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Bolero – A realistic e-commerce
solution for international logistics?
Chennai, September 29, 2000
The mind boggling volume of paperwork
in the course of shipping goods from one country to another is a problem
which importers and exporters can do well without. One international trade
agency has estimated that documentation costs can be as much as seven percent
of the consignment value. With international trade becoming increasingly
competitive, the cost involved in documentation can make a difference for
merchants in terms of profitability. Considering the fact that millions
of consignments are being transported every year, there is immense scope
for controlling documentation costs and the time involved thereof.
The traditional bill of lading, one
of the prime shipping documents has, for several years, ensured secure
commerce transactions all over the world. The functions of this instrument
has remained more or less the same over the years, the most important being
transfer of ownership of goods from the seller to the buyer.
Although the modernization of shipping
and related operations, reduced the time of movement of goods to and from
ports, completing documentation and other formalities still consume a lot
of time. It did not matter much in the past, when it took months for ships
to complete voyages and considerable time for loading or discharge at ports.
But today, when time and cost are the key factors of competitiveness, there
is a strong need for faster and safer transfer of bill of lading to complete
the shipping cycle.
In a bid to find acceptable solutions
for these problems, two key representative organisations from the global
logistics and financial services sector have combined to create a new electronic
trade community, commonly known as the Bolero. The primary mission of Bolero
is to provide guaranteed and secure delivery of trade documentation, in
electronic form, based on a binding legal system and common procedures.
Bolero offers a paperless, web-based
mode of commercial transactions, designed to have international acceptance.
It represents an internet based system, that facilitates electronic transactions
and data exchange among all the parties involved in international trade.
The genesis: In the past, attempts
were made to manage documentation in electronic form, but with little success.
The advent of EDI promised much but the progress in electronic documentation
was slow and failed to meet the complex requirements of trade and commerce.
In 1996, the Boards of the Through Transport Club (popularly knows as the
TT club) and international banking entity S.W.I.F.T got together and formed
an expert group to analyze the requirements and formulate proposals for
perfecting electronic documentation.
In 1998, the boards of the Boards
of the TT Club and S.W.I.F.T formally approved the funding and development
of Bolero. A new company in the name and style of Bolero International
Limited, a 50/50 joint venture of the two funding organisations, was incorporated
in June 1998.
What does Bolero do?
Facilitates quick and safe
transfer of ownership of goods in global trade through the Bolero Title
Registry System
Provides an open and adaptable
platform for electronic documentation and data transfer in a move towards
paperless international trade
Creates a unique legal
framework for international trade, thus assures legality of the data exchanged
with the development of a new international legal infrastructure as laid
in the Bolero Rule Book
Ensures security of data
communication by providing a secure and reliable core messaging component
What makes Bolero unique is the result
of four basic principles on which it is developed, with a view to gain
world-wide acceptance and usage:
Transparent commercial model : One of
the key presumptions of Bolero is that no one company, supplier or service
provider can provide a complete set of solutions to the needs of international
trade. The Bolero model will rely extensively on third party networks and
user application systems to link users with industry standard protocols
and interfaces. Bolero is not a proprietary service that compels users
to some standard technology or applications.
Neutrality and pedigree : Bolero has
evolved under the aegis of S.W.I.F.T and TT Club, two globally reputed
organizations that are considered neutral across the entire cross section
of industry and trade. Thus the trade community can be assured that the
system will be developed in the best interests of all parties involved.
The fact that several thousand companies across the world patronise these
institutions is a testimony to the cross industry pedigree on which Bolero
is founded.
Trust: The unparalleled track record
of S.W.I.F.T as a trusted partner for the banking industry and the reputation
of TT Club as the preferred vehicle for port authorities, shippers and
transporters, provides a platform to Bolero to easily gain the trust of
all participants. This is reinforced by the fact that Bolero will accept
responsibility and liability for the services it provides.
Electronic legal infrastructure : Bolero
will bind users to a common set of rights, liabilities and obligations
in the electronic mode and form the basis of future electronic laws and
conventions
Bolero provides a wide range of services
to different sectors of trade and industry. The key services are :
Core messaging service
The principal service is
the core messaging service that provides for secure communication of information
among the users
Bolero is internet oriented
but network independent, thus enabling users to employ their choice networks
Users will have to register
with a designated authority to become eligible to receive public and private
access keys
All messages are time stamped,
validated, acknowledged and logged
Messages will have digital
signatures and validated electronically for receipt and delivery
The nerve center of the Bolero system
is the core messaging platform, which enables users to exchange electronic
data and trade documents through the internet. The system is secure, governed
by a unique legal structure and is maintained by a trusted third party.
Title Registry
This is an application managing
the transfer of rights in respect of bill of lading. The title registry
will facilitate quick and accurate transfer of ownership and custody rights.
Banks are likely to find this service useful since they can improve security
of contracts.
Rule Book
The rule book lists the rules and
regulations applicable to the use of Bolero. One of the main objectives
of the rule book is to provide users the implications of Bolero and its
services from a legal perspective. This is expected to prevent the possibility
of disputes that may arise in the course of using such services.
The benefits of Bolero
The major benefits that are expected
to flow from Bolero are reduction in trade costs, inventory cycles and
administrative expenses. The net effect is that with Bolero, the trade
cycle will be easier and quicker to execute, thus providing a valuable
base for traders and service providers to redesign existing practices.
Sellers can guarantee faster delivery
of goods and can achieve reduction in costs relating to shipping, inventory
and clearance of goods, thus improving profitability
Buyers can have more transparency
while dealing with suppliers; they can cut down costs through faster access
to products and service, improved accuracy in documentation and lower communication
costs.
Service providers such as carriers,
freight forwarders and clearing agents will have the opportunity to provide
better customer service in terms of speed, precision and reliability.
Customs authorities and other related
government agencies would be in a position to discharge their duties more
efficiently with the help of Bolero’s standard, secure and cost-effective
communication system that will be understood across the world
Bolero seeks to minimize the incidence
of maritime frauds relating to documentation by providing a secure means
of transaction.
The Bolero launch
It is claimed that many of the world’s
top companies including oil majors, trading houses and prominent commercial
banks participated in the first Bolero launch programme and found it could
achieve the stated objectives. Based on this encouraging response, Bolero
International Limited hopes to develop its user base and attain critical
mass over the next few years. The ultimate plan is to position Bolero as
the infrastructure hub of trade transactions on a global scale.
The ifs and buts….
Bolero is no doubt an exciting development
and seems to have the potential to change the way maritime trade is conducted
the world over. However, it is a well known fact that shipping lines are
not keen to share information with competitors. This attitude will present
certain practical difficulties in the adaptation of Bolero on a universal
scale. But with competition on the rise and the increasing customer
preference towards transparent trade practices, the reluctant shippers
will have to consider embracing e-commerce in totality, if they are to
remain in the race. When that happens, the acceptance of Bolero services
would be instant.
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