Paving the way for an eBL-enabled future

Bertrand Chen
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While an eBL-enabled future is certainly an exciting one, as we look ahead, we also believe it is important to consider the potential challenges along the way to 100% eBL.

In the last few weeks we have witnessed a number of milestones on the way to digitizing shipping processes using electronic bills of lading (eBLs). For example, the Digital Container Shipping Association (DCSA) and its shipping line members have committed to 100% adoption of eBLs by 2030, while GSBN has a Memorandum of Understanding (MoU) with Saudi Basic Industries Corporation (SABIC), COSCO SHIPPING Lines, and Hutchison Ports and PSA International for the launch of eBL.

While an eBL-enabled future is certainly exciting, we believe that looking ahead, it is also important to consider the potential challenges on the path to 100% eBL.

More than just digital

The move to eBL goes beyond simply digitizing documents and striving for cost efficiency. The mere fact that current practices revolve around paper severely limits the ability to innovate and improve workflows in international trade. When it comes to eBLs, we should no longer think of a document but of the data it contains. Through this lens, we can see a multitude of opportunities to improve the overall process and create new values ​​that were previously unimaginable.

First, data can be embedded into digital workflows to improve operational performance in applications like freight release. Second, ownership data combined with container location visibility data can enable new applications where more complex ways of ownership transfer could be realized based on new logics.

Finally, payment streams can also be connected to this new data stream. This allows eBLs to play a role in the trade finance process, enabling new applications as well as novel ways of allocating risk to investors. By bringing financial institutions that have previously been on the periphery closer to live ship data, new financial products can be developed to bridge the multi-trillion-dollar global trade finance gap that hampers economic growth.

challenges remain

Nevertheless, significant challenges remain. First, there is the legal uncertainty when using eBL solutions. Even though eBL has long-established sets of rules that have been adopted for specific use cases, there are still many organizations whose legal departments prefer the traditional paper waybill. Fortunately, the Model Law on Electronic Transferable Records (MLETR), which provides a legal framework to support electronic commercial documents, is rapidly gaining traction. Lobbying efforts by the International Chamber of Commerce (ICC) in the UK to push MLETR forward has resulted in an Electronic Trade Documents Bill, which is expected to be implemented into English law in mid-2023. This is important given the impact of English law on international trade. Similar dynamics can be found in France and Germany, and similarly the US and China have also begun to revise their laws on electronic documents for commerce.

Second, and paradoxically, when this legal uncertainty is gone, there will be an explosion of eBL solutions entering the market. While this may sound positive, the sheer volume of choices can actually force companies to wait and see which ones eventually overcome fears that not all will survive, delaying adoption. Another consideration is that global supply chains are invariably complex and diverse. As such, organizations may not even have a choice about which solutions to use, and often these are dictated by their trading partners.

Get ready to answer

To respond to these challenges, the industry needs a trusted hub to connect multiple solutions from carriers, financial institutions and enterprises. Therefore, many solutions can be available as the market decides the best solutions, with a common backend infrastructure serving as the lowest common denominator. eBL solutions would also benefit from tapping into various APIs to add value beyond the eBL.

Shipping has many facets. APIs must also be in place to enable all forms of eBLs, including bulk and container, and the eBL and associated documentation must interoperate with customs and other regulatory authorities. A non-profit consortium like GSBN is best suited to facilitate collaboration with all these important but diverse stakeholders.

For this reason, GSBN actively collaborates with various bodies, including the International Chamber of Commerce (ICC), alongside the DCSA, to ensure that all stakeholders can benefit.

The Case for a “Clearing House”

Another hot topic in promoting eBL adoption is interoperability between different eBL solutions. Technical interoperability is certainly achievable with strong leadership and collaborative efforts between different solution providers.

However, there are legal considerations that cannot be solved by technology alone. For example, imagine a situation where two solutions exchange an eBL and an issue arises where they couldn’t agree on who the current eBL holder is. The solutions will likely be in different stages of growth. Dispute resolutions between a Series A start-up and an experienced eBL provider with deep budgets would not be feasible.

Therefore, we believe there is a reason for a clearinghouse to take on the role of arbiter. This is very common in financial exchanges. It would need to be independent, trustworthy and have access to the minimum data related to the transaction required to provide assurance of transmission between eBL solutions. The underlying technology can be a permissioned blockchain, a public blockchain, or no blockchain at all.

The alternative is a winner-takes-all market instead of a vibrant ecosystem that serves everyone’s interests. The industry requires a variety of solutions that best meet the needs of diverse participants of all shapes and sizes. A clearing house mechanism would support this and allow solutions to compete to best solve customer problems and bring innovation to that market.

A ‘Schelling Point’ for eBL solutions

The path ahead is promising and full of opportunities waiting to be explored. We need a Schelling point for this journey or a natural point of convergence for people to adopt eBL solutions. Of course, the market will ultimately determine where the point or points of convergence lie.

The ability to look beyond profit, the openness to work with key organizations, the inclusion of diverse participants together with a trusted infrastructure like that of GSBN provides the industry with a simple, value-added and easy way to adopt eBL.

Bertrand Chen is CEO of the Global Shipping Business Network

Source: News Network

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