The Achy Back of the Shipping Industry
The Achy Back of the Shipping Industry
Welcome to the 79th edition of The LogTech Letter. TLL is a weekly look at the impact technology is having on the world of global and domestic logistics. Last week, I noted how difficult it is for supply chain participants to understand the confusing tangle of public supply chain data initiatives. This week, I’m looking back at a topic I wrote about in early ‘21, adoption of electronic bills of lading, to see if we’ve gotten anywhere.
As a reminder, this is the place to turn on Fridays for quick reflection on a dynamic, software category, or specific company that’s on my mind. You’ll also find a collection of links to stories, videos and podcasts from me, my colleagues at the Journal of Commerce, and other analysis I find interesting.
For those that don’t know me, I’m Eric Johnson, senior technology editor at the Journal of Commerce and JOC.com. I can be reached at eric.johnson@spglobal.com or on Twitter at @LogTechEric.
A little more than a year ago, I noted that electronic bills of lading (eBLs) were one of those things everyone wanted, but no one seemed to actively build or use. After a conversation this week with someone intimately involved in this area, it felt right to revisit this issue.
For one, there has been slow and steady progress since I wrote that newsletter. MSC, for example, adopted an eBL product, joining a select group of carriers offering such a product. Products continue to come to market, whether it’s the Wave BL product MSC used, Bolero and TradeLens, or essDOCS. This is a worthwhile read about the various entities that have tried to build eBLs the past two decades, and how things changed during the pandemic.
In mid-February a coalition of entities, called the Future International Trade Alliance, formed to try to create interoperability among eBL providers and users. Members of the alliance are heavyweights, including the Digital Container Shipping Association, BIMCO, FIATA, the International Chamber of Commerce and SWIFT.
Yet…the volume of container shipments actually moving on an eBL is still remarkably small. In essence, we are still at the “what will it take to drive adoption” level of this problem. In speaking this week with the source (who I’ll keep anonymous for this newsletter), an interesting point came up.
“The eBL shouldn’t be used to make money,” the source said. “It’s the conduit, the way to connect two parties.”
And those two parties aren’t just any parties, they are the container line and the bank. What the source was saying is that viewing an eBL as a monetizable, transactional product is a shortsighted view of the value of the instrument. The greater value comes from connecting the container line’s systems with the banks systems, and vice versa, through a mutually recognized set of electronic data contained within the bill of lading. That, the source said, was the power of eBLs. Yes it’s better to move data electronically than via a physical piece of paper, but that’s only the first order benefit of eBLs. And trying to extract revenue from digitizing a BL will hamper adoption.
The adoption problem is really about two things: inertia from logistics industry participants, and legal and risk reluctance on the part of banks. It turns out dematerializing a paper document connecting a bank in one country, a supplier in another, a shipping line in another and a consignee in another is quite complicated, especially without the needed impetus. On the industry side, cost is one factor, but process change is the bigger one.
eBL suffers from the same problem that a lot of systemic issues in global logistics do: the current state works. It might not be optimal, or even satisfactory, but it works, and in a job where things actually break every day, there tends to be higher priorities. It’s sort of like if you have an achy back (middle-aged man writing this, keep in mind), you just sort of muddle through because it’s not preventing you from doing the things you need to do. Only when there’s a pinched nerve or a slipped disc that prevents you from moving around do you actually attend to it.
eBL is like the achy back of the shipping industry. Until there’s enough pain to overcome the inertia and reluctance, we’re likely to keep writing treatises about what could and should be.
Here’s a roundup of recent pieces on JOC.com from my colleagues and myself (note: there is a paywall):
Not a tech story, but worthy of your attention nonetheless. A trio of my JOC colleagues tackle the thorny question of what rising fuel prices will do to freight patterns, including shifting modes, grouping shipments, and more. Definitely encourage you to read this one.
European freight procurement software vendor Shipsta this week landed a $10 million funding round, including investment from Slync.io founder Chris Kirchner. I dive into how Shipsta believes tech can fundamentally change procurement cycles.
project44 this week unveiled a new “lite” version of their platform focused around surfacing port dwell times and vessel counts, a sign that non-operations people and even investment bankers need in-the-moment insights into supply chain bottlenecks.
And here are some recent discussions, reports, and analysis I found interesting:
Kris Kosmala with a worthwhile discussion on how shippers should think about splitting contract and spot volume in a tumultuous market.
Missed today’s episode of LogTech Live? Fear not…catch the replay here. I soldiered through a nasty head cold, but the real reason to watch is Beth Pride, one of the world’s leading trade compliance experts, dropping a whole bunch of knowledge on Russia sanctions, China tariffs, the future of trade agreements and global trade management tech.
Really sharp piece here on where control towers might go.
An interesting thread on the funding environment…
Some upcoming events I’ll be involved in:
I’m leading a visibility panel at our JOC Breakbulk and Project Cargo Conference April 25-27 in New Orleans. My session, with representatives from Voyager Portal and FuelTrust, is at 4:25 CST April 26. Register for the event here.
I’m leading a range of sessions on digitization in global ports at the IAPH World Ports Conference May 16-19 in Vancouver. This is going to be a fantastic gathering of the world’s leading ports, terminals and maritime decision makers. Here’s the agenda, and click here to register.
Registration also opened this week for JOC’s Inland Distribution Conference, Sept. 26-28 in Chicago. This will be the pre-eminent trucking event this year, with shippers, carriers, brokers, intermodal providers and technology companies all discussing the path forward.
Disclaimer: This newsletter is in no way affiliated with The Journal of Commerce or S&P Global, and any opinions are mine only.
https://www.linkedin.com/pulse/spot-contract-carriers-hold-all-cards-right-now-kris-kosmala/?trackingId=xKZvMf45TfGTc8bQfTw0pw%3D%3D