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DCSA announces plans to push for electronic bills of lading

The Digital Container Shipping Association (DCSA) has announced a push for the use of electronic bills of lading (eBL) and made a call for collaboration as it estimates a potential $4bn could be saved per annum at a 50 per cent adoption rate by the container shipping industry.

Eliminating paper from the shipping transaction will make every aspect of commercial container shipping better, faster, cheaper, more secure and environmentally friendly, the DCSA states in its latest release online.

There are however, a number of obstacles to obtaining eBL. Lack of standardisation is one issue, but some carriers and solution providers have continued to move forward with proprietary eBL initiatives, albeit at a limited scale, states DCSA.

André Simha, global chief digital & innovation officer for MSC and DCSA chairman recently stated that: “The COVID-19 situation is bringing the core strengths of a standardised eBL to the fore. Cargo in ports cannot be gated out because of paper that is stuck elsewhere due to airfreight delays caused by the pandemic.”

Research shows paper bill processing costs three times as much as eBL processing. In an effort to fully understand the benefit of digitising the BL, DCSA carried out a financial modelling exercise to quantify the potential cost savings for switching from paper BL to eBL. The complexity inherent in using BL means the actual process cost for a single BL can vary widely.

The research found that the total cost of processing paper bills is almost three times that of eBLs. At a global economic growth rate of 2.4 per cent through 2030, as forecasted by the OECD, DCSA estimates that the industry can potentially save more than $4 billion per year if 50 per cent eBL adoption is achieved.

The DCSA states that if the industry starts on standardising eBL now, there is reason to believe a 50 per cent adoption rate is feasible by 2030.

Barriers to adoption

Three major factors drive adoption, but these obstacles are either on track to be resolved or have a path to resolution.

Robust technology – According to the DCSA, achieving acceptance of electronic documentation for something as critical as the bill of lading requires maintaining the integrity and uniqueness of the document as it makes its way along the supply chain. In the past, technological limitations have made this difficult in a digital format, partly due to the negotiable properties of the BL. However, new technologies such as distributed ledger technology (DLT), peer-to-peer and Blockchain offer potential solutions for eliminating the risk of a single catastrophic failure or attack that would compromise the integrity and uniqueness of an eBL.

Acceptance by government authorities, banks and insurers – The DCSA states that concerns over legal enforceability have also been a barrier to widespread adoption of the eBL. Not every government has provisions for an electronic form and many of them require paper. In addition, the lack of industry-standard language and definitions have made it impossible for them to “rubber stamp” an electronic replacement. However, the DCSA states that progress is being made in this area and accelerated as a result of the the COVID-19 crisis.

Open collaboration - For any robust technology, such as blockchain or digital ledger, to safely deliver an eBL from end-to-end, data model and transmission standards need to be in place, says the DCSA. If everyone who touches the eBL is using the same data format and communication standards, it can be transported seamlessly regardless of pre-existing relationships between stakeholders. Digital standards will enable interoperability between all stakeholders, such as system providers, shippers, carriers, banks and regulators. Different parties can be involved in a transaction as long as they have implemented the standards.

Next Steps

This month, DCSA will embark on an initiative to enable the open collaboration necessary for achieving full eBL adoption.

“DCSA’s mission is to drive alignment and digital standardisation to enable transparent, reliable, easy to use, secure and environmentally friendly container transportation services. Digitising documentation, starting with the bill of lading, is key to the simplification and digitisation of global trade” said Thomas Bagge, CEO of DCSA.

“The transformation that has taken place in the airline industry is an example of what’s possible if we work together. The e-AWB is now the norm rather than the exception among air carriers. We invite industry stakeholders to work with us to create standards that will make the eBL maximally useful and relevant for ensuring their goods are delivered safely and seamlessly to their final destination.”

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