Today the completion of the world’s first integrated paperless trade transaction happened – in iron ore – involving Rio Rinto selling bulk iron ore to Cargill, who sourced the cargo from Australia on behalf of a customer in China, supported by banks HSBC and BNP Paribas

The trade was executed through an end-to-end data flow from the sales of goods contract in Chinsay’s ICP platform, the letter of credit management in Voltron, and the shipping / trade documentation in CargoDocs DocEx, with core users accessing all three applications via Voltron. Specifically, the following actions were taken:

  • Rio Tinto and Cargill collaborated on Chinsay’s Intelligent Contract Platform (ICP) to dramatically reduce the time it took to create, issue, approve and digitally sign commodity contracts from several days to hours
  • Contract attributes/data flowed from ICP to Voltron, where Letter of Credit (LC) issuance was completed in less than two hours compared with 1-2 days for traditional, paper-based LCs, with one single-source LC digitally transmitted across the platforms
  • Rio Tinto, Cargill, ship agent, shipowner, HSBC and BNP Paribas collaborated via our web-based CargoDocs solution to draft, approve, sign, issue, transfer and electronically present the electronic Bill of Lading (eB/L) plus upload relevant supporting documents, slashing trade document turnaround to hours as opposed to days/weeks and accelerating the trade via integrated data flow between CargoDocs and Voltron
  • 100% of documents required under the LC were presented electronically, with one single-source eB/L plus supporting documents digitally transmitted across the platforms
  • In turn enabling a seamless, integrated paperless trade flow connecting data from CargoDocs DocEx and ICP to the Voltron blockchain

Earlier in 2019 they announced their partnership with Voltron to integrate CargoDocs DocEx into the Voltron blockchain trade finance application. With the integration now live, the recent milestone transaction paves the way for many more to come, as trade participants seek to find simple, efficient and secure ways to connect previously siloed data and execute trades with increased efficiency, simplicity and visibility. 

Building upon the first fully-digitised trade finance transaction completed in November 2018, Rio Tinto and Cargill have gone two steps further by extending this across the full value- chain from acceptance of key commercial terms through to delivery. This was done by integrating with Chinsay’s Intelligent Contract Platform (ICP) and essDOCS’ Document Exchange platform (CargoDocs DocEx).

The new transaction advances industry towards fully digitising cross-border trade, enabling:

• Faster, more secure, trade flows which are simpler and more efficient.
• Speedier and less manual LC issuance with the process being completed in less than two hours compared with 1-2 days for traditional, paper-based LCs.
• Flexibility that allows for multiple drawings within one LC, instead of just one payment.
• Increased accuracy as one single-source LC was digitally transmitted across the platforms.
• Increased accuracy as one single-source eB/L was digitally transmitted across the platforms, enabling instant electronic transfer of title, with 100% of documents required under the LC presented electronically.
• Faster documentation turnaround for the shipment, significantly reducing the time required to draft, approve, amend, sign, issue, transfer and present the full set of required documents, including the original eB/L.
• Increased flexibility in liquidity management for the seller, resulting in working capital optimisation.

Innovation in practice

In bringing together the stakeholders involved, this transaction is a unique demonstration of innovation at work:
• Rio Tinto and Cargill are dedicating time and resources to testing unproven technology with a view to building an industry leading capability.
• HSBC Singapore and BNP Paribas as participants of the Voltron consortium, relay client experiences to ensure the platform provides the highest impact functionality.
• Chinsay and essDOCS provide specialist capability in a niche part of the trade process.

Connecting all involved companies builds an ecosystem whereby each organisation benefits from the value provided by the others, and together all participants succeed.

Parties Involved:

Trade participants
Banks
Solutions/platform providers
Cargill, sourced iron ore on behalf
of customers in China

Rio Tinto, sold bulk shipment
of iron ore originating from
Australia
BNP Paribas, acting on behalf of Cargill

HSBC Singapore, acting on behalf of Rio Tinto
Chinsay: Intelligent Contract
Platform

essDOCS: CargoDocs DocEx
/DocHub

Voltron: Letter-of-Credit
platform

Quotes:

Rio Tinto

Simon Farry, Vice President, Sales & Marketing for Rio Tinto’s Iron Ore business: “We are focused on utilising technology to improve the customer experience when they do business with Rio Tinto, such as reducing documentation turnaround times and simplifying processes. The
successful conclusion of this pioneering project brings us one step closer to a future of fully digital cross-border trade.”

Cargill

Lee Kirk, Managing Director for Cargill’s Metals business: “This is a significant, industry-defining solution which will evolve the trade process. From acceptance of key commercial terms through to delivery, the speed achieved from a fully digitalized trade enables us to better meet the needs
of our customers across the globe. Innovation is a vital part of the Cargill DNA and we have always been strong supporters of digitalizing the trade process.”

HSBC Singapore

Iain Morrison, Head of Global Trade and Receivables Finance, HSBC Singapore: “Singapore continues to play its role in nurturing the technology which is enabling the evolution of trade finance. Building on the knowledge, relationships and expertise of the participants involved in this
transaction, we are closing the gaps in making this a truly transformative product.”

BNP Paribas

Zoran Lozevski, Head of Global Trade Solutions, Asia Pacific, BNP Paribas: “This fully integrated digital transaction further helps ensure trade flows are faster, more secure, simpler and more efficient and transparent. Following last year’s successful pilot, we broadened the scope to include contract management, making this a complete end-to-end import Letter of Credit proposition for our client, Cargill. We continue to work closely with our clients to make trade even easier for them.”

essDOCS

Alexander Goulandris, co-CEO, essDOCS: “By combining the functionality of Voltron, Chinsay ICP and CargoDocs, we were able to provide Rio Tinto and Cargill a complete, paperless trade solution that digitized contract execution, trade finance and trade execution/documentation processes end-to-end. We see these types of cross-platform collaboration and integration as critical to delivering on the promises of paperless trade.”

Chinsay

Colin Hayward, CEO, Chinsay:“The first paperless trade in iron ore is a clear example of how successful collaboration between vendors, global corporations and a bank consortium can be. By putting together the best companies and technologies, the industry is at a point of real
innovation.”