UOB has partnered the Infocomm Media Development Authority (IMDA) on its digital trade financing pilot using electronic bills of lading for the digitalisation of Singapore-China cross-border trade flows on the TradeTrust digital utility1. The electronic exchange of trade documents speeds up the shipping document presentation and title transfer process and lowers the transaction costs for businesses, helping them to be more competitive.
A bill of lading is a legal title document issued to a seller that details the type of goods, ownership, quantity and destination of the goods being carried. The traditional trade flow typically involves manual handling of trade documents among sellers, buyers, carriers and banks across different geographies. A trade finance deal for a single cargo by sea could involve as many as 27 parties, requiring up to 36 original documents and 240 copies2.
Completed on 15 September 2021, the pilot comprised two digital letter of credit transactions involving electronic bill of lading transaction simulations.
The pilot was conducted by UOB and its Shenzhen Branch in China for the Bank’s corporate clients, namely Manufacturing Network Private Limited, Guangdong Guangyun New Materials Co. Limited, Tri-Star Electronics Private Limited, Shenzhen Uni-Right Industrial Trading Co. Ltd., as well as carrier Pacific International Lines. The simulations were facilitated by financial technology (FinTech) service providers, which have integrated their digital platforms with TradeTrust to connect the digital trade data flows between Singapore and Shenzhen.
Ms So Lay Hua, Head of Group Transaction Banking, UOB, said, “Being at the forefront of connecting ASEAN with Greater China, UOB is pleased to be part of IMDA’s TradeTrust digital utility that transforms conventional cross-border trade flows for greater efficiencies. The successful pilots with our Singapore and Shenzhen clients have reduced the processing turnaround time from a few days to within an hour and demonstrated the interoperability of TradeTrust for paperless workflows within the trade ecosystem.
“With this, electronic bills of lading and other electronic trade documents can be transferred across the ecosystem and the whole trade finance cycle in a fast and seamless manner. We look forward to working with our clients from across the region to enhance their cross-border trade efficiency and to optimise their working capital with greater digital connectivity.”
Shorter turnaround time, including faster transfers of title and other documents, is particularly significant to sellers as they are able to coordinate and to present their documents easily and efficiently without visiting bank branches or engaging couriers. Buyers are also able to avoid incurring charges when there is a timing mismatch between the arrival of goods and paper title documents at ports. This also speeds up the port clearance process for the buyers.
The digital trade financing pilot on TradeTrust marks a key digital milestone under the Singapore-China (Shenzhen) Smart City Initiative. It demonstrates UOB’s continued efforts in driving new cross-border initiatives with its ecosystem partners to connect clients digitally across countries for accelerated growth.
1Please refer to TradeTrust website, https://www.tradetrust.io for more information.
2Source: “How the electronic bill of lading became a battleground for trade digitisation”, Global Trade Review, 12 July 2021.