- 04. 11. 2021
- The Innovator
Imran Vohra is the Head of Maritime at Marco Polo Network, where for the last several months, he has been spearheading its proposition for the maritime industry, aimed at delivering a new digital way to pay for canal transits, port call services and bunkering. In this next instalment of Marco Polo Network’s ‘The Innovator’ series, he provides an update on the rollout of the Network’s maritime solutions, and the interest thus far from prominent industry groups and financiers.
Q: Tell us about your background, your role at Marco Polo Network and what opportunities you’re seeing and exploring within the maritime industry?
Vohra: I’ve been in the maritime industry for 25 years. It’s one of the oldest industries in existence – which also makes it very conservative – and a lot of my focus throughout my career has been on trying to get industry players comfortable with change and digitalisation. My role is to work with the Industry Innovation team to set up and head the maritime vertical for Marco Polo Network.
Maritime transport is an essential part of trade: according to reports it carries between 81% and 84% of goods worldwide – it’s a massive market. In terms of funding, however, the maritime industry – which includes shipping companies and shipowners – does not receive as much financial support as other players engaged in trade. Likewise, there’s a lot of digitalisation happening within the trade space, including many blockchain-based initiatives, but until very recently this hasn’t really flowed into maritime.
Over the last few years, as a result of market volatility, including trade wars and sanctions restrictions, a number of the larger banks have reduced their support of the maritime sector. There have also been some recent fraud-related scandals within the shipping industry in Asia and the Middle East that have left banks with significant financial losses and led a number of them to review their appetite for risk in this space.
But we’ve reached a point now – accelerated by the Covid-19 pandemic – where maritime is trying to catch up with the other industries in terms of digitalisation and technology. At Marco Polo Network, we believe that the time is right to tap into this and develop innovations that prop up the maritime sector.
Q: What is Marco Polo Network developing within the maritime sector? What specific problems are you trying to solve?
Vohra: We are starting with developing a new digital way to pay for canal transits, port call services and bunkering.
What we’re doing is trying to eliminate the need for prepayment of the many expenses that are incurred by the agent of the shipping company or shipowner while a vessel is in transit, moving from one destination to the next.
These fees can be quite substantial and have serious implications for these companies’ cash flow. A very large tanker carrying crude oil from, say, Saudi Arabia to the US, could end up paying about US$400,000 just on the Suez Canal fee, which needs to be prepaid before the vessel even transits the canal.
What we’re doing is getting financiers to support that through the Payment Risk Management module (formerly Payment Commitment) – one of the modules available through Marco Polo Network – and getting the payment terms extended out to 30, 60 or 90 days.
We are working with two maritime giants as anchor clients. For the canal transits and port calls we are collaborating with one of the largest global agency hubs within the maritime industry, while for bunkering we have partnered with one of the largest bunker suppliers.
We are combining our own knowledge with the specific requirements of these anchor clients, bringing this proposition to Marco Polo Network, and working with financial institutions to get them involved.
Q: What role will banks play in these transactions, and what advantages of this structure are they most interested in?
Vohra: We are working with a number of different banks, some of which are already involved in Marco Polo Network. Essentially what we’re doing is bringing in alternative financing options for shipping companies whose banks are not yet onboarded to the Network – although, of course, we’re trying to onboard as many of these financiers as possible, and there is much interest in doing so. One of the bunker supplier’s banks, for example, is already working with us to join the Network. We firmly believe that the Payment Risk Management (formerly Payment Commitment) will become a digital alternative to bank guarantees and letters of credit, and an industry standard within banking.
But instead of the need to have all the banks from every client on the Network, which will take some time, we’re lining up alternative solutions in the form of default financiers – either banks or non-banks – which would be able to come in and provide a default rate to that client, based on their credit rating in the market.
We’re seeing quite a lot of interest from banks in getting involved.
In terms of advantages, the beauty of Marco Polo Network is that everyone – shipping companies, banks, etc – sees the actual transaction and not just invoices. They can all agree in advance on what is required for the Payment Risk Management to be issued, and all the actions that need to happen as part of that agreement can be monitored.
The Network combines transparency and technology to support the industry in a much better way than has traditionally been possible. It does that through offering full transaction visibility in real-time, as well as through our partnership with maritime security software developer Pole Star and its automated vessel sanctions screening solution.
Banks can take comfort in being able to see the whole picture, including for example what date a ship crossed the Suez Canal, the reason for delays if they occur, and the due diligence performed on the vessel. With this transparency, they can be confident that what they have committed to is actually happening; it’s not just a document to inspect and verify by making several phone calls.
Q: What has been the feedback on this structure from the maritime industry and the various companies you are engaging with? What benefits are they most interested in?
Vohra: We’re spending a lot of time speaking to our anchor clients and their customers, getting their feedback, and understanding what they need in order to make this structure work.
So far, the response has been that they are interested, but they want to know what plans are in place if their banks are not yet on the Network, as well as what rate they will be charged – and these are the issues we’re addressing.
Most shipping companies – particularly the medium and smaller players – face significant cash constraints, and credit limits are absorbed when they buy ships and other assets, for example. The solution we’re offering allows them to source funding without having to use up their current credit limits for their operational cash flow.
In the past, good companies could get 60 days’ credit for bunker purchases relatively easily. Nowadays, they are struggling to even get 30 days. It’s a significant cashflow impact. But being able to use Marco Polo Network to extend that 30 days to 90 with a rate that is competitive is a huge advantage – and a big game-changer for this industry.
Imran Vohra (https://www.linkedin.com/in/imran-vohra-0614181/) joined Marco Polo Network in November 2020 as Head of Maritime.
His career in maritime began in 1995, and since then he has been involved in a number of roles across the industry, where he has a history of success in providing technological and digitalisation services.
Throughout his career, he has worked on change management solutions for maritime organisations, driving the digitalisation of workflows within systems and processes to increase efficiency and use of data, and ultimately enhance performance. He has also successfully built a port cost management service.
Since 2008, he has also been involved in digital payments and cross-border FX payments for maritime, and has developed payment and payroll solutions and cash management operations.
Before joining Marco Polo Network, he worked at, and was involved in, the setup of two startups, both of which provide digital cost control and payments to the maritime industry. He joined reputed industry service provider DIABOS in 2010 and served as the CEO and president from 2013 until 2020.
Driving digitalisation, innovation and finance in the maritime sector
Imran Vohra is the Head of Maritime at Marco Polo Network, where for the last several months, he has been...
Launch of the Uniform Rules of Digital Trade Transactions (URDTT)
On October 1st, the ICC published the Uniform Rules for Digital Trade Transactions (URDTT) which is focused on creating an...