to remotely print these bills of lading on special stationery with the associated terms and conditions attached.

The set of originals may be duly authorised for acceptance by the banks or relevant organisations.

While this change in producing shipping bills of lading from paper-based processes to electronic methods may appear relatively simple, it has highlighted some of the challenges faced by collaborating organisations with a common goal.

It should be recognised that introduction of new technologies and their associated processes tend to raise legislative issues, political unease and government regulations as well as the need for normal commercial refinements.

All these bodies have bureaucracies historically built on paper documentation. However, with continuing advances in technology, the progression toward paperless trading, under any title, is a commercial inevitability and will be a constant task into the future.

*John Hart is director of Dialectrics.

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