What is the regulatory framework that would govern moving bill of lading from paper to electronic forms?
Hello! Thanks for your question regarding the regulatory framework related to moving the Bill of Lading process from paper to electronic forms. The short version is that the Databridge Services & Users Agreement (DSUA), a legal agreement, regulates the operation of Bill of Lading (BoL) systems by providing a legal framework that users of the system can use to create and send shipping documents electronically. Below you'll find a deep dive into my research and findings along with all the details for how I came to this answer.
essDOCs, a world leader in electronic trade, states that DSUA is "a multilateral agreement between all Users of the Exchange and between each User and essDOCS". The agreement is needed in order to legally create an enforceable electronic Bill of Lading (EBoL). It also ensures that all users involved in the process understand and treat electronic documents with the same legal weight as paper BoLs. The agreement is the result of cooperation and approval from the International Group of P&I Clubs, Through Transport Mutual Services (UK) Limited (TT Club), industry workshops with stakeholders and Leadership in Energy Automated Processing (LEAP) which represents Oil Majors, Trading Houses & Banks.
ISSUES RELATED TO ADOPTION OF ELECTRONIC FORMS
Since the mid-1980s, there have been various attempts by various industry stakeholders (ex. Intertanko & Chase Manhattan and a joint venture by Shell and BP) to move the BoL process from one relying primarily on paper to an electronic one. Despite some early success, there were setbacks (as noted by Nicholas Demetriou, VP of Marketing at essDOCS) due to "a complex, hardware and software-intensive processes to replace complex, labour-intensive paper processes".
According to Demetriou "eB/Ls rely heavily on the so-called ‘network effect’ in order to gain true prevalence and relevance in the marketplace". Simply put, adoption of new technologies by early adopters will face the same drawbacks as with any new form of technology (ex. fax and email) unless the majority of trade partners fully utilize the new system. The more users within the network using electronic systems, the likelihood of uptake by others will increase. With this shift in thinking, the technology has become valuable and critical to the overall BoL success.
Case in point, the network for CargoDocs, the electronic eBoL system developed by essDOCS, consisted of approximately 500 customers in 2012. By 2014 this had increased to over 2,100 customers (an increase of 320%). It's important to note that different markets are more likely to adopt eBoLs quicker than others. Demetriou states that European markets in particular are headed towards being 80%+ paperless by the end of 2015. CargoDocs also solves the issues relating to the complex paper process of the past due to the fact that is can easily be accessed online through any device.
As the use of technology becomes increasingly more commonplace, concerns with data security will undoubtedly arise. In order to compensate for the potential for data breches and to ensure the protection of all involved parties, the Comite Maritime International (CMI) Rules for Electronic Bills of Lading 1990 and the Bill of Lading Electronic Registry Organisation (BOLERO) were put in place to combat fraud and other risks related to electronic data transfers. Both provide extensice details relating to best practices during the transfer process and the obligations of all users.
As time progresses and the growth of the shipping industry continues to increase, the issues related to adoption and processing using electronic systems have decreased. The industry has made a significant amount of progress to reduce risks, implement regulatory requirements and communicate benefits to all trade partners to ensure successful migration from paper forms.
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