By Nicholas Demetriou, VP Marketing, essDOCS
The trials & tribulations of electronic Bills of Lading (eB/Ls) are well-documented: from Intertanko and Chase Manhattan’s short-lived SeaDocs initiative in the mid-1980s, to the EU-backed EDIBOL project and the Bill of Lading Europe project in the 1990s, to Shell and BP’s joint, repeated efforts with Solidocs up until the early ‘00s; it seems as if for every decade since the 80s there are one or two tales of ambitious expectations crushed by the harsh realities and complexities of global trade.
And yet despite the fact that many of these efforts were driven by a genuine desire to push the industry into a modern ‘paperless’ era, ultimately, none of them had any meaningful uptake.
So what’s different this time around?
Many would simply argue nothing is different today. When it comes to those crucial documents required to execute and transact global trade, the shipping industry still remains heavily reliant on good old fashioned paper: a paradox of inefficient, centuries-old practices in this digital age of e-banking, social media and binary trading. We beg to differ…
Enter the Gartner Hype Cycle
To understand where the industry is today with electronic Bill of Lading uptake, it’s important to look beyond the legal and operational nature of global trade processes and to consider the very business of electronic Bills of Lading, which effectively boils down to two things: technology and the network of users.
The Hype Cycle graph was developed by IT research & advisory firm Gartner as a means of providing a graphic representation of the maturity and adoption stages of technologies. It is intended to give a clear view of how the market will view technology as it evolves over time, providing insight into over-hyped technology and the resultant market “disillusionment” from its failure to meet the hype.
The first stage, or ‘Tech Trigger’ phase, is where early proof-of-concept stories and media interest trigger significant publicity but no real usable products exist and commercial viability is unproven, i.e. eB/Ls in the 1980s and early 90s.
Stage 2, the ‘Peak of Inflated Expectations’ is where we were in the late 90s to early-mid 00s: early publicity regarding eB/Ls produces a number of success stories, often accompanied by scores of failures, where a select few companies undertake tests but most do not.
And the dreaded ‘Trough of Disillusionment’, stage 3, is where some, until quite recently, argued that eB/Ls won’t work as they’ve heard about them for decades with no mass uptake; i.e. according to Gartner, where “interest wanes as experiments and implementations fail to deliver.”
While there is no doubt that eB/Ls have been through these stages, the slope continues upwards past this trough. And that is where eB/Ls are today…
Into the ‘Slope of Enlightenment’
A bold statement for all the naysayers: yes, we’re now in a position to confidently claim that electronic Bills of Lading have entered the 4th hype cycle phase, the whimsically-titled ‘Slope of Enlightenment’! Hyperbole aside, this is where according to Gartner, “more instances of how the technology can benefit the enterprise start to crystallize and become more widely understood […] with more enterprises funding pilots”.
And here’s for some proof:
Since the 2010 operational launch of essDOCS’ flagship solution – the CargoDocs electronic Bill of Lading – use has expanded from small trials with the energy majors to operational use in the agri, metals & minerals and chemicals markets across all shipping segments (namely bulkers, tankers, liners and barges).
To put this adoption growth in perspective, the CargoDocs eB/L network grew from approximately 500 customers in 2012 to over 2,100 in 2014 – a four-fold increase in just under three years. We expect it to double again in 2015. In some markets, adoption rates are reaching or exceeding critical mass: we anticipate that several terminals in Europe will be 80+% paperless before the end of the year.
CargoDocs electronic bills of lading are now approved by all relevant insurance groups, most notably the International Group of P&I Clubs representing the 13 P&I Clubs insuring 93% of the global fleet, the TT Club representing freight forwarders, and ITIC representing ship agents and independent inspectors.
What’s more, CargoDocs eB/Ls come with free insurance against fraud and related risks, covering eRisks (such as eCrime and eFailure) with a limit of US $20 million for any one eB/L: simply put, you’re covered.
In terms of global fleet figures, uptake per shipping segment – a key parameter in evaluating eB/L adoption – has enjoyed consistent growth and as of Q1 2015 includes 44% of the global Tanker fleet, 18% of the global Bulker Fleet and 22% of the global liner fleet signed up to the solution. Moreover, eB/L use, be it operational or in trials, has now expanded to 65 countries compared to only a couple dozen in 2012.
We may not yet be in Gartner’s 5th Hype Cycle Stage – the “Plateau of Productivity’, or mainstream acceptance – but that doesn’t mean that we haven’t transitioned through the ‘Trough of Disillusionment’ and successfully come out the other side. Nor does it mean that CargoDocs isn’t well on its way to reaching critical mass and becoming the de facto industry standard in the key markets where our customers have adopted eB/Ls.
Timeliness: you’re only as good as your current user network
eB/Ls rely heavily on the so-called ‘network effect’ in order to gain true prevalence and relevance in the marketplace. eB/L adoption historically faced a similar barrier to that encountered by early adopters of fax or email, both of which were only useful when all trade partners (i.e. the user network) had a fax machine or internet connection, or in the case of eB/Ls, when more users adopt the solution. In other words, there is no point in a shipper being on an eDocs platform, if your counterparties are not also participating!
Three decades later, with electronic bill of lading uptake on the rise, eB/Ls have gone from being victims of the network effect, to enjoying the very fruits of its expansion. Simply put, as more new users come onboard, the more valuable the technology becomes. Developing a wide-reaching user network spanning across the entire supply chain is therefore critical to efforts in going paperless.
Once you have reached critical mass, which CargoDocs has already achieved in several markets, the shift to paperless gains exponential traction with each new party signing on to eB/Ls. Growing uptake from exporters, their buyers, ship owners, agents and banks means that new ‘firsts’ and precedents for e-shipments across new trade lanes are emerging on an almost weekly basis. With each new precedent, come new users and parties further supporting and expanding the network.
