The shipping sector is expected to adopt electronic bills of lading (eBLs) to enhance the shipping documentation process as the industry gears up for digital transformation in the wake of the disruption brought by the coronavirus pandemic.

Industry players cited multiple benefits of moving to eBills from cost and risk savings to sustainability, speed, security, and visibility of the entire shipment cycle, but they also called for the implementation of “common standards” to improve interoperability of various eBL systems.

ZIM Integrated Shipping, one of the firsts to roll out eBLs, says it has observed an increased take-up for electronic documentation, particularly as remote, touch-free transactions became a “crucial necessity during the pandemic.”

“The world’s first ever paperless, blockchain-based maritime shipment was delivered in 2017, as ZIM announced the successful pilot of blockchain-based electronic bill of lading for a shipment of containers sent from China to Canada. Since then, things are advancing rapidly,” a spokesperson for the Israeli cargo shipper told Asia Cargo News, adding that a large part of ZIM’s customers is now using electronic bills of ladings across many trade zones.

As it moved to simplify and streamline the onboarding process, ZIM noted that eBLs can now be generated “as early as 24 hours from registering” and its decentralized platform already used to issue tens of thousands of eBLs, with the number “growing every month.”

Pacific International Lines (PIL), which joined Maersk and IBM’s Tradelens project in 2018 and 2019 and eventually piloted the eBL system for a shipment from China to Singapore, said last year’s Covid-19 outbreak accelerated the push towards eBLs, noting that early adopters of the digitalized system already benefited from a “consolidated view, real-time updates and transparency of their shipments” on the platform.

Standardization of eBLs system sought

Nonetheless, the Singapore-based container carrier said standardization of systems is necessary to speed up integration across various eBL platforms.

“Global maritime partners and local regulatory bodies need to accept, encourage, and/or mandate the usage of eBL as a document of title for cargo shipments,” PIL said in a statement to Asia Cargo News.

“[But] standardization of the eBL API/EDI formats speeds up the integration, interoperability and transfers across different eBL platforms,” it added, noting that “simplification of the customer onboarding process and data sharing consensus will allow wider usage and adoption of eBL.”

PIL said an eBL can be “effectively used only when all parties (shipper, consignee, freight forwarders, banks, terminals, customs) across the entire shipment lifecycle are onboarded or integrated on an eBL platform.

BIMCO, the largest international shipping association, controlling around 65% of the world’s tonnage, said it has been involved in pushing for eBLs for “over 20 years.”

It also highlighted the same need for a more standard eBL system to hasten adoption and in encouraging the industry to move away from paper bills of lading.

“BIMCO very much supports the use of an electronic bill of lading solutions,” Grant Hunter, head of contracts and clauses at BIMCO in Copenhagen, told Asia Cargo News.

“We applaud the efforts of all the companies that have adopted electronic bill of lading solutions – but we need common standards, not closed systems,” he added.

Hunter noted that BIMCO is currently working together with the International Chamber of Commerce (ICC) as part of its global trade digitalization initiative to help identify the obstacles preventing the wider adoption of electronic BLs. “Part of this initiative will include establishing global standards for electronic bills of lading and encouraging interoperability between existing systems,” he said.

“We believe that standardization is a vital part of the successful transition to electronic bills of lading. There are currently no standards,” Hunter continued.

Legal recognition for eBLs to increase take-up

Industry players cited multiple benefits to eBL transition, but also cited current challenges to shifting electronically from the traditional use of paper documentation.

“With eBL transactions, we see a reduction in the provisioning of BL stationaries, administrative work to print the physical BL, customs manifest submissions, and manual work to validate the original BL and cargo consignee,” PIL said.

“Customers will enjoy reduced cost to courier physical BL, ease of eBL transfer and faster clearance” – and carriers will also be able to provide “visibility of the entire shipment lifecycle.”

PIL noted that a digitalized maritime ecosystem will also provide real-time updates of vessel schedules, shipment events, and container track and trace – which could lead to lower premiums cargo insurance, freight credit facilities and digital banking multi-currency payments, among others.

ZIM said: “Since eBLs are digitally signed and encrypted, there is no physical paper document that can be lost, forged, mislaid, damaged, or destroyed.”

