The Maritime industry has supposedly practised the most ancient document, the Bill of Lading, and continues to rely on the physical transfer of paper records, applying to 40 per cent of all containerised trade transactions.
Documentation for a single shipment can require up to 120 sheets of paper that are exchanged with up to 30 different stakeholders. Bill of Lading (BL) accounts for between 10 and 30 per cent of total trade documentation costs. The International Chamber of Commerce (ICC) projects that paperless trade could create $267 billion of additional exports across G7 countries, compared to base forecasts, by 2026.
This non-digital process is costly, takes time to execute, and is highly susceptible to errors. The digitalisation of the BL has been slow and difficult to date, as various stakeholders are involved in the process, all of whom have different interests, needs, and systems—and must be approached individually. Many other documents are connected to the BL process via a multitude of interfaces, so individual digitalisation initiatives have been challenging to execute as a single stakeholder due to the limited impact they can make on their own.
The documentation process alone can take six or more hours across all stakeholders. Across the globe, generating a physical BL is dubbed a tedious process as it requires constant follow-ups with multiple parties and takes nearly 7-14 days. Additionally, discrepancies may spill over a few more days if discrepancies are identified.
The original BL still requires many stakeholders to print, stamp, and sign various paper copies before physically transporting them from origin to destination as air express shipments. Furthermore, other essential trade documents, like letters of credit and customs declarations, require the paper-based BL as a prerequisite for their creation and issuance.
So cumulatively, obtaining a BL adds up to the Carriers’ overall cost of at least US$4 billion annually worldwide. This accounts for unwanted miscellaneous costs for the industry, and eliminating it is of high priority for trade bodies.
With manual documentation, accuracy is always considered a challenge, and due to the same, the overall process turns out to be time-consuming too. Additionally, a physical document is always manipulated by various parties involved in the process.
Furthermore, the bill of lading is a document of title. It, therefore, requires the highest possible security standards, over and above e-mail or electronic data interchange (EDI) standards, and this creates additional concerns for all parties involved.
Digital Container Shipping Association (DCSA) and FIATA are reportedly the organisations that have fast-tracked digitisation of the overall electronic BL process. Under the standardisation process set by DCSA, nine Ocean Carriers have committed to making the entire process digital, enabling global trade growth of US$30-40 billion and saving US$6.5 billion for stakeholders. Experts believe that the commitment of nine carriers to ensure 100 per cent electronic Bill of Lading by 2030 will soon be achievable with this mandate.
On the other hand, the International Federation of Freight Forwarders Associations (FIATA) introduced the utility of an electronic Bill of Lading for the South African Association of Freight Forwarders (SAAFF) in February 2023. This effort was to help Freight Forwarders and exporters to digitise their operations. It facilitates to enable transparency and 100 per cent data security for all service providers.
An e-BL will be game-changing for the overall ecosystem. Why? Because it will not only help in scaling large-scale automation and bring transparency but also offer end-to-end communication between stakeholders and eliminate security risks in the Logistics ecosystem.
Adopting an electronic Bill of Lading could lead to direct cost savings for all stakeholders, amounting to $6.5 billion annually. Carriers could realise up to $2.1 billion in benefits, such as more direct interaction with shippers, and streamlined and digitalised workloads, leading to cost savings. New digital capabilities could also lead to a new revenue stream for carriers through improved customer journeys. The broader trade ecosystem could unlock a further $6.9 billion in value. Ultimately, greater digitalisation could enable $40 billion in global trade by 2030.
Several IT solutions providers offer an electronic Bill of Lading as a standalone application. However, according to industry stalwarts and trade bodies, several other documents involved in cross-border trade are as important as the Bill of Lading.
A point solution can facilitate communication between service providers only regarding the document. But the benefits are short-lived. International Maritime Organization’s FAL mandate amendment too reiterates the same and mandates all Ports to have a Maritime Single Window system that facilitates all aspects of cargo movement.
Similarly, the Port Community System can offer humongous benefits to all stakeholders involved in the Port ecosystem and beyond. These platforms are built with technologies such as Blockchain, Artificial Intelligence, IoT, and 5G that are future-proof and known to improve efficiency with scaled automation. In short, these platforms help stakeholders and Port authorities penetrate the industry’s digitisation and automation level. Moreover, achieving a 100 per cent electronic Bill of Lading is feasible and optimal with a holistic platform.