The company is one of the world’s leading petrochemical producers, with a global manufacturing footprint across Africa, Asia Pacific, Europe and the Americas. Given the nature of their international trade, the company uses Letter of Credit (LC) extensively and wanted a way to digitise the process, to increase the speed and efficiency of their operations.
The primary reason for long lead times in conventional LC transactions is the need for exchanging physical documentation, including transfer of title of goods and separate communications among counterparties, shipping companies and banks. These can be entirely transformed using Blockchain technology. One challenge in adopting this technology, however, is scaling participation with industry players. Companies need their trading counterparties to join the platform in order to fully benefit.
The transaction processing was reduced from 5-10 days to less than 48 hours, a significant efficiency improvement. This was made possible by providing more visibility for all parties with the use of Contour. With our presence in both Thailand and Australia, we were able to act as the issuing and advising/nominating bank for both sides. In addition, as one of the founding members of Contour, HSBC was able to smoothly facilitate the discussion all the way through to transaction completion.
Contour-enabled trade transactions have offered an insight into how technology has the potential to revolutionize conventional trade finance, and reduce the time frame and risks involved in cross-border trade. We will continue to try new technology and innovate with HSBC as it aligns with our digitalization transformation project
In 2020, through its subsidiary the company successfully executed a Blockchain-enabled LC transaction with one of its suppliers using the Contour Blockchain platform. Both the company and its supplier are active partners in the industry.
This was the first Contour LC transaction for both the buyer and supplier. The Blockchain transaction involved a shipment of goods shipped from Australia to Thailand. The end-to-end trade was completed on a single shared application called Contour, which had previously been done via multiple systems.