Discussions about the electronic Bill of Lading (eB/L) have been ongoing for some years but really gained traction around 2009. If you have missed them, here are some notable articles worth reading:

• The online publication, Splash 24/7, published an in-depth article on May 19^th, 2020, about the progress The Digital Container Shipping Association (DCSA) was making toward introduction of an electronic B/L. Then on December 8^th, 2020, the same publication released an update regarding new standards that were published. The DCSA raises concerns about maintaining the unique integrity of the electronic B/L as it makes its way along the supply chain and it alludes to the need for legislative acceptance by governments.
• Shipping Gazette, published an article on April 14^th, 2020, about Ocean Network Express (ONE) issuing its first digital bill of lading. The article mentions that ONE had handled its first electronic, negotiable bill of lading (eB/L) using CargoDocs, a paperless document solution.
• The International Federation of Freight Forwarders Associations (FIATA) released a short video presentation (https://youtu.be/OEBlJq3v1AM) on the development of the FIATA electronic House Bill of Lading (eHBL).

It is important to note that the electronic air waybill (eAWB) is not analogous with the concept of the eB/L. The eAWB was successfully introduced in or around 2010. A notable difference is that the eAWB does not have to cater for the concept of ‘Negotiability’ as the B/L does.

What is clear from the articles mentioned above is that we are gaining momentum with regards to the development and implementation of the eB/L. Encouraging as it sounds, however, it is important to remind ourselves of the purposes served by the B/L, respectively sea waybill. A Sea Waybill, as with an Air Waybill, only fulfils the first two of the three purposes defined below:

1. It is a receipt for the goods shipped. The body of the Bill of Lading, or sea waybill, therefore includes space for the Shipper to describe the goods to be shipped and the number and type of packages.
2. It provides evidence of a Contract of Carriage. The Bill of Lading (or waybill) is not of itself a Contract of Carriage, it is evidence that a contract exists. A contract requires two signatures viz. the Principal and the Contractor. The Bill of Lading has only one signature, that of the Contractor (the Carrier).
3. It is a document of title. This third function only operates if the bill is drafted as an “order” bill. The carrier agrees to deliver the goods to the named Consignee or to his ‘Order or assigns’. This is sometimes referred to as the ‘Negotiability’ of the Bill of Lading i.e., the value of the goods lies in the Document (the Negotiable Bill of Lading) and not in the underlying goods covered by the Bill of Lading. It is the document that is traded, entitlement is vested in the holder of the document.

It is the third function of the B/L that provides the biggest challenge. By definition, a ‘Negotiable” B/L requires that the document be endorsed in favour of the intended receiver. Multiple transactions may thus be facilitated through multiple endorsements of the same document. In electronic form, this would require, for example, that a PIN or other unique password or code be shared to each intended receiver. This is not impossible to achieve, but a solution to this problem has so far eluded developers. How does one securely share such a PIN or Password from Shipper to intended receiver and subsequent endorsement in favour of the new intended receiver without that PIN or password becoming compromised?

As far as a Documentary Credit (Credit) is concerned there is the added complication of the issuing bank wanting to verify amongst other things, the paper B/L content and possible endorsements. To this end, progress has been made by the International Chamber of Commerce (ICC) to the extent that UCP 600 2019 Revision (ICC Publication: 600E) does include a section covering electronic documents (eUCP). In short, the banks can match prescribed data fields transmitted from Bank to Bank, thereby eliminating the need for a paper B/L.

A further development along the road to full electronic documentation is the introduction by the ICC (ICC Publication: 751E) in 2013 of Bank Payment Obligations (BPO). A documentary credit exists as a contract between the Issuing Bank and the intended Beneficiary in which the Issuing Bank undertakes to honour a compliant presentation and release funds to the Beneficiary. A BPO is a contract between the Obligor Bank (acting on behalf of the Buyer) and the Recipient Bank (acting on behalf of the Seller) to honour a payment against electronic presentation of compliant data fields. In other words, no paper is involved.

The problem we face with both eUCP and BPO is that Banks, certainly in South Africa, have been slow to adopt and to accept the concept. That said, there is nothing to stop a Merchant from negotiating with both the foreign Seller, and the Issuing Bank, to approve one or the other electronic mechanism.

A second and perhaps more important option may be for the Buyer and Seller to diligently explore whether an Original Bill or Negotiable Bill of Lading cannot be replaced by Waybill. If in addition, the Credit could be replaced by Open Account and EFT payment, then we have eliminated the need for, and cost of the Credit.

Progress will be made towards a fully functional Electronic Bill of Lading, including solutions to the present impediment of Negotiability. The legislation will be adopted, but the question is, how long will that take? This writer does not know the answer, but in the interim, there are electronic solutions such as eUCP and BPO. If all else fails, get rid of the Documentary Credit where possible, and nominate some other document or means as a trigger for payment from Buyer to Seller.