The use of paper bills of lading, an important document in maritime trade, spans centuries.
And while the document has evolved over the years, processing paper-based bills of lading, many of which may be required for a single transaction, continues to be costly and time-consuming, creating a friction-filled customer experience across global supply chains.
These issues were further compounded during the pandemic when the transport of paper bills across borders was heavily impacted, said Thomas Bagge, CEO at Digital Container Shipping Association (DCSA), an Amsterdam-based nonprofit group founded by nine major ocean carriers including Maersk, MSC, ZIM and ONE.
“Imagine having goods sent from Shanghai to Los Angeles, but because the planes are not flying anymore, those physical bills of lading are not being transported between the parties. And that means that you cannot pick up your goods at the LA port,” Bagge told PYMNTS in an interview.
That, he said, led to a “definite shift” in accelerating the drive to fully paperless trade in the container shipping industry, resulting in the launch of the DCSA by member carriers in April 2020. “They see [the benefits] — cost savings, [improved] customer experience, and a more sustainable supply chain,” he added.
But from all indications they have their work cut out for them. In fact, data from the DCSA shows that of the 45 million bills of lading generated by ocean carriers in 2021, only 1.2% were issued electronically.
Bagge attributed this low rate to the lack of interoperability and standardized processes among the multiple parties involved in handling trade documents, from shippers and consignees to freight forwarders and customs authorities — a challenge he said digital could easily solve.
It is the reason why the DCSA’s member carriers have committed to fully adopting a DCSA standards-based electronic bill of lading (eBL) by 2030 in an effort to streamline document handling and to promote interoperability across global supply chains.
But it’s not just companies making the effort, Bagge said. At the government level, he pointed to Singapore as a champion in driving the transition to paperless trade, after the country passed a law in February 2021 to recognise eBLs. The U.K., which last year introduced an Electronic Trade Documents Bill, is another country taking concrete steps to make that goal a reality, he added.
Similar to the maritime sector’s efforts to digitize trade, the International Air Transport Association (IATA) has launched an industrywide e-freight initiative that aims to build an end-to-end digitized air cargo transportation process.
And starting with the air waybill (AWB) — a document that acts as a contract of carriage between a shipper and the international air carrier — IATA announced in 2019 the implementation of the electronic air waybill (e-AWB) as the default contract of carriage for all air cargo shipments starting in January of that year.
But according to Bagge, solely focusing on digitizing the Air Waybill instead of all the documents used in the freight transportation process, such as letters of credit and packing lists, has resulted in yearslong delays hampering IATA’s efforts in making the full switch to paperless.
“There are many other documents in digitizing trade, and you need to focus on all of them,” he argued. “If you have 40 documents and you make only one digital, you still have 39, and that’s not necessarily a good customer experience.”
And this is where legislation plays a crucial role, Bagge explained, because digitizing and standardizing many of the documents that are required in international trade, such as commercial invoices for customs authorities, will require engaging regulators and governments worldwide.
“It is key that customs organizations around the world start accepting digital documents because without it, we won’t have fully digital trade processes,” he said.
One of the levers that is underutilized in accelerating the transition to paperless trade is the sustainability angle and the impact of paper-based processes on the environment.
As Bagge said: “We have a significant carbon footprint from using paper. Not only do we cut down trees, we also transport papers by trucks and airplanes. Frankly speaking, in this day and age we should be able to do better.”
Doing better will require taking it one step at a time, however, which is why the DCSA is aiming to increase eBL generated by ocean carriers from 1.2% to 5% this year as member carriers work towards achieving full eBL use by 2030.
“We’ve created great momentum [and] we have a good number of carriers that have done quite substantial amounts of work and have concrete plans [in place to see it through],” he noted, hinting at DCSA member and Hamburg-based Hapag-Lloyd, which began offering its customers eBL last year.
Ultimately, Bagge argued the most important way to move the needle is for all shippers around the world to fully embrace digital documents, a move which will not only contribute towards climate goals but accelerate global companies’ plans for net zero carbon emissions by 2050.
“[The shift to digital] means enabling data to flow instantly, it means better customer experience and it means lowering costs,” he said, sending a “message to anyone, including carriers and shippers that have yet to commit to the cause, to get involved.”
For all PYMNTS EMEA coverage, subscribe to the daily EMEA Newsletter.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More