Maritime Trade Innovation
Simon Ring Global Head of Financial Markets Compliance Pole Star Eric A. Sohn Director of Business Product Dow Jones Risk & Compliance
The Importance of Maritime Trade ● 90% of world trade travels by sea ● COVID-19 has led to global shipping & port activity ○ Estimated USD 12 trillion constricting ● A smoothly running supply chain is needed to ● IMO, ITF, UNCTAD, etc., have urged nations to ensure the flow of essential goods support the flow of sea trade ○ Food ● The COVID-19 outbreak hasn’t erased existing ○ Fuel issues, it has merely brought on a new set of ○ Medical supplies problems. ○ Raw materials ○ Agricultural products ● At any given time, 50,000 vessels and 1.2 million seafarers are in operation.
“The maritime industry is the key artery for sanctions evasion globally” David Peyman Deputy Assistant Secretary of State for Counter Threat Finance and Sanctions
2020 U.S. Government Sanctions Priorities and Approach Looking at the maritime supply chain as a whole: ● Ships (in particular ship types carrying specific cargoes under strategic sanctions programs) ● Flag registries ● Ship owners ● Ship operators ● Ship chartering & brokering ● Ship & maritime insurance players ● Ports & terminal operators ● Shipping service providers ● NVOCCs ● Bunkering
Key Areas of Focus: Deceptive Shipping Practices AIS transponders Falsifying cargo and vessel documents Ship to Ship (STS) transfers Disabling vessel tracking systems - Automatic Identification System (AIS) Vessel name changes Physically altering vessel identification
“No company is too big to fail or too safe.” David Peyman Deputy Assistant Secretary of State for Counter Threat Finance and Sanctions *COSCO designation – considerable increase in global shipping costs
Paper-Based Nature of Maritime Industry On average, a cross-border Cost of processing trade Paper-based nature of trade With people now WFH due to trade finance transaction for a documents can be nearly 20% financing and maritime COVID-19, the drawbacks of single commodities cargo of those of shifting goods transportation industries leave paper-based documentation travelling by sea requires the corporates challenged by: are more pronounced than ever exchange of approximately 36 ● Procedural inefficiencies documents and 240 copies ● Lack of transparency ● Increased risk of fraud ● Increased risk of human error ● Lack of automation
Trade Digitisation The elimination of paper from Combined with appropriate The success of global trade Technological advances such the processing of trade use of tech, this can cut lies in the ability for all those as blockchain promise to finance transactions has the compliance costs by >30% involved to leverage reduce collateral, operational potential to reduce output technology to ensure and compliance costs, time by two hours per sanctions compliance and automate verification, and transaction. appropriate due-diligence digitize paper based while lowering the cost of information management for trade financing. financial intermediaries.
Technology It has never been more vital for businesses to keep at pace and comply with the fast-moving and increasingly complex sanctions and regulatory landscape ● Streamline, automate, and simplify complex compliance process ● Keep at pace with an ever changing regulatory landscape ● Be configurable to meet each clients risk parameters ● Unify compliance process across international branch networks ● Record the process in immutable format ● Incorporate the best in breed service providers & data ● Save the client time and money ● Protect the business, its staff, and its reputation
Partnerships The importance of partnerships cannot be understated when tackling big industry issues. ● Pole Star’s PurpleTRAC entered into partnership with the Marco Polo Network earlier this year to bring about a fully automated vessels sanctions screen solution its members. ● As one of the biggest, global trade finance network supported by blockchain technology, the Marco Polo Network currently has more than 30 member banks on board, having tested by more than 70 corporations ● We are working on some exciting initiatives with MP to be launched officially in the coming month, that will have a direct impact on improving maritime trade and supply chains whilst eliminating a lot of the prevalent industry pain points
“In these difficult times, the ability for shipping services and seafarers, to deliver vital goods, including medical supplies and foodstuffs, will be central to responding to and, eventually, overcoming this pandemic” Kitack Lim Secretary-General
Thank You
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