1. For some shippers, Web's making life easier
But others still cling to complex, time-consuming letters of credit to get paid
By Dave Copeland
Globe Correspondent
Until six months ago, whenever GT Solar Inc. loaded
machines used by other companies to make solar panels
onto ships bound for Asia, company officials were never
certain when they might be paid for the equipment.
The problem stemmed from the antiquated "letter of credit"
system used by shipping firms since the days of Marco Polo.
International wire transfers, foreign banks, and lots of
paperwork all offered opportunities for a glitch to delay
payment, by weeks or months.
"It's one of those complex things where you need to cross
every T and dot every I, or you have a discrepancy," said
Michael Pratt, treasurer of the Merrimack, N.H., company.
"A single discrepancy is enough for one of these foreign
banks to push the whole thing back to you."
That changed this year when GT Solar started using an
online trading platform developed by Trade Technologies Kirk Lundburg, CEO of Trade Technologies Inc., of Austin, Texas,
was in Boston recently to promote his company's online platform
Inc., of Austin, Texas.
to help shippers and receivers track payments.
The system lets both shippers and receivers track
payments, a streamlined process that bypasses the older accuracy," he said.
system's flaws and slow pace. Similar to the way an investor
can monitor stocks by logging into a brokerage firm's The company was founded in 1999, but its business model
website, a shipper can use Trade Technologies' site to get started to take hold just five years ago, Lundburg said. In the
frequently updated information about shipments and early days, there was doubt among shippers and receivers
payments. that the online system could work.
Similar to the way an investor can monitor stocks by Resistance to change "has been the biggest burden to
logging into a brokerage firm's website, a shipper can overcome," Lundburg said. "People just didn't believe we
use Trade Technologies' site to get frequently could get them paid easier."
updated information about shipments and payments.
The company's technology was developed by a Texas cotton
"The bottom line is they get us paid faster," Pratt said. exporter that grew increasingly frustrated with how long it
took to receive payments for shipments to the Middle East,
Trade Technologies expects to process payments on $9 Turkey, and China. Growth has been steady ever since; last
billion worth of shipments this year, up from $5.5 billion last November, Trade Technologies added its 20th Fortune 500
year and $1 billion in 2005, though the company handles company to its client list.
just a fraction of the transactions in the $10 trillion global
shipping industry. Many businesses still rely on the paper The service is particularly helpful to smaller companies like
system, which involves using courier services to shuffle GT Solar, which has 225 employees at its New Hampshire
documents around the globe. A single difference between plant.
the letter of credit and the ship's manifest can cause
headaches. "A lot of companies just don't have people in house who
understand this system," said Lundburg, who joined the
For example, Trade Technologies' chief executive, Kirk company last year.
Lundburg, said that something as innocuous as writing "300
units of widget X" on the letter of credit when the ship's "Letters of credit is their world," Pratt said. Trade
manifest says it is carrying "300 units of X widget" can stall a Technologies helps "eliminate 99 percent of the
payment. "The old system requires a tremendous amount of discrepancies that can delay payment."