1. UN/CEFACT UNECEUNECE Pioneering Paperless Trade: The way covered and the way ahead A Community Model for Paperless Trade Development Experience of the Digital Trade and Transportation Network Peter Stokes CEO, Digital Trade and Transportation Network Ltd Less and Better Data to build Trust and Efficiency

2. UN/CEFACT UNECEUNECE Agenda  Tradelink Highlights and Single Window for Hong Kong SAR Government Trade Documents  Evolution to Community Single Window  Digital Trade and Transportation Network (DTTN)  Community Model  Functions and Features of the DTTN  Costs and Benefits  Model for Worldwide Paperless Trade Interconnections  Inhibitors and Success Factors for the Development of Paperless Trade

3. UN/CEFACT UNECEUNECE Single Window for Hong Kong SAR Government Trade Documents (B to G) and Tradelink Highlights

4. UN/CEFACT UNECEUNECE Tradelink’s Shareholders   The HKSAR Government42.49%   Banks 10.33%   Terminal Operators15.29%   Industry Associations7.78%   China 5.30%   Airline5.30%   Textile Industry 4.73%   Telecommunication8.78%

5. UN/CEFACT UNECEUNECE   Original 7 year franchise (1997 - 2003) for Government trade documents, with mandatory electronic submission extended as a license for 2004 - 2008 – –Over 53,000 company subscribers – –17 million transactions/year – –All documents digitally signed & encrypted for open network transmission, using Recognized Digi-Sign Certification Service’s certificates HKSAR Government Trade Document Single Window via Tradelink (1/2)

6. UN/CEFACT UNECEUNECE   Network of 27 Service Centers   Paper to electronic conversion for organizations who have not “computerized”   Key factor in mandatory electronic submission program HKSAR Government Trade Document Single Window via Tradelink (2/2)

7. UN/CEFACT UNECEUNECE Tradelink’s Electronic Services Trade Related Government Services as the Basic Building Block All Traders   Import & Export Declaration   Certificate of Origin   Dutiable Commodities Permit   Shipping Order Service   Trader Documentation Service for Regional/Global Trade   China Processing Trade/Cross Border Documentation Service Textile Traders & Manufacturers   Production Notification   Textile Trader Registration Scheme (TTRS) Notifications   Certificate of Origin Forwarders & Carriers   Carrier Notification   Shipping Order / US Customs AMS   Manifest   Textile Trader Registration Scheme Notifications

8. UN/CEFACT UNECEUNECE Pan Asian e-Commerce Alliance (1) Established in July 2000, aims to facilitate secure cross border paperless electronic services for efficient global trade Members Number of Customers CIECC (China) 10,000 KTNet (Korea) 30,000 CrimsonLogic (Singapore)25,000 Trade-Van (Taiwan) 25,000 Tradelink (Hong Kong)53,000 DagangNet (Malaysia) 2,000 TEDMEV (Macau) 2,000 CAT (Thailand) 2,000 TEDI Club (Japan) 80 149,080

9. UN/CEFACT UNECEUNECE Pan Asian e-Commerce Alliance (2) Trust in cross border transactions through: Legal framework for electronic Cross Border trade transactions Mutual Recognition of Digital Certificates amongst members of the Alliance, Six Certification Authorities recognized (HK, Taiwan, Korea, Singapore, Japan, China) Secure Cross Border Trade Transaction Service Commercial invoice, ASN/Packing List, Scan / Pack Import Pre-Declarations based on Export data

10. UN/CEFACT UNECEUNECE Trade, Manufacturing Logistics, Finance, Commercial Evolution from Government Single Window to Community Single Window Start Electronic Submission of Government Trade Documents - Trade Declaration - Export License Mandate Electronic Submission of Trade Declarations Initiate Cross Border Paperless Trade Projects - Pan Asian E-commerce Alliance - Bolero - TradeCard Community Single Window for Paperless Trade with Worldwide Interconnection - Certificate of Origin - Production Notification US Customs AMS Manifest Textile Trade Notifications - Shipping Order - Commercial Invoice - Packing List Government Documents 1997 200620032000

