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It’s time to unlock the promise of electronic bills of lading for all

For too long, the world of trade has grappled with the complexities of digitising the bill of lading, one of the most important documents in global commerce. However, there is now light at the end of the tunnel. Thanks to legal reform in major jurisdictions, a faster, cheaper, easier way to trade is now within the reach of every business, everywhere.

In just a few short years, digital transformation has revolutionised the way we do business. Where once only large multinationals could access global markets, online platforms now empower small companies to sell worldwide with relative ease. Cloud computing and software-as-a-service have brought capabilities once reserved for large enterprises within the financial reach of SMEs. Mobile and digital tools have sped up processes across organisations of all sizes.

Meanwhile, emerging technologies like artificial intelligence, machine learning and blockchain continue unlocking new efficiencies and opportunities as data-driven, automated operations become standard practice. These shifts have levelled the playing field for innovation while transforming how business is done at every level.

Yet the backbone of global trade – the bill of lading – remains stubbornly wedded to paper, causing headaches for companies the world over.

Physical documents introduce friction at every turn, as they are couriered between parties, manually verified and stored. This results in delays and errors necessitating the issuance of costly letters of indemnity or bank guarantees, all while demurrage and storage fees pile up.

Paper bills are also susceptible to fraud, with bad actors presenting unauthorised duplicates for financing to multiple banks, or falsifying documents to deceive their counterparties. Over the last decade, Bloomberg estimates that banks, traders and other parties in the commodities industry have lost at least US$9bn as a result.

In contrast, digital trade could unlock a world of efficiency gains. Electronic bills of lading (eBLs) transferred instantly would eliminate paper trails across oceans. Real-time tracking and analytics would transform supply chain orchestration. And doing away with cumbersome paper-based processes would reduce manual workloads and free up resources for higher-value tasks and strategic initiatives.

There is no reason why our digital lives should grind to a halt at the water’s edge. Shuffling physical paperwork to conduct trillions of dollars of trade flows must become a thing of the past, and now is the time to make this happen.

If digitisation is so good, why haven’t we done it yet?

While the potential benefits of going digital are immense, efforts so far have failed to deliver: just a fraction of the bills of lading used today are electronic.

One of the most important barriers to adopting eBLs has been uncertainty over their legal validity. Until very recently, legislation only recognised trade documents as valid in a physical, paper format, which meant that any solution had to be created using a contractual framework – whereby all parties signed up to a private rulebook to agree that an eBL is equivalent to a paper bill.

This has now changed. Singapore’s adoption of the UNCITRAL Model Law on Electronic Transferable Records (MLETR) in 2021 and the entry into effect of the UK’s Electronic Trade Documents Act (ETDA) in September 2023 now mean that paperless versions of documents such as bills of lading have the same legal standing as their physical counterparts – and more major trading jurisdictions are expected to follow suit.

But there have also been other obstacles to eBL adoption. So far, businesses who wanted to use the eBL have had to become participants of a particular system. However, in fast-paced spot trading environments where documentation and cargo ownership must change hands rapidly between counterparties that are not pre-existing members of an eBL platform, a closed-loop system is untenable. This type of ecosystem lock-in has limited the usefulness of early eBL offerings in important trading scenarios.

Another barrier has been around independence and neutrality. Some eBL platforms have suffered from being overly influenced by specific stakeholders in the industry. This imbalance of power risked prioritising their interests over those of other participants, making some unwilling to entrust the platform with their sensitive commercial data and documents.

As a result of all of this uncertainty, progress on eBL adoption has largely been confined to large multinational shippers, financial institutions and commodity traders that have the capital and scale to undertake extensive pilots, invest heavily in proof of concepts, and manage complex digital transformations. Meanwhile, the cost of change management and potential wasted investment in platforms that fail to gain widespread acceptance made such undertakings disproportionately challenging to smaller players – who stand to gain the most from the efficiencies of paperless trade.

Learning from the past with a solution for today

Addressing past concerns head-on, Secro has developed a neutral, flexible utility that leverages new legal and market developments to finally unlock the transformative potential of electronic bills of lading in a simple, scalable way.

Where previous solutions struggled due to legal complexity and lack of standardisation, Secro applies hard-earned lessons. As an independent platform, Secro maintains neutrality across the trade community. Its EBLs are structured for legal compliance from the ground up.

And because it leverages the enabling MLETR framework implemented by Singapore and the UK, its software-as-a-service model requires only a simple agreement, without requiring shippers to take an all-or-nothing leap of faith into an untested system.

On Secro’s platform, buyers, suppliers, carriers and agents can join with just a few simple clicks, lowering barriers to entry for all.

A look under the hood: How the technology works

An electronic trade document is a document traditionally used in trade, such as bills of lading, that has been digitised in a way that gives it true legal equivalence and functionality to a traditional paper version.

