Transcript Paperless Trade in Oil Industry UNeDocs Conference Kuala Lumpur, 21 Feb 2006 ©2003-6 Electronic Shipping Solutions.

Paperless Trade in Oil Industry
UNeDocs Conference
Kuala Lumpur, 21 Feb 2006
©2003-6 Electronic Shipping Solutions. All rights reserved.
Agenda
• Background to ESS and its approach
- Overview of ESS
- Timing right for eDocs
- Commodity Trade Problem
- ESS’ Solution
• Why we chose UNeDocs
• Oil eB/L Pilots
- Hurdles in building pilots
- eB/L Pilots Overview
- BP Pilot details
• Future work with UNeDOcs
©2003-6 Electronic Shipping Solutions. All rights reserved.
ESS Overview
• ESS is an eDocs services provider for the trade finance, commodity trading
and shipping industries
Company
• Established in early 2003 by two shipping
executives
• Management Team has 105 years of IT and
Shipping experience
• Offices in Philadelphia (Sales), Dallas
(Engineering) & London (Sales). Hong
Kong (Sales) to open in late 2006
• Industry neutral company
- Not owned or controlled by any
interested party, stakeholder group or
government entity
• BP pilot started this month
Product
• Product developed in-house
• Web application, integrated or OEM
solution
• Part I: eDocs Solution
- IT Platform (.Net 2.0 & SQL Server)
- User Agreement
- eRisks Insurance
- 24/7 Support & Training
- Part II: Clearinghouse Solution
- UNeDocs data model
- Web Services
- Other adapters for legacy and ERP systems
• Several other eDocs pilots planned for
2006
©2003-6 Electronic Shipping Solutions. All rights reserved.
Timing right for eDocs Solution
• Recent trends make the adoption of an industry standard for electronic
documents the imminent solution to paper inefficiencies
Past solutions failed because …

Ahead of their time
- No longer an issue

Lack of neutrality
- Not an issue for ESS

Fundamentally altered
existing processes
- Not an issue for ESS
ESS is supported by positive recent trends
 Industry acceptance that electronic documents
are the solution
 E-Signature Acts worldwide
 Adoption of eUCP
 Revised Kyoto Convention (e-Customs)
 Adoption of best practices by ship operators
 Electronic disclosure requirements post 9/11
Clear trend towards electronic documents as the solution
©2003-6 Electronic Shipping Solutions. All rights reserved.
The Commodity Trade Problem
• Paper inefficiencies creates very expensive problems for all trade participants
Problem
Working Capital costs
Cause
• Trading & discharge LOIs
• Delays signing & sending paper
Solution
• Demurrage costs
• Slow credit line turnover
Inefficient use of human • Re-keying data
resources
• Correcting document errors
• Amending documents for trade
reasons
Other unnecessary costs • Monthly reconciliations
• Secure eDocs
including eB/Ls
• Data
Interoperability
• Automated L/C
reconciliation
• Non-timely information
• Courier costs
• Printing costs
Fraud risks
• Lack of security devices in
paper B/Ls
©2003-6 Electronic Shipping Solutions. All rights reserved.
ESS Solution: Databridge
• The Databridge provides a full-service, on-demand eDocs Service by combining
an IT platform with a robust User Agreement, eRisk insurance & 24/7 support
• Databridge allows users to
create and transmit any
original trade and shipping
documents electronically
• Paper uniqueness replaced
by strict access rights
limited to legal Holder
Terminal /
Ship Agent
- .NET 2.0
- SQL Server
Majors /
National
Oil Co.
Databridge
Clearing House
• Original eDoc:
- XML Template
Certificate
Of
Quality &
Quantity
Tanker
Operator
and Vessel
- UNeDocs
- XML
- Web Services
- Trade Data
- Digital signature(s)
• Documents can be viewed
as
PDFs
or
using
Databridge viewer
Bill of
Lading
Traders /
Other Oil Co.
Cargo
or AMS
Manifest
©2003-6 Electronic Shipping Solutions. All rights reserved.
ESS & UNeDocs
• Past failures and a desire not to “re-invent the wheel” led ESS to UNeDocs
• Need to start with paper and existing processes
• Need data interoperability
• Need a standard:
- Proprietary standards is problematical

