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  • The electronic revolution

    Chapter 3 - Cotton marketing - Electronic paperwork

     
     
    Not so long time ago, all shipping documentation had to be prepared manually without the use of a computer, and telex communication was the only form of liaison with origin countries to obtain shipping information. Then fax machines were introduced, providing data in a fraction of the time, today we cannot imagine life without e-mail – how did we ever cope!

    The cotton trade has seen the introduction of the electronic contract brought in by the ICA as well as other trade association bodies. Today, 97% of L/C transactions are sent by electronic SWIFT, banks now forward these L/Cs by e-mail to the beneficiary instead of by post, freight bookings are made electronically, and B/Ls are produced immediately the cargo is loaded on board. There are also e-trading companies, but while they bring buyers and sellers together electronically, manual paperwork still has its place to bind the agreements and shipments between the trading parties.

    The cotton industry was excited about the introduction of the ‘Bolero’ system, which promised an electronic revolution in the way international trade was transacted. As well as the electronic transmittal and negotiation of L/Cs, the EWR system in the United States allows the trade to buy and sell cotton electronically at the touch of a button.

    Over the last five years, the major companies have utilized their huge resources in developing bespoke systems which they encourage their own customers to use. International banks, with their enormous client base across all traded commodities, have developed in-house systems. These developments hardly encourage straight through processing (STP), in which information that can be recognized by participating systems can be transferred and data read from computer to computer without the need for user verification and subsequent re-entry of data.

    What a giant leap forward it would be for all companies in the supply chain to incorporate systems that talk to each other. Perhaps the different applications will be brought together, as banks have done with SWIFT, but we are not there just yet.

    The electronic revolution has certainly made an impact on the cotton trade, and those in the trade already using these platforms have seen a significant gain in their productivity and fast turnaround times for their capital.

    But will electronic paperwork really make a difference to both large and small traders in the cotton industry? Absolutely! Banks, warehouses, shipping lines, chambers of commerce, government departments and trade bodies are all moving into the electronic age. Irrespective of whether they ship 2 or 2,000 shipments a month, exporters can obtain and print their certificates of origin online via the Internet, the shipping line allows the original B/Ls to be printed within the trader’s office just hours after the cotton is loaded onboard the vessel, and courier companies have electronic air waybill manifests to evidence and track dispatched documentation. Banks receive electronic documentation to allow them to check compliance and claim for funds from the end-user quicker than receiving manual documentation from the seller. Warehouses provide electronic warehouse receipts for immediate passing of title to the goods between seller and buyer.

    The advice is simple – whether you are a one person operation or a multinational, ask the companies in your supply chain what electronic platforms are available for you to incorporate within your business. Although it may not be possible to have one all-encompassing trading platform across the entire supply chain, the advantages already in the marketplace will allow greater efficiency, control and cost savings. 
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    Cotton Exporter's Guide

    Brochure - African cotton promotion
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