Boosting take-up of the electronic bill of lading (eBL) through standardisation could save the global shipping industry as much as US$4bn a year, according to the Digital Container Shipping Association (DCSA), which has put out a call to action to the industry to drive adoption.
The independent organisation, which was established in 2019 by several of the largest container shipping companies, is embarking on an initiative to develop open source standards for the eBL, including definitions and terminology to facilitate communication among customers, container carriers, regulators, financial institutions and other industry stakeholders.
“To the extent it’s possible within the jurisdictions and the legal frameworks, our vision is to make trade as easy as the other digital activities we do in our everyday lives,” Thomas Bagge, CEO of the DCSA, tells GTR. He adds that DCSA’s nine members cover 70% of the world’s containerised trade, and the key pain point that the association wants to tackle is the number of different variations of the eBL that exist and the underlying data definitions. “What is required on the documents is 95% identical, yet the bills of lading and the underlying data standards are not standardised. We want to sit down and take all of the nine different bills of lading and come up with a syndicated electronic version that we can then go out and present to all the providers in the industry, and hopefully drive greater adoption,” he says.
The view from the industry seems to be positive. In conversations with GTR, representatives of some of the main vendors of eBLs – Bolero, essDocs and Wave – say they support the DCSA’s initiative.
“Anything that drives digitisation is a good thing,” says Marina Comninos, co-CEO of essDocs. “There is no doubt that life would be simpler for all of us if we had standardised documents, an international legal solution that enables cross-border trade digitisation, and standard ways of communicating across platforms. I think this would greatly accelerate the adoption of digital solutions in international trade, which is lagging far behind most other industries because it is highly complex and very traditional. We definitely support any attempt to standardise.”
“As a standards organisation, the DCSA will be able to pull together a multitude of participants not only in the carrier space but in the banking space, and customs,” adds Andrew Raymond, CEO of Bolero. “The fact that the DCSA is pushing standardisation is great for all sides, because without it, we might have to adopt a lot of different APIs and data standards from the carriers as well. There is definitely a benefit to us to having standards around the data format and the way that a digital bill should be rendered.”
Gadi Ruschin, CEO of Wave, adds: “The work of DCSA will provide huge momentum to the eBL, and it will help the entire industry. When such a wide range of industry leaders decide that they want something to be standardised, it will be standardised.”
Using an eBL offers several advantages that improve upon the current paper-based system, including significantly faster document transfers, which in turn leads to a shorter payment cycle. Being electronic, it is also far less likely to be susceptible to forgery, fraud, loss or other forms of human error.
The Covid-19 pandemic has driven take-up substantially, as exporters and financiers alike have sought out alternatives to physical transfers of documents, but the lack of legal recognition of eBLs as a document of title remains a sticking point to wider adoption. The International Chamber of Commerce (ICC) recently called upon governments to adopt the UN Commission on International Trade Law (UNCITRAL) model law on electronic transferable records which would address this, but it remains to be seen whether this will be adopted in state legislation worldwide.
“As a result, whichever eBL solution you’re looking at is a ‘digital island’ hinging on contract law,” Sam Mathew, global head of documentary trade at Standard Chartered, told GTR last year.
Despite this legal limbo, progress is being made in other quarters. The International Group of P&I Clubs (IGP&I), which provides indemnity insurance to around 90% of the world’s ocean-going tonnage, has picked up the pace on approving eBL solution providers, with two added in the last six months to a total of six approved so far. This essentially means that the 13 protection and indemnity (P&I) clubs within IGP&I agree that the eBL is equivalent to a traditional bill of lading for insurance purposes.
DCSA’s Bagge believes that standardisation may be what is needed in order to move the needle on the legislation front. “If we create a standard eBL that is used across the industry, then that will make the dialogue with regulators and other stakeholders easier. We expect it will bring about greater acceptance of the eBL being a legal document of title, because that is a big hurdle to get over,” he says.
According to the DCSA’s mission statement, the creation of digital standards for the eBL will enable interoperability between all stakeholders, such as system providers, shippers, carriers, banks and regulators. It wants to see the eBL become as widely used as the electronic airway bill (e-AWB), which became the default contract of carriage for all air cargo shipments in 2019.
While Bagge is keen to point out that the DCSA’s role is not to act as a “selector of technology”, its plan to develop a syndicated version of the eBL could potentially lead to consolidation in the industry, as essDocs’ co-CEO Alexander Goulandris points out. “You have different email providers. You have different car companies. So you might still have different providers who offer value adding services in other areas, but I don’t think you’d end up with 10 vendors who are all doing eBLs. I don’t think we would need 10,” he says.
“Do we lose a bit of our secret sauce if everything is standardised? Maybe,” says Bolero’s Raymond. “But there is no point having that if no one is really benefiting from it. It might level the playing field in some aspects, but we have always had the view that the bill of lading is great, but it’s really what you do with it that counts. Making it useful, easy, and practical is beneficial for Bolero and also beneficial for the market.”
The DCSA says that it will hold conversations with all industry stakeholders in the coming weeks to create a set of standards for the eBL, and aims to hit 50% adoption of the solution by 2030.