Expensive to develop and maintain

Creates significant pushback from users
- Developing your own standard is problematical

Takes significant time to create

Need broad-based support before you have demonstrated proof-ofconcept
ESS has adopted UNeDocs as its internal data model and
default integration standard
©2003-6 Electronic Shipping Solutions. All rights reserved.
Hurdles with Oil eB/Ls
• ESS faced a number of hurdles in tackling oil B/Ls
Buy-in from
customers
 Oil eB/Ls require working with two of the worlds most conservative
industries at the same time: banking and shipping
 A number of failures of prior eB/L projects made obtaining buy-in
more difficult
 eB/L pilots require participation from a full trade chain for any type
of meaningful trial
Legal
 Lack of any international treaty (standard) requires ESS to adopt a
robust legal framework to deal with the transfer of title
Insurance
 Dealing with extremely high value cargoes – up to $120MM
necessitates significant insurance cover
Practical
 Need to resolve issues of obtaining Master’s signatures when the
majority of vessels are not internet enabled
 Need to solve issue of dual medium – paper and eDocs
©2003-6 Electronic Shipping Solutions. All rights reserved.
eDocs Oil Pilots
• ESS is in the process of running a series of pilots which should lead to
commercial rollout in the oil & petrochemical segment
• Running approximately 5-8 oil and petrochemical pilots in 2006
- First part of series is underway with BP, Shell, Hess and possibly Exxon - involves simple trade
chains (involving 5-10 parties)
- Second part will commence in 2H 2006 – involves complex trade chains (20+ parties)
• Commence with pilots involving oil terminals, leading oil majors tanker operators, ship
agents, cargo surveyors, commodity traders and banks
• Initial pilots involve several stages:
- Training & Proof-of-concept
- Simulations
- Dry runs (i.e. eDocs in parallel to paper)
- Production pilot (i.e., no paper)
• Later pilots involve integration using UNeDocs, XML or Web Services with users trading
and scheduling systems
• Pilots supported 24/7 by our Technical Support and Professional Services Departments
©2003-6 Electronic Shipping Solutions. All rights reserved.
Pilot Example: BP-Supsa
•
Cargo: Azeri Light Crude
•
Route: From Supsa, Georgia to Trieste, Italy
•
Start Date: Commenced February 2006
•
Timeframe: Approximately 6 months
•
Participants:
•
-
Georgia Pipeline Company (terminal operator)
-
BP Oil International (shipper) & BP Germany (receiver)
-
BP Shipping and possibly others (tanker operator)
-
Barwil Agency (ship agent)
Documents Involved:
-
Negotiable bill of lading
-
Certificate of Origin
-
Certificate of Quality & Quantity
-
Cargo Manifest
-
Master Receipt of Samples
©2003-6 Electronic Shipping Solutions. All rights reserved.
Future Work with UNeDocs
•
ESS is committed to support UNeDocs in developing a trade facilitation
standard
• Important work from ESS’ standpoint includes:
- Developing standards around specific shipping documents not presently included in
UNeDocs, such as the eCQQ
- Developing a standard for rendering eDocs (eForms)
- Convergence of UNeDocs and both WCO standards and emerging single window
standards
- Ensuring that UNeDocs conforms with the UNCITRAL draft Instrument on transfer
of rights of eDocs
©2003-6 Electronic Shipping Solutions. All rights reserved.
ESS Contact
For more information on ESS or the oil pilots contact:
Name:
Tel:
Email:
Alexander Goulandris
+44 20 7754 5984
[email protected]
©2003-6 Electronic Shipping Solutions. All rights reserved.
“Our Age of Anxiety is, in great part,
the result of trying to do today's jobs
with yesterday's tools....”
- Marshall McLuhan
©2003-6 Electronic Shipping Solutions. All rights reserved.
3624 Market Street, Suite 300s
Philadelphia, PA 19104
United States
Tel: +1 (866) ESS-DOCS
Fax: +1 (806) 214-9148
Email: [email protected]
Web: www.essdocs.com
18 Mansell Street, 4th Floor
London, E1 8AA
United Kingdom
Tel: + 44 (20) 7754-5984
Fax: +44 (870) 129-6428
Email: [email protected]
©2003-6 Electronic Shipping Solutions. All rights reserved.