The Bill of Lading, is one of the most important documents’ in global trade and has been around for many years..
The paper form of the bill of lading is still the leading form and is most commonly used when a Bill of Lading is issued as a Negotiable instrument (Ocean Bill of Lading)..
Is there space in the shipping world however, for an Electronic Bill of Lading..??
Some may argue that there is already an Electronic version of the Bill of Lading and that is the Sea Waybill of Lading..
A Sea Waybill of Lading which is also issued by the shipping line is neither negotiable nor signed and it does not require presentation of any negotiable paper document for delivery at destination and is generally circulated by email..
Also, a Sea Waybill of Lading only fulfils two of the 3 roles of the Bill of Lading 1) Evidence of Contract of Carriage and 2) Receipt of Goods.. It does not fulfil the role of Document of Title which is one of the key roles of a bill of lading when issued as a Negotiable Document..
So the question is whether there is space in the shipping world for a Negotiable Electronic Bill of Lading which is electronically signed by the carrier and maybe printed at the office of the shipper or freight forwarder..
In October 2015 BIMCO introduced some major revisions to the NYPE (New York Produce Exchange) Time Charter Party which includes the issuance of Electronic Bills of Lading covered under below clauses
32. BIMCO Electronic Bills of Lading Clause
(a) At the Charterers’ option, bills of lading, waybills and delivery orders referred to in this Charter Party shall be issued, signed and transmitted in electronic form with the same effect as their paper equivalent.
(b) For the purpose of Sub-clause (a) the Owners shall subscribe to and use Electronic (Paperless) Trading Systems as directed by the Charterers, provided such systems are approved by the International Group of P&I Clubs. Any fees incurred in subscribing to or for using such systems shall be for the Charterers’ account.
(c) The Charterers agree to hold the Owners harmless in respect of any additional liability arising from the use of the systems referred to in Sub-clause (b), to the extent that such liability does not arise from Owners’ negligence.
According to BIMCO,
Bills of lading produced in electronic format are designed to replicate the purposes and processes (such as endorsements or reservations) of their paper equivalent so as to offer “functional equivalence”.
Electronic bills can, if required by parties in the trading chain, be replaced by paper bills of lading at any point.
In practical terms, while electronic bill of lading systems do not entirely eliminate the problem of cargoes arriving at discharge ports before bills of lading, their use should result in a significant reduction in the number, and associated risks, of LOIs voluntarily issued by owners.
Although the above is mainly for dry bulk cargoes covered by Charter Party, encouraged by this, could more shipping lines and customers in the container shipping sector opt for Electronic Bill of Lading..??
Is there a future for electronic bill of lading in the container trade where there are more chances of fraud and forgery..??
Are the shipping lines and customers ready to accept and use electronic bill of lading..??
Read this insightful article about the advantages and disadvantages of Electronic Bill of Lading by Reed Smith lawyers and share your opinion..
Have any of you dealt with Electronic Bill of Lading (negotiable) and how was the experience..??
Dear Harish,
Please confirm, is revenue stamp still required on the bills of lading ?
Hello Santosh, am not aware of the current requirements in India, so unable to comment on this..
Hello,
From what I understand, as per the Indian Stamp Act of 1899, B/Ls issued in India need to be stamped using a 2 rupee revenue stamp for it to be a valid legal document (otherwise it is just a contractual document).
By affixing revenue stamps on B/L, it shows that documentary tax is paid, which is a requirement for legal validation.
Since, the same is only required for international trade, and such a technicality is not observed by many countries, I believe quite a few shipping companies get by through not following the said rule. But the legality of such a B/L would not be recognized before a court of law.
The procedure cannot be used on eB/Ls for obvious reasons. Is there anyone who could clarify how such an issue can be overcome?
Good Idea , when we use E-b/l it will save much times , such as we book ticket Airline invoices as Electronical but this E-b/l maybe face some problem in custom in some country so i hope all world follow one system in very things , goods and commodity are same things in any area for example apple is apple in any place not changing their feature so we need one law and one legislation to follow
i totally think this should and will happen. There are, however, many countries that require by law to print OBLs like Columbia, Brazil to obtain customs clearence for example. So some legal barriers should be removed.
If shipper doesnt trust consignee and doesn’t want Sea Waybill, my thaught is that a password system can be used. Shipping line system generates password and communicates it to shipper. Upon receipt of payment for the goods shipper releases number to consignee. Consignee enters password on a shipping line wesite and obtains the release. I see it as rather easy task for shipping line IT staff.
Thank you for your inputs Roman.. 🙂
Hi , we have already implemented this and yes it has gained a very high momentum with a very positive response from customers
Hello Archana can you elaborate a bit further on how you implemented it and what is the reaction from the market..??
Given that demand for shipping services derives from demand for the transported products, one could argue that it is the shipping companies’ customers that can tip the scales for the incorporation of e-Bills to the trade. Personally I can see only good things happening once there is a horizontal and vertical integration of e-Bills into the trade.
Since such a transition would mean changing many aspects of a company’s or organization’s operations there is still ground to be covered. However, as Reed Smith point out, with the approval from the IG of 3 different e-bills platforms and the e-Bills clause integration to the latest NYPE the foundation has been laid. Now would be the time for the e-Bill platforms to push forward with reduced rates and appealing pricing schemes in order to bring people onboard.
