Paperless trade solutions provider essDocs has been acquired by Intercontinental Exchange (ICE), an owner and operator of financial and commodity marketplaces and exchanges.

The financial terms of the transaction were not disclosed. GTR understands that essDocs will continue as a standalone brand within ICE, with co-CEOs Alexander Goulandris and Marina Comninos remaining in their current roles.

ICE owns and operates the New York Stock Exchange, as well as energy futures markets covering Brent, gasoil, TTF natural gas, JKM liquefied natural gas and EUA carbon allowances futures, and soft commodity futures across coffee, sugar and cocoa.

In a statement on essDocs’ website giving the rationale for the acquisition, ICE says it “provides financial technology and data services across major asset classes that offer its customers access to mission-critical workflow tools that increase transparency and operational efficiencies, two areas which essDocs is similarly focused on”.

essDocs, which launched in 2005, created the second commercial attempt at an electronic bill of lading (eBL) after Bolero’s eBL was introduced in 1999. The essDocs eBL became operational in 2010, and in the years that have followed, a handful of other solution providers have entered the market. But take-up of eBLs has been slow, with research from the Digital Container Shipping Association in 2020 putting the proportion of BLs issued in electronic format in containerised trade at just 0.1%.

However, the forced digitisation brought about by the Covid-19 pandemic has led to a surge in demand for the solution.

“What Covid has proven is that physical and financial supply chains that are built on paper have fragility and can break,” Goulandris told GTR last year. “The risks of paper were considered theoretical in the past. Now, it’s no longer a risk that can be left unaddressed.”

“We have some trade lanes where customers are nearing 100% digital. There is now almost no paper at all,” he said, adding that barge bills of lading in domestic US agribusiness have already reached critical mass in certain agri commodities, as have certain bulk metals and minerals flows. “This has happened in a very short time, and we are now expanding into more markets, more commodities and new trade lanes. Covid has had a massive impact on accelerating uptake in all routes.”

On top of Covid-related forced digitisation, increasingly positive signals from large jurisdictions that they may soon accept eBLs as being equivalent to their paper counterparts are generating greater comfort among trade participants as to their utility. The UK currently has a draft bill before parliament that would enable electronic trade documents to be used in the same way as traditional ones, while a growing number of countries are working to adopt the United Nations Commission on International Trade Law’s Model Law on Electronic Transferable Records into their domestic legislation.

ICE has form for making acquisitions of companies working to digitise paper-based processes. In 2020, it bought out US mortgage origination software company Ellie Mae in a US$11bn deal, adding to its acquisitions of the Mortgage Electronic Registrations System and Simplifile – a company that connects agents and jurisdictions that underpin residential mortgage records, which it bought in 2019. Speaking at the time, Paul Clifford, Simplifile founder, said ICE “has helped to transform markets going through an analogue to digital conversion and made them more transparent and efficient for all participants”.

ICE would not comment on whether it intends to acquire more companies within the trade finance digitisation space. For now, it says it is focused on onboarding and integrating the essDocs team and business.