Making innovation interoperable for Global Trade

Digitising trade is a common goal across the financial industry as it presents an opportunity to improve efficiencies, reduce costs, boost global trade, and provide rich, structured data that addresses ESG and compliance practices. However, the complexity of trade processes has made achieving digitisation difficult for institutions. 

 

Trade transactions must factor in a range of participants in the physical and financial supply chains, all of them having different processes, priorities, and speeds of work. This is not to mention other obstacles such as the limited adoption of electronic trade documents in different markets, and risks of fragmentation given the variety of digital platforms, APIs, and standards. 

 

So, while the benefits of trade digitisation are evident, it will require technological interoperability, legal harmonisation and adoption of common standards to be successful – which can be fostered through strong industry collaboration. 

 

Swift’s support for trade digitisation

 

When speaking with the industry, Swift found there was a particular appetite for streamlining the processes involved in the trade guarantee lifecycle. 

 

Guarantees, which are used globally to provide certainty of payment in the event of a breach of contract, can be hard to obtain. Applying for a guarantee can be time-consuming, with densely written documents typically exchanged via paper or email. Looking to overcome this deficiency, Swift has previously developed an industry solution that allows institutions to manage guarantee interactions using MT 798 messages. But there is still more that can be done. 

 

Swift has collaborated with the International Chamber of Commerce (ICC) to develop a new corporate-to-bank Guarantee API as the industry looks to reduce friction that arises from different standards, identities, and security specifications. This has resulted in an open API solution that streamlines the corporate-to-bank lifecycle, one which has a light footprint and can provide standardization and real-time visibility. It also provides structured ISO 20022-ready data.

 

Currently, a range of industry players are taking part in pilot testing to validate the effectiveness of this solution; seven banks have already begun implementing corporate-to-bank Guarantee APIs, and two trade platforms are harnessing the APIs to improve interoperability between corporates and banks via their platforms. 

 

Enhancing eBL adoption

 

Another key priority for the industry is digitising bills of lading – a physical document issued by a carrier to a shipper that serves as a receipt, a contract of carriage, and a document of title. Although this document already has a digital format – the electronic bill of lading (eBL) – adoption has been limited to date, largely due to the lack of interoperability between platform hosts and participants involved in the transaction. 

 

Setting out to improve the interoperability of eBL, Swift and industry leaders such as BIMCO, DCSA, FIATA, and ICC, established the FIT Alliance (Future International Trade) in 2022 to strengthen global adoption of internationally recognised standards for eBL across all sectors of trade. Progress has been steady, as the FIT Alliance’s recent 2024 FIT Alliance eBL Report found that dual-format users (those using both paper and eBLs)  surged from 28% in 2022 to 41.7% in 2024.  As a result, the overall adoption rate – encompassing users of eBLs exclusively or alongside paper BLs- rose from 33.0% to 49.2%. 

 

Efforts have not stopped there, and in 2023 the FIT Alliance successfully tested a model that uses APIs to speed up the exchange of eBL between different trade platforms in collaboration with eBL platform providers. The model isn’t limited to bills of lading, and other documents needed for trade such as invoices, certificates of origin, and packing lists can be converted into PDF and digital form. 

 

Following the success of the initial collaborative innovation trials, the community is exploring how momentum can be carried into the future. For instance, Swift recently worked with a trade platform, WaveBL, on a proof of value project to demonstrate how the end-to-end electronic exchange of eBLs and other related shipping documents can be supported in the near term, using a digital file transfer service, FileAct. 

 

The project displayed strong results and enabled the end-to-end transfer of documents that are maintained and managed by approved IGP&I club platforms, such as WaveBL. This initiative has expanded to more players within the financial community, as Swift is collaborating with several banks and trade platforms to validate the feasibility of exchanging a full set of trade documents in PDF or digital form, with FileAct and FIN messages. 

 

While the industry has made notable strides in eBL adoption, it’s clear that greater coordination and capacity building will help enable stakeholders across the supply chain to operate seamlessly with eBLs. As the industry works toward achieving this interoperability, Swift’s goal is to enable institutions to leverage infrastructure without significant investment required, as this will help overcome barriers of entry for institutions to use digital trade documents. 

 

Entering a new frontier for trade

 

While digitisation has progressed in certain areas, numerous trade activities remain ripe for digital transformation, given trade’s interconnected nature. Interoperability is crucial - not only among corporates, platforms and banks, but also across entire industries and ecosystems, especially considering that economic fragmentation can cost up to 6% of global economic output. For digitisation to succeed, collaboration between markets is essential to ensure interoperable outcomes. Tangible roadmaps by industry participants will also help drive digitisation. This will not only improve efficiency, transparency, and accessibility, but ultimately drive global trade forward.