11. UN/CEFACT UNECEUNECE The Digital Trade and Transportation Network (DTTN) A Community Model

12. UN/CEFACT UNECEUNECE Guiding Principles for the DTTN Guiding Principles for the DTTN Public/private sector Logistics Development Council initiative to improve HK’s competitiveness and to make HK the regional e-Logistics hub of choice   Neutrality   Non-exclusivity   Transparent, accountable & responsible operations   Minimum intervention to any participant’s business processes & relationships   Facilitate & respect market forces   Easy to access & use

13. UN/CEFACT UNECEUNECE Governance Framework   Digital Trade and Transportation Network Limited ownership principle   51% by Tradelink   21% by Government   28% by industry associations   Operating Agreement to assure a neutral and community focused DTTN operating framework   Industry Based DTTN Standards Advisory Group – advise, review and endorse document structure and interconnection standards

14. UN/CEFACT UNECEUNECE Three Layer DTTN Model Value-added services such as financial products, multi-modal integration, distribution management Value- added Services Core Messaging Infrastructure (DTTN Ltd) Open, neutral, secure, reliable and shared electronic infrastructure messaging Local and international standards for security, trade documents, codes, protocols Layer 3 Layer 2 Layer 1 Standards and Protocols

15. UN/CEFACT UNECEUNECE Community Role of the DTTN Sellers Carriers / Portals (Inttra, GTNexus) Carriers / Portals (Inttra, GTNexus) Buyers Freight Forwarders Freight Forwarders Document Exchange & Transformation Communications Gateway Customer Management Security Services Support & Operations Management Web Services DTTN Core Messaging Infrastructure Banks & Financial Institutions Banks & Financial Institutions Terminals Inspection Agencies Inspection Agencies Insurance Institutions Insurance Institutions Government & Agencies Government & Agencies e.g. Tradelink

16. UN/CEFACT UNECEUNECE Functions and Features of the Digital Trade and Transportation Network (DTTN)

17. UN/CEFACT UNECEUNECE   Reliable, secure transformation and delivery of legally recognized electronic documents   Reliable, secure delivery – local, China, globally   Any-to-any protocol & document transformation   Excel; XML; EDIFACT, ANSI X12; Flat file, Cargo-IMP;   e-Mail, FTP/S; HTTP/S; AS1, AS2, ebMS2, Multiple Character Sets   Documents stored on-line for 2 years, offline for 7 years   Low Cost Single e-Channel to all trading partners   use existing in-house system with minimal changes   Community interconnections e.g.Tradelink’s 53,000 traders & forwarders; 30+ major ocean carriers via INTTRA/ GTNEXUS DTTN Services – Core Infrastructure

18. UN/CEFACT UNECEUNECE DTTN Document Exchange Services (1/2) Supports ten major trade & logistics processes for import / export between HK-PRD (truck, rail, river) & overseas via Ocean / air;   Purchase Process (Purchase / Sales Order; Order Confirmation)   Get products ready for delivery (Packing List / ASN; Commercial Invoice; Inspection Certificate; Insurance)   Local and overseas transportation (Booking; Shipping order; arrival notices; transport documents - Master / house waybill - sea / air; cargo receipt; transport set; Equipment Interchange Receipt; delivery / release order)

19. UN/CEFACT UNECEUNECE DTTN Document Exchange Services (2/2)   Integration with Government Trade document providers - GETS (Trade Declaration, Certificate of Origin, Textile Notifications, Dutiable Commodities Permits, Manifest…)   Settlement Process (Letter of Credit; Company Guarantee; Bill of Exchange; L/C collection letter; document arrival notice) [Depends on Bank participation]   Key document ownership transfer & “print right” with local on-line payments (transport documents e.g EIR; local trade services invoice; payment instruction / confirmation)

20. UN/CEFACT UNECEUNECE Development of DTTN Canonical XML Document Structures   Following UBL Methodology to develop Canonical XML Structures for over 60 major international / local trade documents   The DTTN Standards Advisory Group, comprising relevant industry associations, has reviewed and endorsed over 50 documents   Exploring the submission of these document structures to UBL for incorporation within UBL V2.0, as part of proposed alignment with UN-eDOCS under the UN/CEFACT framework

