How LEI adoption can Benefit the Shipping Industry
LEIs play an essential role in risk mitigation. One of the critical aspects of LEIs is that they are not tied to any single jurisdiction, so they can be used across global financial markets without causing confusion or additional cost. This makes them particularly valuable for financial institutions with multi-jurisdictional operations or those that must comply with local regulations. As part of raising awareness about why it makes sense for everyone in our industry to adopt LEI code registration and renewal, we’ve put together this list of the benefits that the Shipping Industry will enjoy by adopting LEI:
Eliminating Duplicate Data Collection
The need to avoid duplicates arises at every step in compiling data on an asset or activity – entering new information, updating existing data, and reporting all uses of each unique identifier. Unfortunately, duplicate data collection is commonplace worldwide, particularly concerning identifiers used during shipments across borders.
A shipment may have copies or translations of bills of lading issued in different formats. The number of copies can vary from one to several duplicates required by the parties involved in the shipment.
Reduced Fraudulent Activities
A unique identifier provides a globally recognized standard for identification, security, and integrity of shipments during their life cycle from point-of-origin to final destination anywhere in the world. Therefore, transactions with LEIs will bring benefits beyond just being able to flag misappropriated or diverted cargo that has been attributed to a wrong bill of lading. In addition, in many jurisdictions, transactions with LEIs are legally enforceable as proof of the existence and transfer of clear title to cargo between two parties involved in a transaction.
Faster Documentation Issuance Procedures
A unique number that remains unchanged over time allows carriers/shippers/consignees to fully see their supply chains. In addition, it enables them to be updated about every change related to a shipment along its route from origin to final destination among all parties involved in the supply chain. This is key to saving time and costs when monitoring or rerouting shipments during their operational life cycle.
Improving Claims Processing
A unique identifier facilitates claims settlement by allowing carriers/shippers/consignees to track proof of delivery through an unbroken series of shipment event data, which can also ensure compliance with regulatory requirements such as proof of delivery for exports imports and hazardous material shipments.
The ability to trace where a container has been will allow the owner and insurer to determine whether cargo has been misappropriated during transit, which would give peace of mind that not all cargo has been stolen. This is very important in the shipping industry, considering that cargo theft can cause severe losses to businesses and insurers alike.
Minimize Documentation Errors
Shippers and consignees will benefit from a unique identifier because it provides a single source of information about their shipments during all phases of their life cycle and reduces the possibility of errors caused by different documents containing different information for the same shipment.
Improved Customs Procedures & Compliance Issues
The LEI brings benefits beyond customs agencies when used within an electronic data interchange (EDI) environment or when combined with solution providers such as plug-ins to commercial software such as SAP, Oracle Applications, and others, since documentation checks usually performed during customs clearance can be performed once by the carrier and applied to all shipments.
Lack of Paper Trail on Sealed Containers
A unique identifier provides proof that a container has not been opened or tampered with during transit, allowing carriers/shippers/consignees to avoid costly delays at destination ports due to broken seals. It also enables them to track proof of delivery through an unbroken series of shipment event data throughout its life cycle from origin to destination anywhere in the world.
Improved Product Traceability Measures
The ability to trace individual pieces within a shipment using its reference number will help provide greater transparency and traceability of products, parts, or other variables. This feature is currently used in the pharmaceutical industry to track individual drug components/analogs, ensuring their authenticity and quality throughout their entire life cycle.
Faster Cargo Claims Settlement
The ability to claim goods quickly is key to minimizing losses caused by cargo theft, which cause severe losses to businesses and insurers alike. In addition, a unique identifier that remains unchanged over time allows carriers/shippers/consignees to have complete visibility on their supply chains.