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Oman has taken a step towards paperless trade by introducing e-delivery and e-cargo release orders, enabling the sultanate’s logistics sector to approve digital documents and keep trade flowing.

“Traders will no longer be forced to wait for the physical receipt of delivery order papers,” reveals Oman Logistics Center (OLC), a government agency that focuses on logistics development, in a statement. It adds that port operators, shipping lines and custom clearance agents will all process shipments electronically.

All transactions at the port of Salalah and more than 60% of those at Sohar port are now paperless, with that figure “likely to continue to rise in coming weeks”, as digitisation makes trade quicker, safer and more secure.

“Within two weeks of the submission and processing of delivery orders, bills of lading and service payments would be moving completely online,” it adds.

A delivery order is a document issued by the owner of cargo, a consignee, shipper or carrier, which orders the delivery of goods to another party. A cargo release is confirmation on a bill of lading that states all charges associated with the shipment have been paid, meaning goods can be cleared. A cargo release can also exist as a separate document.

The OLC statement adds: “Private sector logistics providers benefit greatly from savings of time and cost. As more providers move quickly to digitalise their own processes, paper transactions across Oman will quickly become a thing of the past.”

“Oman by itself is a very small country. It’s not hugely significant in terms of world trade. But what is significant, is the fact that it is an emerging country that has started to issue instructions to accept e-documents,” says Sean Edwards, head of legal Emea at SMBC and chairman of the International Trade & Forfaiting Association (ITFA). He says that other emerging markets such as Algeria and India have also introduced digital trade processes, describing this as a trend which is “significant”.

The digitisation of Oman’s shipping sector is part of the Sultanate of Oman Logistics Strategy 2040 (SOLS 2040) revealed in 2015 to promote digital transformation and Oman as a global logistics hub, with a key objective to make logistics a core economic driver in the country’s economy.

 

“Thin end of the wedge”

Edwards tells GTR that in the past there has been a lot of resistance to digitise trade in emerging markets. “They felt that this was sort of the thin end of the wedge, in terms of US big tech stealing data from them.

“Now, what’s happening in the current crisis is that there aren’t enough people physically present, and documents have to be presented electronically, because without doing that the actual physical movement of goods stops or is slowed down significantly.”

Global trade has witnessed a sharp downturn as a result of the Covid-19 pandemic. The World Trade Organization (WTO) estimates a drop in global trade of between 13% and 32% for 2020, depending on how deep the initial shock is and how countries recover economically in the latter half of the year.

The need for digital documents has been made more apparent by the pandemic, as courier services carrying important trade papers have ground to a halt.

Edwards mentions a paper by the Bankers Association for Finance and Trade (Baft), the ICC and ITFA, published toward the end of last month which cites the importance of digitisation in trade, as well as efforts made by Algeria and India in this respect. The paper says that the Bank of Algeria is advising all authorities and banks to use electronic documents, taking “a proactive approach”. The Indian banking association recommends the same measures, with Indian authorities also “encouraging electronic customs document submissions”.

“Hopefully, this is the beginning of a sort of tide of jurisdictions becoming more digital, especially the smaller ones. A lot of emerging markets take direction from smaller countries rather than the more developed jurisdictions,” he says.

He adds that smaller countries introducing digital trade measures are “ahead of the curve” as more developed countries, for the most part, have not introduced such measures. “They can move much more quickly than the established markets. Certainly, Algeria was one of the first to do this, they gained a lot of respect from people like us who try and push digitisation.”

ITFA recently lobbied the UK government to change an 1882 English law to recognise digital versions of trade documents such as promissory notes and bills of exchange.