21. UN/CEFACT UNECEUNECE DTTN Interconnection Example – Purchase to Delivery Buyer 1 DTTN 1. PO (X 12) Buyer 2 Forwarders Seller Application Service Provider 2 6. Shipment Status (Web) 1. PO (Excel) 2. SO, CI, PL (Excel) 5. BL (EDIFACT) 2. SO, CI, PL (EDIFACT) 5. BL (Excel) 4. Shipment Status (X 12) SO - shipping order CI - commercial invoice PL - packing list BL - bill of lading Application Service Provider 3 Carriers 3. Master SO (EDIFACT) 3. Master SO 4. Master BL Shipment Status 4. Master BL, Shipment Status (EDIFACT) 3. Master SO (EDIFACT) 6. Goods / Shipment Status (Web Services/XML) 6. Shipment Status (EDIFACT) 4. Master BL, Shipment Status (EDIFACT) Goods Status (RFID / EPCGlobal) Goods Tracking Locations Physical Delivery

22. UN/CEFACT UNECEUNECE Cost and Benefits of the Digital Trade and Transportation Network (DTTN)

23. UN/CEFACT UNECEUNECE   Charges based on each successfully transformed and delivered document   Initial connectivity, annual & customisation fees will apply   Final pricing details to be determined by DTTN Ltd Board closer to launch   Special Incentives for Pilot Users   Waive document charges for the duration of the pilot, waive initial connectivity charges   Rebates may accrue for each document transacted during the pilot   Be a part of the DTTN marketing program Low Cost Community Infrastructure

24. UN/CEFACT UNECEUNECE   Cut operation costs through reduced delays, double handling / data entry & minimized errors   Save time and cost for document delivery e.g.EIR, HWB   Better financial management e.g. credit, cash flow   Easy, cheap & fast to interconnect with trading partners – any-to-any protocol & document transformation   Retain existing business against competition   more timely, accurate and value-add services   Visibility along the supply chain   Significant business and efficiency opportunities   “Just in time” supply chain management;   e-access to more trading partners What are the benefits of the DTTN

25. UN/CEFACT UNECEUNECE Digital Trade and Transportation Network Model for Worldwide Paperless Trade Interconnections

26. UN/CEFACT UNECEUNECE Interconnecting for Paperless Trade

27. UN/CEFACT UNECEUNECE Model for Worldwide Paperless Trade Interconnections

28. UN/CEFACT UNECEUNECE  Lack of IT sophistication for Small and Medium Enterprises  difficult to compete against multi-nationals  High cost in integrating with local and overseas trading partners  Government acceptance of electronic documents from overseas (e.g. Certificate of Origin) is limited Inhibitors for Paperless Trade (1/2)

29. UN/CEFACT UNECEUNECE  No commonly accepted trust framework for cross border paperless trade  Paper documents dominate for payment and settlement  Lack of coordinated and neutral interconnected platforms to streamline the “total” trade chain for all parties Inhibitors for Paperless Trade (2/2)

30. UN/CEFACT UNECEUNECE  Efficiency / competition for international trade  Government Mandate  Increasing drive towards integrated global digital supply chains Metcalfe’s Law Value of a Network = (Number of Connected Parties) 2 Motivators for Paperless Trade

31. UN/CEFACT UNECEUNECE To make Cross Border Paperless Trade happen we need to…….   Request US and European Governments to accept electronic Certificates of Origin   Support the Financial community’s drive to accept cross border electronic documents for settlement   Find ways to increase acceptance of a common cross border trust framework for paperless trade   Expand hub-hub interconnections between major consumer markets (North America / Europe) and major supplier bases (Asia)   Show demonstrable benefits for “expanded pilot” project as a platform to develop a critical mass of users in focus areas

32. UN/CEFACT UNECEUNECE The Digital Express Link to your Business Partners Worldwide