Nine ocean carriers recently committed to 100% adoption of an electronic bill of lading (eBL) by 2030, with a waypoint goal of 50% adoption within five years.
It is a significant step along the road to digitalisation, one that heralds a future for container trade processes that are simpler, more sustainable and more resilient.
Standards will provide a common language for the eBL so that information can be readily exchanged, regardless of the technology platforms in use, for unhindered international trade.
Why container trade needs to digitise the bill of lading
The bill of lading is the most important trade document in container shipping. It functions as a document of title, a receipt for shipped goods and a record of agreed terms and conditions.
Currently, most bills of lading that are passed along complex supply chains, are in paper form.
That is an astonishing situation when you consider that container trade is heavily dependent on communication and that other industries in similar positions have transitioned to digital processes.
Exchanging paper is time-consuming, and it adds to expenses. Paper exchange isn’t environmentally sustainable, and it can contribute to supply chain bottlenecks.
If an original bill of lading, or title document, fails to arrive or isn’t processed in time, cargo in ports can’t be gated out.
Conversely, digital processes enable data to flow instantly and accurately, reducing delays and waste. Sharing information in this way can make international trade more efficient, reliable, secure and sustainable.
Why hasn’t an eBL already been adopted?
Digitalising container trade, and in particular transitioning away from paper and towards an eBL will deliver compelling benefits. Yet, in 2021, only 1.2% of issued bills of lading were electronic. Why?
The Future International Trade (FIT) Alliance, comprising DCSA, BIMCO, FIATA, ICC and SWIFT, set out to find out. It conducted a study with industry stakeholders across 66 countries, including banks, freight forwarders, carriers, shippers, agents and consignees.
The study revealed that the largest factor hindering eBL platform adoption is concern over technology platforms, especially regarding the lack of interoperability between eBL platforms.
There are currently eight eBL platforms approved by the International Group of P&I Clubs for ocean carriers to use; however, the platforms are not interoperable.
This means that a trade finance bank, for example, that uses one platform can’t exchange shipping documentation with a stakeholder that uses a different platform.
As a result, everyone involved in a shipment must be onboarded onto the same platform. That takes time and is expensive and inconvenient for companies who transact with many organisations and therefore, may have to implement multiple platforms.
The solution to enabling 100% eBL adoption and benefits for trade finance
The solution is the adoption of DCSA digital standards for container shipping, which will enable seamless data exchange across all stakeholders and interoperability between platforms.
When organisations use DCSA eBL standards to transfer eBL data, information can be exchanged efficiently, consistently and accurately. When eBL platform providers adopt DCSA interoperability standards, standardised eBLs can be exchanged between platforms securely, enabling stakeholders to adopt just one platform regardless of whom they do business with.
Widespread adoption of DCSA bill of lading standards will establish a technological foundation for straight-through, end-to-end processing of electronic bill of lading data.
With trade volumes expected to triple again by 2050, digitalisation has become a priority for the shipping industry.
A recent McKinsey study estimates that if eBL achieved 100% adoption, it could unlock around $18 billion in gains for the trade ecosystem through faster document handling and reduced human error (among other improvements), plus $30-40 billion in global trade growth, as digitisation reduces trade friction.
Paperless trade would also save 28,000 trees per year and may significantly reduce carbon emissions.
For financiers and other stakeholders, standards for seamless digital information exchange support innovation and choice in the market, giving trade participants the flexibility to conduct business with the partners of their choosing in any digital transaction.
For too long, container shipping processes have relied on paper.
Where technology has been used, it has operated in a standalone way, not based on standards, and unable to streamline data exchange across the end-to-end supply chain. By committing to adopting a standards-based eBL, industry stakeholders are paving the way for an interoperable container trade ecosystem that can effectively support future growth.