Contract.
Once a deal is established the contract details are automatically transmitted to
the principal parties to the trade, using the secure messaging platform and the
contract XML standard. (XML means extensible mark-up language.)
Back-office
link. This is automatic, since both parties have received the contract
confirmation and the information has been integrated into their back-office
systems through their user interface. The contract data are now ready for
further execution.
Price
fixing. The price is fixed either by using an e-marketplace or directly
between the parties by trading futures via their futures broker, using the
network to confirm the transactions.
Letter of
credit. If called for, the network is used to establish the letter of
credit through a message from the opening bank to the exporter's bank.
Shipping
instructions. For an FOB contract the importer will provide shipping
and document instructions to the exporter and the opening bank via the network.
The opening bank in turn sends an undertaking to the exporter's bank, detailing
the commercial documents to be presented under the letter of credit.
Pre-shipment
finance. On the basis of the letter of credit (or other undertaking)
the exporter can apply for pre-shipment finance, using the protocols provided by
the system (and their relationship to the banking system). Upon approval the
bank's collateral manager will be automatically linked into the transaction.
Freight.
The importer can negotiate freight through a carrier's electronic service
provider (e.g. INTTRA or GTNexus), confirmed through the network's electronic
messaging system.
Shipment.
The exporter advises the coffee's availability and makes a container booking
using electronic messaging. (This incidentally also facilitates the
establishment of the ship's stowage plan.) The importer books for voyage and
space with the carrier as per this advice. These messages are simultaneously
copied to other involved parties, for example the handlers of the cargo to the
export terminal, the warehouse and the agency supervising weighing and stuffing.
Of course the foregoing presupposes that all of those involved, including
customs, have updated their electronic back-office systems using data obtained
from a web interface or using their own document management software.
Bill of
lading. Using details from the booking and document instructions
received earlier, the carrier issues an electronic bill of lading and registers
it under the network title registry for release to the exporter. The exporter is
notified through the system, and will endorse the B/L to the appropriate party,
usually the bank that financed the goods, who is then registered as pledgee on
the B/L. Alternatively, the B/L can also be issued directly in a bank's
favour.
Shipment
advice. This is sent via the network, using the XML standard for
electronic shipping advices.
Dispatch.
The exporter combines the commercial invoice with the other export documents
received from the different service providers and authorities, and packages
these into a network message which the network forwards to either the buyer or
the bank.
Verification. The documents are verified
electronically with the instructions registered under the L/C undertaking. If
there is any discrepancy the system notifies all parties and asks for refusal or
acceptance of the documents.
Presentation of
documents. If the documents are correct they are transmitted for
inspection and/or approval (as per the L/C protocol) to the importer's bank or,
in the case of CAD (payment cash against documents on first presentation)
directly in trust to the importer. When the importer's bank makes payment, the
electronic documents are released automatically to the importer. Alternatively,
the L/C opening bank, which was acting as pledgee on the B/L, will endorse the
B/L to the importer once the electronic funds transfer (EFT) has been confirmed
through the SWIFT clearing system.
At the receiving
end. Before or upon arrival of the vessel, the carrier notifies all
concerned (importer, clearing agent, customs, inland roasting plant, etc.) of
the vessel's ETA, followed by a notice of arrival, using XML. The importer
settles the freight, releases the B/L to the carrier or shipping agency at the
port of destination, and copies the B/L together with the commercial invoice to
the clearing agent, all through the electronic network system and all at the
same time. Again, each party knows instantaneously who said what to whom.
Final
delivery. If the coffee is going to an inland roasting plant,
notifications of cargo arrival, sample orders and delivery orders will pass
electronically between the importer and the roaster. If the roaster operates on
a VMI basis (vendor managed inventory) then the importer will place the coffee
either at the roasting plant, or at an intermediate container station, or in a
warehouse or silo park pending final delivery. All this is done through network
instructions to the clearing agents, trucking company and warehousemen. Again,
everyone knows what is happening, and the roaster can see where the coffee
is.
Finally the importer issues an XML invoice and
delivery order to the roaster, copied to the clearing agents, truckers and
warehousemen. Upon payment this delivery order acts as transfer of title as per
the conditions determined in the ECF or GCA standard form contract.