Chongqing- China recently debuted "Tongdao Tierong," its inaugural financing tool, utilizing the New International Land-Sea Trade Corridor (ILSTC) multimodal transport digital bill of lading for securing loans. Tailored for businesses engaged in ILSTC imports and exports, it marks a pioneering step in trade finance innovation.

The rail-sea multimodal train operates along the ILSTC. (Photo/ New Land-Sea Corridor Operation Co., Ltd.)

The essence of this product lies in its innovative approach to handling the bill of lading, a key document in shipping. Traditionally, there's been uncertainty over the property rights associated with bills of lading. To tackle this, the new service combines a pledge of the bill of lading with logistics monitoring, ensuring more secure financial transactions. 

Under this model, the operation company issues a digital bill of lading for each shipment. This document then serves as a digital voucher, allowing businesses to withdraw funds. Additionally, the operation company offers comprehensive logistics supervision, including port collection, inspection, transportation, and storage.

This agreement links the management of the bill of lading and the cargo, allowing the digital bill of lading to be used as collateral for loans from the bank. The bank then registers this pledge with the Credit Reference Center of the PBOC, which acts as a risk mitigation measure. After that, the enterprise doesn't need to provide additional collateral for these loans.

This initiative, led by the People's Bank of China (PBOC) Chongqing Operations Office, involves the Chongqing Rural Commercial Bank Co., Ltd. (CQRCB) and New Land-Sea Corridor Operation Co., Ltd. The CQRCB, the operation company, and the enterprise involved signed an agreement. 

An example of this model in action involves a Chongqing-based company specializing in import trade. This company typically pays foreign exporters an advance of about 30%, facing significant cash flow pressures due to delayed payments from downstream buyers. 

To help, the CQRCB devised a tailored financing solution using the digital bill of lading. On November 30, the bank processed China's first loan using this method, providing the company with 857,000 yuan at an interest rate of 3.65% over 180 days.

Officials from the PBOC Chongqing Operations Office believe that this innovative financing model solves the issue of unclear property rights in the shipping industry and sets a precedent for similar applications in ILSTC. It's seen as a significant step towards the rapid development of the trade route.

The latest data shows that in 2023, the rail-sea multimodal train of the ILSTC grew by 8% year-on-year. By the end of 2023, the number of liner trains is expected to exceed 9,300, a 52-fold increase from 178 trains at the beginning of 2017.