Simply scanning a paper document to create a PDF does not meet the definition of an electronic trade document under legislation like MLETR. While a PDF preserves the visual information, it does not enable the digital transfer, endorsement or use of the document in the way an electronic trade document does.

For a document to be MLETR-compliant, it must be able to be identified as an original, able to be possessed or controlled by no more than one person at any one time, able to be transferred to a new holder, and protected from unauthorised alteration.

The laws around electronic trade documents are technology neutral, which means businesses have the flexibility to choose any reliable, secure and standardised system that meets their needs.

Secro’s technology works through a simple software-as-a-service model that aligns with all of the requirements of MLETR-based legislation and can accommodate evolving industry standards.

Through a simple web-based portal, users can perform core eBL functions like issuance, endorsement and transfer entirely online without the need for paper documents or physical signatures.

The portal centralises these workflows into an intuitive digital interface that enables users to save time by avoiding separate systems while reducing risk through a consolidated view of trade partners and cargo movements. The result is a 21st-century paperless solution that streamlines processes while unlocking new data-driven insights.

On the backend, Secro uses blockchain tokenisation to make sure each eBL is accessible and amendable only by its current holder, and is immune to counterfeiting, forging, or duplication. Each transaction and document is digitally notarised for trustworthiness, and parties with access to the eBL receive real-time notifications and warnings in the event of any significant activity.

Secro prioritises interoperability through open APIs that facilitate seamless digital connections with third-party systems, while its blockchain layer is also compatible with leading distributed ledger technologies.

Finally, Secro has been designed to help expand financing options, by allowing shippers to leverage eBL-backed cargo as collateral for working capital loans, letters of credit or other trade finance products, while at the same time providing banks with a secure platform that ensures end-to-end visibility and transparency. Additional comfort through international recognition as a trusted solution.

The International Group of P&I Clubs (IGP&I) collectively provides marine liability cover for approximately 90% of the world’s ocean-going tonnage. IGP&I approval of an EBL system indicates eBLs created using it are recognised on par with paper from an insurance perspective, therefore giving shippers the assurance that any digital documentation they use will be seen as valid by their carriers’ insurers in the event of an incident.

Historically, the IGP&I was hesitant about digital documentation, only approving the first EBL platforms years after they emerged. IGP&I endorsement lends credibility that risks are properly addressed, and while not a legal requirement, IGP&I recognition helps give shippers confidence that using EBLs will not negatively impact important marine insurance coverage or liability protections, therefore encouraging wider adoption.

How Secro is ripping up the rulebook

Legislation enabling electronic bills of lading has only been passed in a limited number of jurisdictions so far, but for now, choice of law already allows the broader trade community to use Secro’s solution to work digitally.

Even if a business is located in a jurisdiction that has not directly adopted legislation based on MLETR, a choice of law clause included in the contract of carriage allows parties to select the law of a jurisdiction that recognises e-bills of lading to govern the electronic aspects, while carving other terms out to be governed by a different law if needed.

This ensures the core commercial terms are unchanged, while still benefiting from the legal validity and other advantages offered by the chosen jurisdiction. As a result, businesses worldwide can leverage Secro’s solution to issue, transfer and collateralise e-bills of lading globally, even before enabling legislation becomes widespread.

By working closely with legal experts to ensure its systems are aligned to applicable laws like MLETR and the UK Electronic Trade Documents Act, Secro ensures its e-bills of lading have a strong legal foundation that makes court challenges unlikely.

Additionally, Secro’s technology allows for the seamless conversion between digital and paper documents if needed for any dispute resolution or customs clearance processes. Every copy or printed bill of lading generated through the Secro platform includes a QR code, enabling instant verification of the document’s authenticity and update status.

Finally, Secro is actively working with industry groups to further strengthen the legal framework through initiatives like standardising templates and processes. Over time, increasing precedent and adoption will help address any remaining legal uncertainty around the use of electronic trade documents.

The future of digital trade is here

Secro represents the next evolution of trade digitisation. By addressing past issues while embracing emerging opportunities, Secro’s independent, standards-based approach is primed to finally fulfil the long-held promise of a paperless trade system.

With legal validity and an inclusive user experience secured from the start, Secro removes barriers that have hindered this mission for decades. Through neutral enablement of the industry’s transition, Secro can usher in a new era where digital is the default and trade without borders is a reality.

As businesses increasingly demand streamlined, data-driven operations, Secro delivers the future-proofed foundation necessary to bring global commerce into the digital century. When even the smallest players can benefit while the entire ecosystem thrives together, true transformation is at hand.

Secro is paving the way toward a world where trade without paper is not a vision, but simply the way business is done.

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