Things to consider when choosing an Electronic Bill of Lading (eB/L) Platform
The COVID pandemic has accelerated digital transformation in many industries. It’s crazy to think a year ago Zoom meetings were relatively unknown, today everyone’s zooming. Likewise, after decades of using paper Bill of Lading, the shipping industry is moving away from paper and courier trade towards Electronic Bill of Lading. For example, you may have heard about centralized versus decentralized Blockchain platforms, or you may be wondering about the challenges in moving to eB/L. In this article, we help you evaluate which eB/L platform may best suits your trade needs.
What are the general advantages of eB/L over paper and courier?
As you’ve probably heard or even experienced, speed is a major factor - eB/L cuts the time it takes to receive a document from weeks to hours. With eB/L, security is vastly improved, and risks associated with paper BLs such as fraud, theft or lost documents are largely non-existent. In general, eB/L considerable lower overall expenditures since there is need to pay courier companies or insurance companies. And let’s not forget the convenience factor - with eB/Ls, the whole process can be managed remotely. When you add it up, that’s a pretty strong business case: security, speed and business continuity.
What is the difference between a centralized and decentralized Blockchain platform?
When considering an eB/L platform, you’ll need to choose between one that sits on a centralized or decentralized architecture. In a centralized eB/L platform, trades are managed and orchestrated by a central entity (the provider). The advantage is someone is responsible for the traffic and the operating rules in the network. The downside is that there is a “Big Brother” who has visibility into all the business transactions between the parties, is at liberty to change the rules, and takes a commission. A decentralized platform works as a distributed ledger network using blockchain technology to enable parties to issue, exchange and sign a variety of supply chain encrypted documents with no need for a central server or registry. In a decentralized architecture trades are performed peer to peer. There is no middleman or “Big Brother”. The platform provider has no knowledge of the parties involved and no access to the transaction data. They simply enable the trades to occur securely and efficiently. In other words, the decentralized approach is almost identical to the current paper and courier trading approach. Thus, if you prefer the idea of a full electronic process that enables direct peer-to-peer transactions with full security, then you should go with decentralized.
eB/L platforms are new. Shouldn’t I wait until they are more mature?
As witnessed in many walks of life, the COVID pandemic has accelerated many forms of digital platforms that enable remote, touch-free transactions. Usage of eB/L has soared during this period which has increased confidence in the technologies and allowed providers to smooth out operational creases. Some eB/L platforms have been running for years and have processed thousands of bills of lading per week. As more and more parties are onboarded to eB/L platforms - from trading companies to banks - the more robust the ecosystem is becoming. In summary, those who sign up to an established eB/L today are neither guinea pigs or early adopters.
How is security addressed and protected?
One of the major advantages of eB/L platforms that run on a decentralized Blockchain architecture is the ability to engage in transactions among unfamiliar parties who don’t know each other, with complete peace of mind, safe in the knowledge that transactions are secure and reliable. Centralized platforms tend to run on cloud-based architectures and also provide secure transactions, provided the cloud is secure.
Are some platforms easier to adapt to than others?
For companies that have been doing paper and courier trades for decades, it is understandable that moving to a new system may seem daunting. It is reassuring to know that some eB/L systems have modelled themselves as “mirrors” of the existing paper trade process, with the obvious difference that “printed B/L documents in envelopes” have been replaced by “digitally encrypted files” and physical couriers are now “digital couriers”. In “mirror” platforms there is built in familiarity and thus essentially no need to learn a new workflow and business process. The business process has simply been “copy and pasted” into a digital format.
What about IT integrations?
One should look for platforms that have created simple integrations that can be down as easily as downloading a simple software app and that require no special IT assistance. Some of the leading eB/L platforms on the market have made onboarding as effortless as possible. In some cases, new users can start generating eB/Ls within one hour of registering. Simple integration makes eB/L suitable for small companies and large trading companies alike. It is a good idea to look for a platform that offers full support through the onboarding process, so any teething issues that may arise can be resolved quickly.
Do eB/L platforms allow you to trade with any entity? What if trading partners are not part of the eB/L platform you’ve signed up with?
In general, one can trade with everyone that joined the network, in much the same way you can send WhatsApp message to everyone that joined the WhatsApp platform. Joining the network shouldn’t be more complicated than installing an app. When joining you will automatically be assigned with a unique address. Using this address network participants will be able to identify you for sending and receiving electronic documents, as easy as sending an email. If for some reason one of your trading partners is refusing to join the network a switch to paper is always possible with the help of the eB/L issuer (the carrier).
Do eB/L platforms require insurance? What about compliance issues?
Knowing your valuable cargo is safely in your hands is a prerequisite of all eB/L systems. But even if a disaster strikes, cargo owners need to know that they are 100% covered. Before choosing an eB/L platform, one should check the eB/L solution is recognized and approved by Insurance providers, specifically the International Group of P&I Clubs (IGP&I) that provides marine liability cover for approximately 90% of the world’s ocean-going tonnage. Once an eB/L system is approved by IGP&I, if a cargo owner or ocean carrier is exposed to any kind of legal conflict they will be covered.
Need more information?
We hope you found this article useful. If you’d like to learn more about a leading decentralized eB/L solution that has processed over 100,000 bills of lading this year, click here or