The maritime and port community continues to face the challenges of digital transformation in the sector, and one of the key points is the digitalisation of the Bill of Lading of international trade – improving its sustainability, agility, and transparency.
Created in 2022, The Future International Trade Alliance (FIT), signed a memorandum of understanding (MOU), between DCSA, BIMCO, FIATA, the International Chamber of Commerce (ICC) and SWIFT, committing to collaborate to standardise the situation.
Meanwhile, DCSA (Digital Container Shipping Association) reminds the industry that switching from paper bills of lading to eBL will benefit international trade in countless ways by increasing speed, reducing administrative burden, decreasing legal risk, and reducing illegal trade and carbon emissions. It would reduce the risk of loss, gaining transfer speed, improving security by using blockchain technology (it generates a unique, indivisible, and transferable document) and save paper.
During 2021, the shipping lines issued 45,000,000 Bills of Lading, but only 2.1% were electronic.
According to Shipping and Freight Resource, shipping physical paper around the world today is not sustainable and completely unnecessary. A study by renowned consulting firm Mckinsey estimated that adopting 100% electronic bills would result in a significant reduction in carbon emissions by eliminating paper use - saving 28,000 trees per year!
In this context, one of the most important challenges arises in the maritime sector, and that is the adaptation of the Bill of Lading to digital format, a process that faces numerous barriers.
Bill of lading is one of the key documents in international trade. It performs three functions. It acts as:
1. A receipt for shipment acknowledging that the cargo was loaded on a ship.
2. Evidence of the contract between carrier and exporter.
3. A document of title that means whoever possesses the original paper copy is the one legally entitled to deliver it to the destination.
While we’ve seen electronic contracts and receipts, the last function is way harder to replicate digitally. Why so?
The Hague-Visby Rules - standards for international carriage of goods by sea last updated in 1979 - don’t have clear instruction regarding whether an electronic document yields the same legal power as the paper one. The Hamburg and the Rotterdam rules appeared later to create a more modern framework. But while the former didn’t add any clarity, the latter has not come into effect at all lacking the needed number of ratifying countries. This means that for now, the outdated Hague-Visby rules dominate the market.
Legal recognition of eBLs varies by jurisdiction. While some countries have already passed laws recognizing eBLs, others are still in the process of doing so. It is important to ensure that eBLs are legally recognized in both the source and destination countries before using them.
What is the exact legislation change? On 20th September 2023, the Electronic Trade Documents Act (‘the Act’) came into force in the United Kingdom, giving legal recognition in English law to electronic trade documents, including electronic bills of lading (‘e-bills’). The Act reflects the recommendations of the Law Commission that the law should be reformed so that certain electronic trade documents, including e-bills, can be recognized as having the same legal recognition and functionality as their paper counterparts. This legislation follows the adoption by Singapore of similar legislation, in the form of the Singapore Electronic Transactions (Amendment) Act in 2021.
One of the main concerns of eBLs is security. As with any electronic document, there is a risk of fraud and cyber attacks. However, the use of blockchain technology and digital signatures can help mitigate these risks and provide a secure, tamper-proof record of the transaction.
All parties in the chain (shipper, consignee, shipping company, bank, etc.) must sign or register on the same eBL platform with access to that software; If only one of the parties is not on said platform, the document cannot be endorsed or digitally transferred to that party, so the bill of lading must be printed, thus losing the advantages. It represents to implement new software in all the parts of the chain, with the cost that it represents of money and people. Also each computer connected it’s a risk of hackers in the systems.
The most important platforms used by electronic bl approved by IG P& I CLUB
BOLERO – www.bolero.net
ESSDOCS – www.essdocs.com
E-TITLE – www.e-title.net
TRADELENS – www.tradelens.com
WAVE BL – www.wavebl.com
CARGO X Smart BL – www.cargox.io
edoxOnline – www.globalshare.com.ar
As conclusion, the COVID 19 pandemic, was a turning point in the path of digitalization in the maritime sector. A path that began in 1990 but that did not trigger the alarms until 2020 about the precariousness of the bureaucratic document system in the maritime sector during pandemic.
This is clear that the future is blockchain and the digital solutions. The industry needs to find out safe solutions and easy to implement. Also, The forwarders have the problem to issue the Electronic HBL eHBL. To issue it, we must integrate all platforms in our system to be able to issue the HBL once the shipping line issue the eMBL. It means a lot of investment in software and operational time.
The challenge for DCSA is that all the bill of lading will be electronic in 2030. I don’t know if this time will be realistic, but the Maritime community, Governments, Associations, Customs have a lot of work to get it done!
45 millions Bills of Lading a year, 28.000 trees a year, carbon emissions produced by printing and by sending docs by courier to other part of the world, tradability, speed, are compelling reasons to speed up the process
This article was written by Ainhoa Carrio, General Manager of e2e Logistics Solutions SL, Spain.
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