How seven parties came together to provide one innovative solution for one of the world’s leading dairy processors
Seven parties. One solution. A first for New Zealand.
When Fonterra, one of the world’s leading dairy processors, wanted to carry out their first Electronic Bill of Lading (eBL) for a shipment of milk powder from New Zealand to Sichuan Province, HSBC had the global network and strong presence in China they needed to pull it off. The end-to-end electronic presentation of trade documents was completed in 1-3 days, compared to the traditional time of 7-10 days using paper-based documentation and couriers.
About the client
Fonterra Co-operative Group is one of the world's leading dairy processors, owner of a significant portfolio of brands in Asia-Pacific, and a partner to many of the world's leading food companies. Fonterra is headquartered in New Zealand, with offices in more than 40 countries around the world.
Breaking new ground with Blockchain
Covid-19 has posed logistical challenges for companies around the world, and Fonterra was keen to achieve greater efficiency by piloting this digital solution – the first of its kind in New Zealand.
The Bill of Lading is one of the most important legal documents in an international trade as it represents the ownership of the cargo contents. As one of the world’s largest exporters of dairy products, Fonterra deals with thousands of Bills of Lading each year. Present from origin to destination, it’s essential to the ownership of cargo, customs clearance and finance, and serves as a shipment receipt when the goods reach their final destination. Under normal paper-based circumstances it can take more than a week for a physical Bill of Lading to travel from origin to destination, changing hands many times in the process, leaving it open to delays or fraud.
By digitising this workflow, Fonterra were keen to maximise operational efficiency and deliver the goods more optimally by:
- Reducing the end-to-end turnaround time from 7-10 days to 1-3 days
- Decreasing documentation processing costs
- Eliminating manual processes to minimise the risk of document loss, human error, forgery or delay
- Gaining greater visibility and real-time oversight over their trade transaction.
A turning point for trade
HSBC was well-placed to lead this transaction – the first Blockchain trade transaction between the two countries - given its international network, digital capabilities and ability to offer banking services on both ends.
“We are delighted to be part of this step in the evolution of trade” said Rachael Ireland of Fonterra. “Leveraging ePresentation of trade documents can lead to great efficiency and reduces risk of fraud, which benefits everyone involved including our customers. The close collaboration between the teams across geographies and time zones meant we were able to smoothly navigate the complexities of the transaction.”
Speeding things up to form a solution
The underlying technology facilitating the transaction was the Blockchain-based Wave platform, a 100% decentralised eBL solution. The eBL is digitally transferred from peer to peer, with a representation of it stored on Blockchain.
The carrier issued the eBL, Fonterra added additional trade documents, and presented a digital trade ‘envelope’ to HSBC New Zealand. The bank verified the documents and forwarded them to HSBC China representing the buyer, which sent the documentation to the importer. The importer then gave the Bill of Lading to the carrier, which released Fonterra’s cargo. The documentation part of the process took 1-3 days, a reduction of more than a week.
An outstanding outcome
The transaction went off without a hitch after nine months of close-knit collaboration and preparation between the seven parties involved: Fonterra, HSBC New Zealand, HSBC China, the importer Sichuan New Hope Trading, the shipping company Maersk, the Blockchain provider Wave, and the destination’s carrier port.
“We are pleased to have been able to assist Fonterra with this milestone Blockchain transaction, their first using an Electronic Bill of Lading between New Zealand and China” said Rob Roughan, Interim CEO, HSBC New Zealand. “This development supports the digitisation of Fonterra’s supply chain into the key market of China, a further example of HSBC facilitating Fonterra’s international banking requirements.
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