Twenty-plus years ago (gulp) my colleague Stuart Burns and I met as traders in the world of global commodities. Looking back, all I can say about the experience is that I could’ve re-written and re-titled the book “All I Really Need to Know I Learned in Kindergarten” to “All I Really Need to Know About Business I Learned as a Commodities Trader.”
To the positive, I learned the technicalities of global import and export trade finance. I learned about how mills work with service centers, as well as how trading companies establish foreign trading desks and create overseas agencies and offices. More important, I learned about third-party logistics (3PL), how cargo moves around the world and the inner-workings of trade finance.
I also learned a lot about different business cultures, norms and general business practices. Valuable lessons, as they say.
However, I couldn’t help but learn some nefarious business practices along the way. My best business stories (that I still tell) all come from my trading days.
Whether it was the time Stuart’s customer retrieved their aluminum plate from our supplier – and found the shipping containers completely empty – or the time my boss at the trading company I worked for asked us to alter some shipping documents when the bankers were due in the office (we didn’t do it), trading showed me everything that could go wrong in a business transaction.
And I’ve learned that in the 20 years since I last brokered aluminum, many of the business practices have not changed – in fact, they are still very similar to practices prevalent in 1994. For context, here are two pieces from our sister site Trade Finance Matters – a piece from October 2014 and here from April 2014.
For large metals and mining companies that trade billions of dollars worth of iron ore, coking coal, bauxite, alumina, etc., the circa-1994 paper trail and processes that support our $20+ trillion of world trade suggest companies can reap big rewards through trade automation and technology.
Over the coming weeks we will run a series on international trade discussing some of the bigger challenges around the use of letters of indemnity, fraudulent transactions, and how large metals and mining firms have reduced (and in some cases, even eliminated) demurrage charges. For large players that have established themselves as world-class trading operations, the benefits appear significant – working capital improvements, reduced days sales outstanding (DSO) and lower inventory.
MetalMiner will be collaborating with Bolero, a cloud-based platform that provides a different way to optimize complex international trade chains. The Bolero platform digitizes and exchanges trade documents in a legally secure and trusted environment. The unique technology infrastructure supports all trade flows between parties and across all locations. Bolero automates the entire paper-based trade process, generating significant benefits to large mining and metals companies, including: accelerated time to cash, reduced costs, reduced risk greater control and visibility, and operational efficiencies.
Stay tuned! In the meantime, get on the list to receive Trade Finance Matters’ weekly digest.