In the ongoing efforts to bring global trade into the digital age, initiatives from industry bodies, governments and financial institutions are steadily progressing.
The FIT Alliance has announced a commitment to the development and promotion of an electronic and universal bill of lading standard. The FIT Alliance was formed in 2022 by Bimco, the Digital Container Shipping Association (DCSA), the International Federation of Freight Forwarders Associations, the International Chamber of Commerce, and Swift. In forming the alliance, the groups have united behind the mission to standardise the digitalisation of international trade.
Launched as the ‘Declaration of the electronic Bill of Lading’ (eBL), by the FIT Alliance, the aim of the declaration is to secure commitment from all stakeholders in international trade to collaborate on driving digitalisation, starting with eBLs, within their industries.
As part of this movement, the UK passed the Electronic Trade Documents Act (ETDA) in September of this year. This legislation gives digital trade documents, such as bills of lading, the same legal standing as their traditional paper counterparts.
The impact of the UK law on global trade is “a huge thing”, according to Niels Nuyens, head of digital trade at the DCSA, because “a lot of the bills of ladings are based on UK law”.
The ETDA is designed to give UK businesses and participants in the 60% to 80% of trade transactions worldwide that are subject to English law more flexibility in how they trade.
However, “more than the UK and Singapore are involved in global trade”, Mr Nuyens adds. “It is still very important that other countries follow as well … it is also a massive push to create awareness of the possibilities of electronically exchanging documentation that relate to shipping.”
The FIT Alliance is campaigning for 100% eBLs to support global trade by 2030. “Our objective is to standardise and digitalise the end-to-end documentation process in container shipping, where the bill of lading is the most important document,” says Mr Nuyens. Interoperability between global systems is the main barrier to achieving that goal, he adds, which is why the alliance is pushing for global standards for eBLs.
Global banks are also a main player in promoting electronic documents to support global trade. Lloyds Bank has completed what it believes to be the first transaction under the UK’s ETDA.
Lloyds Bank used the trace:original system from Enigio to complete a digital promissory note issued by Matalan to accept liability when settling a documentary collection for the purchase of garments from one of its suppliers. Through the technology, the key documents arrived two days earlier than they would have, if the promissory note had been concluded on paper.
Rogier van Lammeren, head of trade and working capital products at Lloyds Bank, agrees that the UK law has a huge impact on progress in digitising global trade.
“The UK has really been a trailblazer with regards to enabling digital trade and, and that’s important because the UK in its own right is the world's fifth largest exporter,” he says. “What people often don't realise is that English law has such an important role in international trade. Getting that law changed done in the UK, through the electronic trade documents act is such an important enabler not just for UK trade, but for international trade.”
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As part of these trends, Lloyds Bank has developed a service where clients can request digital Direct Guarantees or Standby Letters of Credit. The bank’s Paperless Guarantee initiative, created to support businesses who have a high volume of transactions requiring bank guarantees to be issued, enables instant delivery to recipients, while reducing their carbon footprint. The bank has also invested €3m in Enigio to help expand and accelerate the use of digital documentation in trade.
Enigio’s trace:original product removes the need to physically transfer actual notes and enables the creation of digital documents that can be ‘possessed’ by an individual or transferred between parties. Originals can be distinguished from copies, similar to paper-based counterparts.
According to the FIT Alliance, every year, ocean carriers issue around 45 million bills of lading. Currently, many international shipping documents are not standardised, and the majority are still paper-based, requiring physical hand-off between participants. The adoption of eBLs will enable the trade industry to benefit from faster transactions, cost savings and lowered fraud risks through the use of digital authentication systems.
In 2022, only 2.1% of bills of lading and waybills in the container trade were electronic, according to the FIT Alliance.
A McKinsey study estimates that if eBL achieved 100% adoption in the container sector alone, it could unlock between $30bn and $40bn in global trade growth by reducing trade friction in the container trade alone. It could also help save 28,000 trees per year, equivalent to around 39 football fields of forest, and significantly reduce carbon emissions by eliminating paper.
