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Nine of the world’s major ocean carriers have formally committed to the full adoption of the electronic bill of lading (eBL), in a move that could trigger as much as US$40bn in annual global trade growth.

Under the agreement, Digital Container Shipping Association (DCSA) members CMA CGM, Evergreen, Hapag-Lloyd, HMM, Maersk, MSC, ONE, Yang Ming and ZIM, which together represent nearly three-quarters of global containerised trade, have pledged to convert 50% of original bills of lading to eBLs based on DCSA standards within five years and 100% by 2030.

The bill of lading is one of the most important trade documents in container shipping. It functions as a document of title, receipt for shipped goods and a record of agreed terms and conditions. But in its paper form, it is time-consuming, expensive and environmentally unsustainable for stakeholders, with an October McKinsey report calculating it accounts for up to 30% of total trade documentation costs.

The antiquated process – unchanged for centuries – not only causes delays to the release of cargo when documents fail to arrive or cannot be manually processed in time, but also leaves banks open to fraud risk, since the documents can be falsified or double financed with relative ease.

Digital versions have existed since 1999 with the commercial launch of the Bolero eBL, but take-up has been sluggish. According to the latest DCSA figures, while the container shipping industry currently issues approximately 45 million bills of lading per year, only 1.2% of them are electronic.

If today’s commitment to transform document exchange is realised, the DCSA says the industry will save US$6.5bn a year in direct costs, benefitting all maritime supply chain stakeholders.

“The digitalisation of international trade holds vast potential for the world economy by reducing friction and, as trade brings prosperity and the eBL will further enable trade, helping bring millions out of poverty,” says Thomas Bagge, CEO of the DCSA. “This heralds the start of a new era in container shipping. I applaud the leadership of our members in coming together to achieve this important milestone.”

Slow progress

However, the DCSA’s somewhat conservative seven-year time horizon to make the full switch away from paper stands in contrast to the hype that has been building around trade digitalisation, driven by legal reform in major economies and statements from bodies such as the G7 and Commonwealth Secretariat.

In particular, the Electronic Trade Documents Bill that is currently making its way through UK parliament will legally recognise digital trade documentation as equivalent to paper by mid-2023, and should therefore open the door this year for widespread adoption of the eBL for all trade using English law as a basis for international contracts.

For DCSA CEO Bagge, a pragmatic approach is key. “I don’t think you will find anybody who wants to move faster on this than me,” he tells GTR. “Our members have shown the commitment they want to go for, but we also have to realise that we’re talking about massive corporations which carry 72% of all the containerised goods in the world that are transported by sea. They have a lot on their plate. For them, this is a small part of a wider digital transformation agenda.”

Nonetheless, the general sentiment among ocean carriers is that adopting the eBL is a priority. Calling the paper bill of lading “one of the most cost-heavy and troublesome components in the shipping industry”, Vincent Clerc, CEO of Maersk says: “A fully digitised bill of lading enables a more seamless customer experience across the supply chain and in turn it will help democratise trade and reduce time and costs for all involved parties. The need for digitisation in logistics is urgent, and the industry needs to speed up the process.”

“Our industry needs to accelerate digitalisation to help make shipping more efficient, more secure and a better experience for our customers,” adds Soren Toft, CEO of MSC.

Getting over hurdles to adoption

To try to overcome any lingering resistance to going digital, the DCSA and its partners in the Future International Trade (FIT) Alliance – BIMCO, FIATA, Swift and the International Chamber of Commerce – recently surveyed their respective member organisations to gauge eBL acceptance and identify the factors that most hinder their use.

The survey, which polled 278 participants from banks, freight forwarders, carriers, shippers, agents, consignees and others across 66 countries, found that while the vast majority of stakeholders were sold on the benefits of eBLs, only 5% have made the full transition, with another 28% of respondents saying they used them in conjunction with paper. That said, the tide does appear to be turning: 58% of those using only paper bills report their organisations plan to use eBLs, although only a fifth of them say this will be within the next six to 24 months.

For carriers and charter groups, the top obstacle to eBL adoption is a lack of readiness by other stakeholders in the ecosystem. Because the document passes through the hands of numerous actors, from financial institutions to customs authorities, shippers, and freight forwarders, everyone needs to be on board for the solution to work – a problem the DCSA is currently tackling.

“We are working with port authorities in places like Rotterdam and Singapore to create green digital corridors where we will show this could actually be done in practice. Once we can showcase it in these corridors, the dominoes will start to fall,” says Bagge.

With different, competing eBL systems on the market, a reluctance to invest in a particular solution for fear of backing the wrong horse is a concern for almost three-quarters of FIT Alliance survey respondents, who cited technology, platform or interoperability concerns as barriers to adoption. Looking solely at bank respondents, this figure rose to 100%.

“The survey results confirm our hypothesis around the direction of travel for eBL adoption,” Niels Nuyens, DCSA programme director, tells GTR. “In order for this to take off, we need all the different stakeholder groups to participate rather than waiting for others to go first, and what our findings demonstrate is that there is interest across the board.”

Meanwhile, the other major barrier to using eBLs is the concern around their legal validity, an issue for 55% of survey respondents. Here again, banks were most likely to cite this as an obstacle compared to other groups, perhaps unsurprisingly given their need to be able to enforce repayment of the huge sums of money they lend against the documents.

Work to align national laws to the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Transferable Records (MLETR) – a framework to enable electronic documents to be recognised as legally equivalent to paper documents – will resolve this issue, although the DCSA challenges that because solution providers have their own rulebooks in place, the eBL can already safely be adopted.

With the countdown to 2030 now underway, the DCSA is ramping up its engagement around the world to ensure its target of 100% eBL adoption is met.

“Everybody sees that trade will be digital, and the momentum keeps on building,” says Bagge. “We need to create a bit more excitement around the topic. It’s about reducing emissions, improving trade, improving the customer experience, and taking costs out of the supply chain, and we need to communicate that a bit better so that it is easy to understand and easy to get excited about.”