The Shipping Industry's eBL Challenge

Welcome to the 27th edition of The LogTech Letter, a weekly look at the impact technology is having on the world of global and domestic logistics. Last week, I dared to suggest people in logistics overvalue their data, unless it’s shared. This week, I’m going to dive into a pretty specific topic: whether the ocean freight industry is ready for an electronic bill of lading (eBL).

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@ihsmarkit.com or on Twitter at @LogTechEric.

There are some topics in global logistics that are basically really boring versions of the movie Groundhog Day. Go to bed, wake up, Sonny and Cher song, nothing has changed. Over and over, only without the humor of Bill Murray.

One of those subjects? The availability of an electronic bill of lading (eBL) for ocean shipments. I’ve lost track of how many people have publicly lamented the fact that paper BLs are literally flown around the world to accompany shipments that move on the water. And then there are the other complaints that come with a paper-based process: every time an amendment needs to be made, the BL needs to be physically sent. Errors abound. Terrible for the environment.

So why do we wake up every morning and hear “I’ve Got You Babe”? People in the container shipping world have been talking about an eBL for more than two decades. The airfreight world has already shifted to a paperless documentation environment (though that initiative moved at a somewhat glacial pace, given that “nine years after its introduction in 2010, e-AWB became the default contract of carriage for all air cargo shipments” in January 2019).

For one, the liner shipping industry doesn’t have an IATA, a single international organization that can galvanize it around key progressive initiatives. Second, the low-value nature of ocean freight (not the value of the goods, but the freight costs) has always made it a tricky place in which to drive innovation. And third is the issue of interoperability - with multiple companies aiming to generate an eBL, will they all play nice with one another?

I’ll dive into the last piece first. There has not been a technical limitation on creation of an eBL for a long time. That’s not the issue. But interoperability is. Think of this from an exporter’s or consignee’s perspective. They deal with multiple shipping lines and multiple international logistics intermediaries. Say they work with three of each - what if each of those six companies has adopted the eBL product of six different providers. That would mean six different eBL formats, six different data schemas, six different product support teams to deal with.

The shipper could adopt its own preferred eBL product, orienting its systems around it, but can it guarantee that the three shipping lines will be equally welcoming of that product? What if one of the shipping lines is, itself, working on an eBL product and is steering its customers toward that product? Creating interoperability between eBL products is essential, because there isn’t one (nor should there be one) entity creating a single product that governs all the hundreds of millions of ocean freight shipments that move each year.

What does that interoperability look like? Well, there could be an interoperability layer, or clearinghouse, that essentially acts like a universal power adapter between all the eBL products and parties that need to generate or receive the eBL. That’s where the first issue comes into play - the lack of a neutral body driving such an interoperability layer. But, the Digital Container Shipping Association (DCSA) is trying to assume that role. The DCSA, a nonprofit consortium of nine container lines aiming to build data and process standardization into ocean freight, last year signaled it was taking on the eBL challenge. Interoperability of privately-developed products is the chief challenge it will tackle.

There is some regulatory traction, as the essDOCS (one of the entities providing an eBL solution) noted last week in this update about Singapore recognizing eBLs as equivalent in status to paper BLs. That’s exciting. But there’s still so much work to be done. As this article from December suggests, the maritime industry needs an “ecosystem approach” that has historically been avoided under the auspices of competitive advantage.

If individual shipping lines see an eBL offering as a way to win customers versus competitors (or even versus forwarders), we’ll see a variety of eBL products emerge and be adopted, and the interoperability will be an afterthought. The same forked path as before. If DCSA is successful in providing a common data structure that every line and software provider adheres to, it will be easier for cargo owners to use eBLs across their service providers and there will naturally be wider adoption of all eBLs products simply because it is easier to use.

The last issue I mentioned earlier - the low-cost nature of ocean freight being an inhibitor of innovation - is also changing. For one, ocean freight rates may be permanently elevated relative to historical levels. But second, the industry, from carriers all the way to small export suppliers, has adopted a new mentality about the importance of technology. There is progress, even if it seems gradual, toward the embrace of systems where spreadsheets and emails once stood. Electronic BLs are a part of this evolution.

And maybe, one day soon, we’ll hear “I’ve Got You Babe” through Spotify on a smartphone instead of through an old alarm clock.

Here’s a roundup of pieces on JOC.com the past two weeks from my colleagues and myself (note: there is a paywall):

  • As much progress has been made on digital international freight rate quoting, there is still a long way to go, Freightos found in its latest “secret shopper” survey of forwarders.

  • The small truckload carrier technology space is red hot, with SmartHop getting a $12 million round barely half a year after landing a seed round.

  • Watch this space: CBP is likely to expand its de minimis shipment pilots later this year. A huge amount of e-commerce freight is coming in via the Section 321 rule, and it’s only going to grow.

And here are some recent discussions, reports, and analysis I found interesting:

  • My colleague at IHS Markit James Kwan spearheaded an interesting report this week on data management with seven other authors. Well worth a read.

  • Weekly moving update: still not moving to Florida or Texas (despite this really rude video Miles Varghese at CargoLogik posted).

  • Weekly Keith Rabois update: annoyingly mundane this week. I got nothing.

🚨 Only 13 days left before we kick off #TPM21 with two days of #LogTech focused programming Feb 25-26. Registration is live, and so is the agenda. Each week until TPM, I’ll be highlighting a tech-focused session we’ll be hosting.

I referenced the DCSA and eBLs earlier in this newsletter, and so it seems perfect to note that I’ll be talking to Andre Simha, chairman of the DSCA and Global Digital & Information Officer at MSC in a 30-minute 1-on-1 discussion March 3 at 1:15 pm EST. We’ll be discussing a range of topics, from how container lines can drive adoption of technology, data standards, what shippers really want, product- and service-wise from carriers, and the state of eBLs. Don’t miss this one.

Disclaimer: This newsletter is in no way affiliated with The Journal of Commerce or IHS Markit, and any opinions are mine only.