As the global eB/L network continues to expand, the job of paperless trade enablers such as essDOCS is to ensure that key trading partners and service providers continue to join up, and the solution accommodates stakeholders such as Customs, Homeland Security, Chambers of Commerce and other bodies issuing Government certificates.
The rest is really up to you…
Why electronic Bills of Lading matter to you
As documented earlier, getting to where we are today with electronic bills of lading was certainly not easy, by any means. A lot more still needs to happen for paperless trade to become an all-encompassing reality in global shipping & trade processes.
However, real-world benefits and the value derived from the growing user network is a key driver in the current push towards paperless trade.
For shipowners, their agents, charterers and brokers, a world in which electronic bills of lading are the mainstay can mean many things; in large part, dependent on your role in the process. But there is also a common added value to going paperless, relevant to all.
Where earlier, failed eB/L efforts relied on complex, hardware and software-intensive processes to replace complex, labour-intensive paper processes, CargoDocs requires no additional software, digital certificates or hardware to be installed since the solution is simply accessed through your web-browser. It can be accessed via any internet enabled device (e.g. iPad mini, laptop etc), and even if a vessel does not have always-on internet, the Master can still use the solution via our secure email solution to review and sign Docs. Masters can even handle all vessels documents including letters of protest, electronically.
Adding to this simplicity is the fact that the same processes that apply in the paper world are recreated and applied, by design, in CargoDocs. CargoDocs eB/Ls are based on best paper practices meaning that documents are reviewed, signed, released and otherwise handled by the same parties that would handle paper B/Ls and supporting documents today. The difference is that all the documentary actions required to execute and transact a given trade – i.e. draft, review, sign, endorse – happen electronically; in a secure, streamlined, traceable and flexible manner.
The added speed and efficiency resulting from these data-based, electronic processes is where these benefits begin to have a true dollar value assigned to them, as real-time access to eB/Ls and supporting eDocs enables faster, more efficient vessel turnaround.
A speedier process for document management and distribution allows vessels to leave the loadport faster. Amendments, in the event of errors or changes, can occur almost instantaneously, but always securely as CargoDocs will automatically void the original before issuing the amended version following the owner’s approval.
Most importantly, CargoDocs enables discharge to an original electronic Bill of Lading, rather than an LOI, allowing shipowners to remain within their P&I cover.
Security and fraud-reduction is also of major concern for shipowners: electronic processes are proven to substantially reduce traditional document fraud, a problem still affecting the industry to this day. A two-step authentication process, among many more stringent security checks in terms of CargoDocs’ backend infrastructure, ensures that only relevant users have access to shipping and trade eDocs within the scope of their specific roles.
Added security and fraud-mitigation also ties to the fact that CargoDocs provides both added control and visibility across the entire fleet for a pool operator or manager.
As these and many more factors emerge as palpable, real-world benefits experienced by a growing user network, ongoing efforts from key industry bodies and NGOs continue to play a major role in spurring on further uptake – removing legal hurdles and making it easier for parties to adopt eB/Ls:
Case in point – BIMCO’s tailor-made electronic Bill of Lading Clause for Charter Parties
Back in May 2014, a major breakthrough for eB/Ls came when consultations between BIMCO and major industry stakeholders led to a new eB/L clause which can be added to charterparties: giving electronic bills of lading the same status as paper B/Ls under the terms of the charter party. Most importantly (as mentioned earlier), normal protection and indemnity liabilities are covered to the same extent when using eBLs as their paper equivalent.
According to BIMCO, “the technical, legal and financial infrastructure necessary for the widespread adoption of eBLs has developed sufficiently to herald what it believes will be a new era for electronic documentation.” We tend to agree…wholeheartedly!
Widening the eB/L scope
Moving a step further, we anticipate continued, increased eB/L uptake to also emerge as a result of the flexibility of e-processes; namely the ability to electronically tie-in additional, yet crucial, shipping & trade processes linked to bills of lading – something which is already happening as we speak:
On the trade finance side, as of Q1 2015, 17 global banks have already adopted CargoDocs in order to support their corporate customers’ use of ePresentation under an eUCP Letter of Credit, in addition to eDocumentary Collections and the emergent, entirely data-driven trade finance instrument that is the Bank Payment Obligation.
In terms of integrating with government single windows and customs, essDOCS is at the forefront of joint efforts which also tie in to continuously securing government approvals worldwide. To date, no customs or governmental authority has ever refused to work with our solution.
These milestones can mean only one thing: it is different this time
History may have been harsh on electronic bills of lading, but we are clearly way beyond the stage of still trying to prove history wrong. As outlined above, the real, far-reaching benefits of paperless trade are currently enjoyed by a much wider user base, further fuelling consistent, increased uptake.
Quite simply, electronic Bills of Lading are here to stay: a viable, proven eB/L solution is now trusted by a rapidly expanding user network.
But are eB/Ls today a truly mainstream, common practice in daily shipping and trade operations? For some, yes, though admittedly limited to specific trade lanes – which is not to diminish the rapid, exponential increase in eB/L use from this low base.
Yet the real crux of the matter is that it’s different for eB/Ls this time around not simply because we say it is.
Today, uptake is driven by major industry stakeholders with a long-term commitment to going paperless: an irreversible momentum which gains even more traction as the user network continues to expand.
Undoubtedly, some of you have already come across requests for CargoDocs. We anticipate – and can only hope – you’ll see many more in the coming months!
Costas Hadjipateras – VP Vessels: firstname.lastname@example.org / T: +30 210 724 5960
essDOCS Americas: email@example.com / T: +1 732 539 2609
essDOCS Asia Pacific: firstname.lastname@example.org / T: +65 6513 1352