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Issue 3 2019 - Freight Business Journal


///IT


By Philippe Salles, Bolero International


The global shipping industry is sometimes likened to an enormous social network where everyone knows everyone else. Yet any similarity with digital social media applications is misleading. Even though carriers and


freight forwarders know they need a digital transformation strategy, most are still struggling with questions such as standardisation, interoperability and trust. Agreement on common IT and documentation standards has been hard to achieve in the carrier world, while fraud, or the fear of fraud, continues to stalk every quayside, making trust between partners in international transactions difficult. There is a powerful


competitive imperative behind digitisation. In its research paper,


Digital Disruption


in Freight and Logistics, professional services company Accenture highlights how logistics businesses that neglect digitisation risk having their profitable


activities cherry-


picked by more agile companies using data analytics, Cloud- based solutions and connected platform technology. Accenture believes, however, that established businesses adopting digitisation could see their earnings rise by double


figure percentages. Ocean


carriers have


responded to these imperatives by embracing digitisation to improve customer experience and process efficiency through a variety of initiatives covering booking, tracking, and the transmission of


instructions.


Pressure for digitisation of trade


documentation has


increased as major corporates use digital interfaces for other transactions and business processes and are increasingly accustomed to near real-time visibility of their shipments through supply chain track- and-trace technology.


The bill of lading - focus of digitisation


The missing link has been the most crucial document in global shipping – the bill of lading. There are huge advantages to be gained from using electronic bills of lading (eBLs) but it continues to be inhibited by reliance on slow, error-prone and insecure paper processes. Digitising such an important


document is no easy task. As well as requiring a secure technology


solution which


implements the functions of the bill of lading, the solution must be underpinned by a comprehensive legal


framework to allow and manage the transfer of rights (both contractual and over the goods) and obligations in the same way as a traditional bill of lading. This is also necessary to preserve the concept of an original bill of lading which can only have one holder at any one time. Shippers and carriers should


therefore take care when selecting a solution. It must be proven, secure and standards- based, and have achieved adoption from both a legal and


technology banks, standpoint


across the entire supply chain including


corporates


and the shipping community. It must also be approved and recognised by industry bodies such the International Group of P&I Clubs which represents the 13 Protection and Indemnity (P&I) Clubs which insure over 90% of the world’s ocean-going tonnage, covering virtually every type of vessel. This ensures that a carrier can issue electronic bills of lading with the confidence that its Club will cover a cargo claim on the same basis as if the carrier had issued a traditional bill of lading. An eBL


delivers all


necessary details, while it also acts as a document of title, entitling the rightful holder to claim delivery of the goods. It


also contains all the


necessary more specific data, but with the huge difference that it is transferred between parties at the click of a mouse. The eBL has full legal status and is backed by the rigour of English common law.


Advantages of the eBL While the eBL can be


used to support financing through letters of credit and documentary collections, the in-built security means only the legal holder can use the eBL for such a purpose. Most importantly the holder is the only party permitted to demand delivery of the cargo from the carrier, reducing opportunities


for confusion the


functions of a traditional paper bill of lading without the disadvantages. Like its paper equivalent, it is a receipt from the carrier for the goods it describes. It is the contract for carriage, bearing all the


and delay while investigations or checks are completed. The full visibility and audit trail of digital platforms also makes forgery well-nigh impossible. No party can amend the document without being seen to do so. Digitisation also eliminates


the delays that inevitably arise when numerous bills of lading are required on a single vessel, with each document having to be updated during the course of the voyage. This is a real problem on shorter


routes, where the vessel often arrives before the paper bill of lading and then has to sit in port until the finalised document is received, potentially incurring demurrage and detention penalties. For carriers, digitisation all


of almost types of trade


documentation resolves these headaches. With eBLs the speed of execution across a digital platform accelerates the time it takes to establish title and release goods in full confidence that they are with the legitimate consignee.


It is also far more


secure than paper, since each document enjoys protection from a digital signature and encryption.


Forward-looking carriers


Carriers such as Evergreen and Wan Hai have focused on the use of eBLs because they grasp how digital integration will bring their customers huge gains in speed, efficiency and trust. Evergreen has integrated eBL technology into its ShipmentLink customer portal, simplifying requirements for customers, especially on shorter routes where speed is essential. With its first eBL, Wan Hai


reduced from days to hours the time required to complete a transaction supporting a shipment of chemicals from Taiwan to China. No letter of indemnity was needed as a result of the greater confidence among all parties involved. The eBL offers carriers huge


gains in efficiency and critical market differentiation, creating


real value for customers. In fact, the benefits of digitising trade documentation are obtained rapidly without major IT upheaval. Automation


reduces


overheads and man-hours and the use of the internet eliminates the need for documents to be physically couriered around the globe. Compliance with the continually evolving rules and requirements with regard to labelling and manifest reporting is also far simpler and more transparent. Digitised documents


such as eBLs are tried-and- tested solutions, mapped onto everyday global trade workflows and recognised by BIMCO, the well-respected carrier association as well as the P&I clubs in the International Group. The latter provides protection and indemnity coverage for carriers using eBLs on the same basis as paper bills. With so many proven


advantages and increasing adoption by major corporates and trade organisations, it is time for carriers and forwarders to integrate electronic trade documentation into their digitisation strategies. Most businesses grasp that digitisation is a huge trend in world trade and to resist it could be commercially suicidal. Carriers need to grasp more fully how they can gain competitive differentiation, vastly improved security and efficiency and much-enhanced customer experience through digitisation of trade documentation, especially eBLs.


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