I feel that shipping and especially liner companies would also have a lot to gain from the e-Bill concept. It would be easier for their customers to approve/issue/exchange documents and would also provide security of higher standards when it comes to attempts of fraud. But then again we knew all that. If the industry(or end users) really was in need of more transparent procedures, the legislation would be in place(or at least steps would have been taken) already and electronic forms would be used across the board. At the end of the day the customer is always right…
dear Harihesh and all for example, if I’m shipping company in charge to release an Original BL on prepaid basis to shipper………… I can send it to shipper by a edi file or just as pdf file, but with a password/key generator with other message that is valid only for the shipment done, this key generator once insert into my file, it generate just for one time a Original BL into shipper’s hands.
I shipper, after done all controls to continue with my business with cnee, I need to transfer the OBL to cnee, how can I send the OBL to cnee if I’m in Italy and cnee is in Japan?, I can use again a key generator (through shipping company web site) able to cancel (invalidate/nullify) the OBL in my hands but able to transfer the OBL (signed on back side by me with an electronic process) to cnee. that’s all.
Could be possible to switch an electronic B/L into an Original B/L just using an key O_B/L generator……..like most of banking transaction
Hello Luigi, can you pls elaborate on what you mean by “to switch an electronic B/L into an Original B/L just using an key O_B/L generator”.. Are you talking about an electronic bill of lading system..??
This article is a food for thinking for stakeholders of shipping. I think like Paper Negotiable Bill of lading, an international convention has to be developed by the international shipping community to facilitate the introduction of Electronic bill of lading taking into consideration all the pros & cons of such e-B/L. Hope the ratification of such convention by the member countries would help implement such venture gradually. Thanks
Hi Hariesh – thanks for the very good and informative article. As of today, many major Container Shipping Lines in India enable printing of Bill of Lading documents at the Shippers’ own premises.
This is basis a separate contractual agreement between the Shipper and Line along with specific access to the Shipping Line Web Portal or equivalent for delivery.
This we could call as ‘offsite’ printing.
An ‘Electronic Bill of Lading’ needs to remain in ‘electronic’ form without getting printed through the entire end-to-end chain – across Line-Shippers-Banks-Consignee.
I had come across a company called Bolero with a platform enabling eBL facility. This would however require all stakeholders to be onboard this platform – else even one missing link would create a physical print.
Would be glad to hear other approaches/views. Thanks.
Hi Hariesh – further to my earlier comment, following are my views on the queries raised in the article –
Although the above is mainly for dry bulk cargoes covered by Charter Party, encouraged by this, could more shipping lines and customers in the container shipping sector opt for Electronic Bill of Lading..??
—–Yes, Container shipping sector and Customers could opt for E-BL as it has a potential to reduce Booking to Bank Submission Cycle Turntimes.
Is there a future for electronic bill of lading in the container trade where there are more chances of fraud and forgery..??
——The Bolero platform mentioned earlier could be checked out for security angles.
Are the shipping lines and customers ready to accept and use electronic bill of lading..??
——-To the extent am aware, yes there is an interest. Though the success would depend on all stakeholders (including consignees and their banks, if L/C is involved, to be onboard a common platform.
Best Regards
Thanks for your views Venkat and enlightening us regarding the practice in India..
Currently BOLERO, essDOCS and E-title are three electronic documentation platforms that have been recognised by various P&I Clubs.. Let us see if this recognition will spur the EBL..
Hi Hariesh, I am certain that it is more a matter of when rather than of if. Some technological hurdles still have to be cleared to make the OBL an e-BL but it will come. My take is that most of the resistance will result from reluctance to change within the industry (like using FOB for just about everything…).
Hi,
The adage ‘Old habits die hard’ is apt when looking at the shipping industry and I believe E-bills will not see their ascension into becoming the most common form of document used in marine trade. The tangible and physical nature of paper bills of Lading i.e you can hold the document in your hand provides security to many.
Due to the fact the E-bill does not provide the holder with a document of title, it lacks clout in a legal sense. In many cases, paper BL’s are withheld from a customer as a form of leverage in order to ensure payment is made. What better way to place pressure on a delaying customer than to refuse rights to the goods.
An interesting thought nonetheless and would be keen to see the day of the E-bill as the delay in receiving original documents due to delayed postage etc is something one would not expect to shackle the world of logistics in the 21st century.
Thanks,
Jack
Hi Jack, thanks for your views.. I refer to your statement “Due to the fact the E-bill does not provide the holder with a document of title…..”..
If a bill of lading is issued in a NEGOTIABLE form (whether paper or electronic), it will be considered a document of title..
Hi Carlos, what you say is very true both regarding the “when” and not “if” and also reg the use of FOB.. 🙂 Old habits die hard as Jack mentioned.. People still refer to freight collect shipments as FOB shipments..
I think E-BLs would be the next generation bills of lading and easy to use. Initially the acceptance would be a difficult with the fear of “title of goods” being easy with a physical bill of lading etc., However the right of the title can be governed / managed by a good company providing this service through electronic rights / access etc.,
The consignee will not be able to get the rights to the title unless the payment is made by them and shipper is convinced. This platform might also work as a media to safeguard the interest of the consignee to record the agreement between the shipper and the consignee and avoid risk to the consignee who makes the payment as per agreement , but the shipper still decides NOT TO transfer the title through physical courier / transfer of the bill of lading. Further E-BLs will be beneficial to mitigate the costs , risk of loss, getting in to legalities of obtaining a duplicate bill of lading from the carrier by blocking 200 to 300% of the cargo value for 5-7 years etc.,