Under amendments to the U.S. Warehouse Act, the USDA issued regulations governing the establishment of electronic systems under which EWRs related to the shipment, payment and financing of agricultural products can be issued or transferred. By becoming an official EWR Provider, eCOPS, LLC, now holds the unique position of administering a system in which an official electronic version of the primary title document for coffee, the Warehouse Receipt, will be maintained and transferred. The eCOPS form of EWR is now recognized in its web-based format as a legally negotiable and transferable instrument. This capability is particularly important to the banking community in support of its financing functions for commodity industries.
"The USDA designation of eCOPS, LLC, as an official Provider of EWRs is the start of a revolutionary process which will forever change the way commodities are transferred and delivered," said NYBOT President and CEO Charles H. Falk. "This historic action demonstrates the singular and central role the New York Board of Trade has played in the coffee market. With the launch of eCOPS and the recent opening of our state-of-the-art grading facility in Lower Manhattan, NYBOT continues to expand its mission to serve all sectors of the global coffee and cocoa industries" he added.
The groundbreaking eCOPS, due to be fully operational in the First Quarter 2004, represents an evolution of NYBOT's Commodity Operations Processing System (COPSâ), which was built originally in 1990 to handle deliveries for NYBOT's coffee and cocoa futures markets.
Parts of eCOPS are online for data entry and some document functions in connection with the December Coffee "C" delivery. While the December delivery will still utilize paper Warehouse Receipts, the heart of the system, namely the Electronic Warehouse Receipt will be used for March 2004 delivery when the full transition to the electronic system will be made for coffee delivery. From that point onward, all exchange coffee deliveries will be made using the EWR and eCOPS. Currently, training sessions for eCOPS users are being conducted throughout the industry by NYBOT. The system will eventually be expanded to include cocoa deliveries as well as cash market transactions and service to other commodities as well.
Both the cocoa and the coffee industries represent logistically complex and far-reaching supply chains that require significant numbers of manually processed document presentations. For example, the domestic coffee market generates approximately 60,000 transactions in a year, and the cocoa market produces about 48,000 transactions. Each coffee transaction involves some 59 documents. Based upon World Trade Organization (WTO) global estimates of the overall documentation costs for all international trade, the annual cost of shipping documentation for the U.S. coffee market is about $70 million and nearly $280 million for the global market.
In addition to the EWR, eCOPS will handle electronic versions of a range of documents including delivery orders, sampling orders, weight notes, invoices, bank releases and insurance declarations. The system will serve key coffee industry segments and related areas such as exporters, importers, roasters, grinders, bankers, insurance companies, ocean carriers, customs brokers, as well as FCMs, warehouses, samplers and weighers.
The New York Board of Trade (NYBOT) is the parent company of the Coffee, Sugar and Cocoa Exchange, Inc. (CSCE) and the New York Cotton Exchange (NYCE). Through its two exchanges and subsidiaries, NYBOT offers an expanding range of agricultural and financial products. Information about the New York Board of Trade can be found at www.nybot.com.
