“Bolero” - the electronic transfer of commercial trade information
“The ability to move from a paper to an electronic environment will provide significant benefits to all participants in international trade”
It is estimated that currently three times more documentation is required to process an international consignment than was needed in 1970. Each document has to be prepared separately and the risk of a keying error is self-evident. Indeed, studies show that approximately 50% of all documents presented to banks under documentary credit arrangements contain some type of error resulting in delay whilst the document is returned for correction.
However, a new system called “Bolero” has been designed to eliminate these problems.
What is Bolero?
Bolero is a fully electronic environment for trade administration offering an electronic alternative to the documents supporting international trade. Beginning with the bill of lading which, due to its negotiable nature, has been the most difficult document to deal with, the system uses a series of EDIFACT (Electronic Data Interchange for Administration of Commerce and Transport) standard international messages, a central register to record who the holder of the document is at any one time and a security system based on digital signatures to pass electronic title to the document down the chain.
How Bolero works ......
The carrier receives the shipping instructions electronically, turns this data into a Bolero Bill of Lading (BBL), digitally signs this message and sends it back to the shipper via the registry. The registry will set up a record for this BBL giving it a unique consignment reference number and the shipper, when he confirms that he accepts the BBL, becomes the first recorded holder. When the shipper, or any other current holder, wishes to transfer the BBL to the next person in the chain, he sends a transfer request to the proposed new holder via the registry. On receipt of this, the proposed new holder will then accept or decline the BBL. If he accepts, he will become the new recorded holder. All the electronic messages relating to the BBL are also secured by the use of digital signatures so that the registry and the users can all be sure that the person sending the message is authorised to do so.
Of course, there are many other documents involved in an individual shipment, but since they (unlike bills of lading) are only pieces of paper carrying information and without any intrinsic value, these are easier to translate into their electronic equivalents. Indeed, many of the other documents already have EDIFACT messages designed and in use, which can be readily adopted by the Bolero service. Some other possible functions, such as full integration with customs systems, may take a little longer to achieve.
Prevention of Fraud
The paper bill of lading containing a manual signature can easily be forged. Bearing in mind that the average value of a consignment in international trade is approximately US$ 40,000 and that the value represented by a single bill of lading could be as high as US$ 60 million, it is no surprise that the maritime world suffers massive fraud. The replacement of paper with a system such as Bolero, based on digital signatures, should result in a considerable reduction in fraud, with attendant lower costs for all honest international traders.
As with the use of other electronic systems, the improved customer service that can result for all users with a well-planned implementation of Bolero makes the organisation more competitive. Customer service improvements tend to come about through the fast availability of more accurate information and through the ability to plan further ahead and achieve a closer partnership between supplier and customer. The biggest benefit of all, however, is the ability finally to integrate shipping systems with the manufacturing, order processing and accounting systems of traders. Transport documents are very often the missing link in achieving completely automated administration systems - Bolero makes it all possible.
The way ahead
The TT Club (a sister Club of ITIC) recently signed a joint venture agreement with SWIFT (The Society for Worldwide Financial Telecommunication) in order to commercialise the project. This joint venture will be responsible for the overall management of Bolero. It will also contract with service suppliers for the development and operation of key components of the service and provide an integrated service to end users. In particular the joint venture will contract with SWIFT for the provision of the central registry and security systems. The joint venture will also accredit network suppliers and establish standards for application vendors to build front end applications for Bolero.
Bolero is different from previous initiatives because of its cross-industry approach. It is believed that this will ensure support from the key banks and transport operators who will brand, with their own name, the central service, add value to it and promote it to their customers.
The ability to move from a paper to an electronic environment will provide significant benefits to all participants in international trade, including liner agents. The Club, will of course, be monitoring the progress of this exciting project and further developments will be reported in the Intermediary.