Shop talk: Marco Polo-Pole Star on smoothing maritime trade transactions
TXF sat down with Simon Ring, global head of financial markets compliance at Pole Star, and Jeff Handler, global head of special projects & network adoption strategy at Marco Polo to discuss what the partnership will achieve in the choppy waters of the trade finance market.
At the beginning of the year, Pole Star and Marco Polo partnered up to enable the streamlining of maritime transactional processes and securing of sensitive data. The partnership provides a fully automated vessel sanctions screening solution to Marco Polo Network’s member banks, their corporate clients, and the extended trade ecosystem. In short, the marriage allows organisations to increase the capacity and velocity of their transactions, while facilitating rapid decision-making in trade finance.
TXF: Tell us a bit about Marco Polo and the work you do.
Jeff Handler (JH): Marco Polo provides banks and corporates with easy to use, digital tools that make managing trade finance programs simpler and more cost effective. I oversee our global special projects team, where we focus on identifying specific use cases where our propositions provide additional value and benefits over the options available today.
TXF: Could you tell us a bit about Pole Star’s regulatory technology solution, PurpleTRAC?
Simon Ring (SR): In light of the current regulatory landscape, the ability to verify the location of a vessel and screen its ownership and management is crucial. PurpleTRAC allows users to configure their own unique compliance criteria, ensuring clear results in seconds and a compliance audit trail. Our hybrid-tracking solution incorporates automatic identification system (AIS) and Inmarsat data to provide the most robust and accurate geolocation data in the market today.
TXF: Which issues faced by the shipping industry do you aim to solve?
SR: The shipping industry runs on razor-thin profit margins, creating an environment where sound working capital management is essential for businesses to survive and thrive. At the same time, there is a huge lack of trade finance and working capital programs tailored to meet the industry’s needs, leaving even the world’s strongest performing companies without readily available, easy to manage financing options.
TXF: How has Covid-19 impacted the industry?
SR: 90% of world trade travels by sea, however since the beginning of the pandemic, shipping and port activity have constricted. As stated by the International Chamber of Shipping, “in this time of global crisis, it is more important than ever to keep supply chains open and maritime trade and transport moving.” Moreover, the shift to working from home has ground many banks’ documentary trade to a halt, which at a time when access to capital is more important than ever, underscores the need for digitally native programs that allow banks and their clients to operate in a paperless world.
TXF: Are there any joint solutions in the pipeline to address these challenges?
JH: Currently, we have three joint propositions available, which we feel will be of great benefit to the shipping industry. They include:
Marine (Bunker) Fuel Financing: Bunker fuel purchases constitute the largest operating expense for any ship owner and operator, with few financing options that work well for both buyers and suppliers. Our joint solution allows buyers and suppliers to access new working capital programs tailored to the unique transaction requirements, providing buyers with the ability to extend payment terms, and suppliers with early payments from the buyers’ banks.
Port Services Disbursement Account Financing: Companies must pay for port agencies weeks in advance of service delivery so that these agencies can cover the costs of 3rd party providers that deliver their services. By leveraging our Payment Commitment solution, ship owners can finance disbursement accounts with extended payment terms while ensuring that port agencies are paid prior to the collection of the supplier invoice.
Canal Transit Toll Fee Financing: Similar to port services, companies are also required to pre-fund expensive canal transits weeks in advance of service delivery. This creates a glaring working capital challenge. Our joint solution offers a way to finance these transactions and avoid pre-funding through a specialised program that is fully compliant with the business and system requirements of all parties involved.
Note : Generic representation only. Detailed workflows and participant interactions are dependent on specific use cases.
TXF: So what comes next?
The shipping industry is, and will remain, a critical component of the global economy. The importance of sound financial performance, as well as cost savings, risk mitigation, and efficiency gains associated with digitisation, are now at the forefront. We are continuing to work with key stakeholders across the industry, and have a number of exciting global initiatives that we look forward to announcing shortly.