Organizing a replacement bill of lading on short notice will also be faster and with eBLs stored digitally, copies will be made accessible anywhere, and at any time.

The Israeli shipper, which completed its US$1.5 billion initial public offering on the New York Stock Exchange in January, also noted that eBLs are now “recognized and approved” by insurance providers, specifically the International Group of P&I Clubs (IGP&I), which provides marine liability cover.

“The main hindrances to the transformation are technological and psychological, [although] the technological issue is becoming far less of a problem as the process becomes simpler,” ZIM said. “Still, in spite of the obvious advantages, customers still have concerns about issues such as safety of the transactions, insurance, availability etc.”

ZIM noted that there’s also challenges in the need for original documents in instances where authorities in certain countries still demand paper documentation.

1% of world trade carried on eBLs

BIMCO’s Hunter cited the slow take up for eBLs in the past, saying that electronic bill of lading solutions have been made available to the industry for “over 20 years,” yet, “less than 1%” of the annual world trade by volume is carried on eBLs.

“The benefits to the shipping industry are considerable, but one of the advantages will be a significant reduction in the reliance on letters of indemnity issued by charterers to owners to allow the cargo to be discharged in the absence of the original bill of lading,” he said.

“One of the main obstacles is that in many of the world’s main jurisdictions, an electronic bill of lading is not legally recognized and therefore does not have the same legal status as a paper bill of lading.”

Hunter noted that with a limited use of eBLs in the industry, many banks are unwilling to devote resources to training staff to operate a growing number of eBL platforms.

“There are now seven systems approved by the International Group of P&I Clubs.

There is no interoperability between the seven systems and no ‘standard’ electronic bill of lading. This needs to be addressed,” he continued.

In late April, MSC Mediterranean Shipping Company also announced that it is officially introducing eBLs for its customers around the world, following a successful pilot phase.

André Simha, global chief digital and information officer at MSC and also chairman of the Digital Container Shipping Association (DCSA), said eBL provides a digital alternative to all the possibilities available with traditional print documents, just much “faster and more secure.”

“MSC has long recognized the importance of digitalization across the shipping industry and has been one of the pioneers behind the industry’s digital transformation,” Simha said.

Industry adoption

Nonetheless, industry players noted that it’s only a matter of time for the transition to eBLs, as digitalization in the industry becomes more imminent.

“With wider adoption by customers and accepted by global partners, eBL will eventually become the de facto document for cargo shipments,” PIL said. “Partners and carriers are keen to adopt eBL solutions to improve efficiency, reduce cost, manual processes and fraud.”

ZIM also reiterated the “strong business case” for moving to eBLs including security, speed, cost reduction and business continuity, which could prompt a wider industry adoption, especially in the wake of the coronavirus pandemic.

“The shipping industry is perceived to be traditional and slow to change, but everyone agrees, the move to eBL is long overdue,” ZIM told Asia Cargo News.

“The advantages are clear: eBL cuts the time it takes to receive a document from weeks to hours. With eBL costs reduced, security is vastly improved. And let’s not forget the convenience factor: With eBLs, the whole process can be managed remotely.”

“This is the wave of the future, eBLs have so many advantages the industry is bound to move in this direction,” ZIM added.

Meanwhile, BIMCO said an electronic bill of lading “needs to be platform agnostic” to help raise industry adoption.

“Ultimately, there needs to be a major drive by nations to adopt national legislation that recognizes electronic bills of lading. Singapore has recently adopted legislation based on the UNCTAD Model Law of Electronic Transferable Records (MLETR) to recognize electronic bills of lading as having the same legal status as paper bills. In the UK, legal reforms are being proposed that will give legal status to electronic bills of lading,” Hunter noted.

“We do expect this [transition] to happen on the back of the current global initiative to drive shipping business towards digitalization. There are obstacles to overcome, but there is a massive drive supported by many stakeholders to overcome these obstacles as soon as possible,” he added.

Earlier, the DCSA estimated that the shipping industry could potentially save more than US$4 billion annually by achieving just 50% eBL adoption by 2030.

By Charlee C. Delavin

Asia Cargo News | Hong Kong