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).
Eric the key issue of interoperability is not technological interoperability – as in the days of open API, sharing data is extremely easy – but rather one of legal interoperability. To ensure eB/Ls give each user the same rights (and responsibilities) as they would have in a paper world, the eBoL provider is required to create a ‘closed circuit' or ‘club’ of users by ensuring they sign the eBoL provider’s multi-partite legal framework. This framework ensures cross-border validity of the electronic issuance and negotiation of the bill of lading, i.e., that the eB/L is the legal equivalent of paper.
(Sidenote - ensuring Authority of the individual who signs the agreement is critical, as if one signer was not authorized or empowered to bind his/her organization, bank, etc., then the eBoL will not be valid under that framework. This essentially eliminates the ability to one-click “agree terms”, as most users accessing the platform will not have the requisite authority to bind their company to an agreement of this nature.)
In the example you use, where a shipper has to use 6 different eBoL solutions, that means its supply chain and finance providers will need to each review + sign the 6 legal agreements from each of the 6 providers.
In order to solve this issue, you would need legal interoperability. Indeed, there are a couple of organizations looking to resolve this including DCSA, as you mentioned, and the ICC Digital Trade Standards Initiative (DSI).
While legal interoperability is an audacious goal, and would significantly accelerate paperless trade adoption, there is no parallel to this having been done anywhere else. So it is not without its challenges.
Legislative changes to adopt the UNCITRAL Model Law on Electronic Transferable Records (MLeTR) or equivalent will eventually solve the issue of interoperability, essentially because the local law will govern electronic transfer of title, rather than the legal frameworks of the eBoL solution providers, but unfortunately this will require quite a number of years as more countries update their laws.
In the meantime, eBoLs will need to be governed by non-interoperable legal frameworks, so customers will be limited by the customer, bank, carrier network of those providers.
Hi Eric, the issue as I see it is not mainly from the shipping lines side.. The shipping lines may be ready to stick to one format as they have done in the case say an EDIFACT message.. BUT, the issue here in my view is the people who require these documents.. Mainly the trade and mainly the banks.. They place a variety of documentary requirements on the customers - buyers/sellers - which they are FORCED to do when banks are involved in the trade.. Some of these requirements are archaic and painful for the traders.. If these requirements are simplified, probably things would move at a much quicker pace..
Eric the key issue of interoperability is not technological interoperability – as in the days of open API, sharing data is extremely easy – but rather one of legal interoperability. To ensure eB/Ls give each user the same rights (and responsibilities) as they would have in a paper world, the eBoL provider is required to create a ‘closed circuit' or ‘club’ of users by ensuring they sign the eBoL provider’s multi-partite legal framework. This framework ensures cross-border validity of the electronic issuance and negotiation of the bill of lading, i.e., that the eB/L is the legal equivalent of paper.
(Sidenote - ensuring Authority of the individual who signs the agreement is critical, as if one signer was not authorized or empowered to bind his/her organization, bank, etc., then the eBoL will not be valid under that framework. This essentially eliminates the ability to one-click “agree terms”, as most users accessing the platform will not have the requisite authority to bind their company to an agreement of this nature.)
In the example you use, where a shipper has to use 6 different eBoL solutions, that means its supply chain and finance providers will need to each review + sign the 6 legal agreements from each of the 6 providers.
In order to solve this issue, you would need legal interoperability. Indeed, there are a couple of organizations looking to resolve this including DCSA, as you mentioned, and the ICC Digital Trade Standards Initiative (DSI).
While legal interoperability is an audacious goal, and would significantly accelerate paperless trade adoption, there is no parallel to this having been done anywhere else. So it is not without its challenges.
Legislative changes to adopt the UNCITRAL Model Law on Electronic Transferable Records (MLeTR) or equivalent will eventually solve the issue of interoperability, essentially because the local law will govern electronic transfer of title, rather than the legal frameworks of the eBoL solution providers, but unfortunately this will require quite a number of years as more countries update their laws.
In the meantime, eBoLs will need to be governed by non-interoperable legal frameworks, so customers will be limited by the customer, bank, carrier network of those providers.
Hi Eric, the issue as I see it is not mainly from the shipping lines side.. The shipping lines may be ready to stick to one format as they have done in the case say an EDIFACT message.. BUT, the issue here in my view is the people who require these documents.. Mainly the trade and mainly the banks.. They place a variety of documentary requirements on the customers - buyers/sellers - which they are FORCED to do when banks are involved in the trade.. Some of these requirements are archaic and painful for the traders.. If these requirements are simplified, probably things would move at a much quicker pace..