Grant Hunter, BIMCO
The comprehensive and complex animal that is global trade relies heavily on outdated manual, paper intensive practices. This is despite the fact that issuance of electronic bills of lading (eBLs) has been possible for more than 20 years on safe and well-established platforms that have been approved by the International Group of P&I Clubs. Perhaps more interestingly, it is despite eBLs being safer, faster and greener when compared to their paper bills of lading ancestor.
One of the big risks that parties unecessarily take on is caused by ships tending to turn up at the port of discharge before the paper bill of lading has completed its travel through the trading and banking system. To ensure operations run smoothly and to avoid delays in discharging cargoes, the bulk shipping trade has over time adopted a commercially feasible, but legally unfortunate, practice where ships discharge without the paper bill of lading but instead against a letter of indemnity. eBLs are able to eradicate the majority of this reliance on letters of indemnity – an exposure that can quickly add up to millions and even billions of dollars – simply by ensuring that the bill of lading will be there before discharge. In addition to this, eBLs are much safer in respect of fraud and will do away with the risk of e.g. double financing.
There is also a green incentive to be found in the adoption of electonic bills of lading. By avoiding having to courier physical bits of paper all over the world, a notable amount of CO2 emissions can be saved.
Use of electronic bills of lading saw a boost in a world where people were suddenly stuck at home and reluctant to touch paper. To build on this momentum, BIMCO joined forces with key organisations DSCA, ICC, FIATA and SWIFT to form the FIT (Future International Trade) Alliance. In the summer of 2022, the Alliance sent out a survey to its respective members. One of the obstacles to wider adoption of eBLs that has been identified is that it is currently not possible to transfer an eBL from one approved platform to another, i.e. a lack of interoperability. A whopping 73% of the respondents pointed to “Technology, platform or interoperability concerns” as a factor for not yet using eBLs. The way the approved platforms operate is as “walled gardens”, or separate systems. To put it in perspective, it could be compared to the inconceivable sitaution that someone with an Apple phone not being able to call or send text messages to someone with an Android phone. Or someone with a Gmail being unable to send emails to someone with a Yahoo email. This is addressed and solved in the first instance by ensuring that the platforms speak the same “digital language” – through adoption of technical standards.
THE BIMCO ELECTRONIC BILL OF LADING STANDARD
BIMCO as an organisation has been in the business of producing paper standards since the early 20th century with our first ever contract published in 1908. Since then, hundreds of charter parties and bills of lading have been published. In July 2022, BIMCO moved into the digital space when we published our first digital contractual standard: the BIMCO Electronic Bill of Lading Standard.
The BIMCO Standard is free for everyone to start using and can be found on our website. It will be available to use on any of the platforms that have been approved by the International Group of P&I Clubs. Our Standard is aligned with the standards from our FIT Alliance partners DCSA and FIATA as well as the UN/CEFACT Multimodal Transport Reference Data Model.
WHEN TO START?
You can – and should – start today. Although there is a push for adoption of a harmonised legal framework recognising the legal validity of electronic transferable records, this will take time. And while it will make things easier, there are already tried and tested platforms which have been approved by insurers available that allow you to start now.
BIMCO has launched a campaign to help accelerate the adoption of electronic bills of lading in the bulk shipping sector. The 25 by 25 Campaign is a pledge by the world’s largest bulk shippers to commit to carrying on eBLs 25% of their annual trade volume for at least one commodity by 2025. Support for the initiative comes from carriers, the banking and finance community and other stakeholders.
