How the Electronic Bill of Lading Improves the Shipping Process

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New Electronic Bill of Lading Technology to Streamline Global Trade

Over the past few years there have been advancements in technology that have transformed the traditional paper based Bill of Lading into an Electronic Bill Of Lading (eB/L) format.  This new technology is also referred to as E Bill of Lading, Electronic Bill or Digital Bill of Lading.  The new Electronic Bills of Lading can provide many advantages for several parties involved in the supply chain.

In this article we give an overview of how an Electronic Bill of Lading works and how it can provide efficiency and value to exporters and other supply chain parties.

 

What is a Bill of Lading?

A Bill of Lading is a document that the Carrier of goods issues to the “Shipper” of the goods.  It’s a document to provide evidence or proof of shipment.

This is extremely important in International Trade as it provides ‘title’ as to who legally owns the cargo.  Moreover, the Bill of Lading acts as evidence of Contract of Carriage, receipt of goods and document of title to the goods.

The owner of the cargo (the holder of the B/L) has the legal rights to claim the goods or arrange transfer ownership of the cargo to another party in the supply chain.

Read more about a traditional Bill of Lading here.

 

What is an electronic Bill of Lading (eB/L)?

An electronic Bill of Lading is a new electronic version of the bill of lading.  The eB/L performs the same functions, and in addition it improves the speed, security and accuracy of information.

In the past, the transfer of important information relied on a physical Bill of Lading document being posted from the shippers to consignees in a different country.  Using an eB/L, the data contained on the Bill of Lading can be transferred to other parties involved in the supply chain almost instantly.

 

How Does an Electronic Bill Of Lading Improve the Import Export Process?

Upgrading to an Electronic Bill Of Lading process will bring a variety of benefits to many parties along the global supply chain.  The traditional Bill of Lading process is quite manual, slow, and not easy to share to parties in the supply chain.

According to the Digital Container Shipping Association, the global container shipping industry could save up to $4 Billion every year, if half of all Bills of Lading were dealt with in an electronic format.  This is such a big number because the Bill of Lading affects many party’s individual processes and workflows when dealing with International supply chain shipments.  Shippers will provide information and data to carriers to create the Bill of Lading, which is then easily shared with Freight Forwarders, Consignees, Banks and numerous other supply chain parties.

 

Upgrading from a completely manual, paper-based process to an electronic interface to capture the information and instantly transfer it to the relevant parties will reduce administration and operational costs for all parties involved.  Ultimately, these time and cost savings will reduce the cost of products and shipping, to reduce the final costs for end consumers.
A List of Benefits that an Electronic Bill of Lading will Provide

A Paperless Process

An eBL will provide supply chain parties with a paperless process.  Traditionally, a BL would contain information on a physical piece of paper that would be used to transfer information and ownership of goods.  Supply chain parties literally rely on a physical piece of paper.  When an eBL is created, data is entered digitally, electronic stamps and signatures can be used, then the data, information and ownership of cargo can be instantly transferred to another party.

The supply chain relies on the sharing of information and data.  Therefore, if each party uses software systems with great integration abilities (via EDI, API or other integration processes), this will allow information to be instantly shared to another software system.  These can be systems such as TMS, ERPs, CRMs, accounting systems and other supply chain software.  This eliminates manual data re-entry, eliminates human error, reduces administration time & associated costs, and eliminates the need to share and store physical documents.

Many companies still manage information and data via PDF documents, spreadsheets or other manual methods.  Upgrading software systems into a ‘structured data format’ will unlock huge efficiencies and new possibilities for the future of global trade.

Instant Exchange of Information, Data and Title

Amending information on a BL or Draft BL does not happen instantly, it often requires someone to manually change information in a database and re-send information back to another party.  In addition, when shippers and consignees require amendments when shipments are close to arriving into port, it can cause costly delays or demurrage charges.

Using an eBL, the transfer of title of goods can be made in a matter of seconds, to avoid issues and delays along the supply chain.

Accessibility

Using an eBL, users will be able to access the document and data instantly online via web browser, using PCs, laptops, tablets and mobile phones.  Any smart device that is connected to the internet will allow users to have access from anywhere, anytime.

Data Accuracy

Creating a traditional Bill of Lading requires gathering information from various sources to create a BL document.  Each time that data is re-entered there is an increased risk of human error.  If data was captured in an electronic format or integrated into a provider’s system this would eliminate the risk of human error.

Data Security

Supply chain parties rely on the accuracy and validity of information that is contained on the Bill of Lading document.  Although there are some measures in place to reduce the risk of fraud, how does each party verify the accuracy of information?  A traditional BL is open to a wide range of fraud as the information can be edited or manipulated in the sharing process.

Digital eBLs provide a higher level of security, especially in the case of being built on blockchain technology.  Blockchain technology can guarantee the accuracy of information and confirm exact time and dates of which parties have created the relevant information.  Because blockchain technology works on a distributed network, it ensures that data can’t be manipulated or changed without first being approved or traced.

Eliminate Postage Costs

Physically posting Bills of Lading and shipping documents Internationally may not initially seem too expensive.  But when you add up the costs of the number of times this is done per year, businesses can be saving a substantial amount of money.

Electronic Storage, Searching and Historical Records

Electronic BLs are stored in a digital format which eliminates the need to store physical documents over time.  In addition, documents and records can be searched easily, by reference numbers, BL numbers and other contact and product information.  This provides additional ability to provide reports and insights into historical information.

 

Challenges for the Electronic Bill Of Lading

Although online Bills of Lading will eventually replace most traditional Bills of Ladings, there are several challenges faced before the benefits can be provided to the industry as a whole.  Below are some of the key challenges that the industry faces in order to get widespread adoption of eBLs.

Understanding and Adoption

Although many new technologies can provide additional benefits and efficiencies, the value can’t be provided unless users are willing to adopt a new process.  In theory, new software systems and procedures are great, but the greatest challenge is change.  People are key to change.  If people don’t understand the benefits, or are not willing to adopt a new process, it simply can’t provide the benefits mentioned above.

User adoption is key, so the User Interface and User Experience (UI/UX) must be simple and easy for people to use all over the world.  If a new software process is not intuitive or it’s too hard to use, then it will fail to gain widespread adoption.

Legal Complications

As mentioned above, the Bill of Lading process is extremely important to global trade as it acts as evidence of contract of carriage, receipt of goods and document title to the goods.  Because global trade at its very nature involves multiple countries, each country must amend, approve and adopt new laws that enable the eBL to be used.

Such laws are not easy to change and rely on the willingness of many structures of government to make such amendments.  The UNICITRAL (United Nations Commission of International Trade Law) is the legal body for the United Nations in relation to International trade law.  In 2017 they created the MLETR (Model Law on Electronic Transferable Records) in order to enable the adoption of electronic transferable records.  The adoption of new laws will create confidence and increase the adoption of the eBL over time.

Verifying Insurance Cover

Until new laws are adopted by different countries over the world, insurance cover may not recognize some new electronic transferable records processes.

 

Conclusion

As mentioned above, there is no doubt that the new Electronic Bill of Lading process will provide so many benefits, efficiencies and cost savings to the global shipping industry.  The technologies are in place, but all of the value can not be enabled unless the laws and adoption is mainstream.

When the eBL does become mainstream, companies will have to ensure that they have efficient systems and data structures to keep competitive and also to enable the many new integration efficiencies that will come as a result.  All supply chain parties must be proactive to improve any outdated processes or software systems to ensure they don’t miss the boat.

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