HMM’s eBL partnership to boost trade and cut costs

By partnering with electronic document solution provider CargoX, the South Korean carrier believes it can offer benefits to its customers and make major cost savings while also improving security in the documentation element of the supply chain, said the carrier.

According to the partnership, CargoX’s functionalities “will be integrated into HMM’s digital services. This integration aims to modernise and streamline e-Bill of Lading (eBL) workflows, enhancing the efficiency and security of global trade documentation.”

While the new functionality may well be welcomed by many customers, the claim by SVP of HMM’s container operations office Kurt (Wonjun) Jang that the carrier’s new partnership will “spearhead the digitalisation of the shipping industry” appears wide of the mark, although HMM is a founder of the DCSA, and in that sense it is a part of leading the charge towards digitalisation.

DCSA has driven the container shipping lines’ shift to eBLs for many years with the digital developer claiming the move would see a $6.5bn reduction in direct costs and would lead to $30-40 bn in annual global trade growth.

To achieve these levels of savings and growth, nine of the top 10 shipping lines formed the DCSA to lead the transition, but the carriers needed the support of industry too. That came in the form of the FIT Alliance; Future of International Trade, which includes BIMCO, FIATA, DCSA, the International Chamber of Commerce, and Swift, the company behind the global payment platform, which is expanding its services and claims to offer a reliable and secure “way for the global financial community to move value”.

Historically, one of the barriers to the widespread acceptance of eBLs is the inability of one player to transfer the documents to another within the supply chain, the interoperability of the digital freight transportation documentation, caused by the spread and adoption of different computer languages and standards.

However, Bojan Čekrlić, CEO of CargoX said this is an oversimplification. According to Čekrlić there are five levels of interoperability, and they are loosely based on the EU’s National Interoperability Framework Observatory's work. Making eBLs a viable solution and achieving the first, technical, level of interoperability, was “easy” to solve, “you just need to sit down and agree” he suggests.

A system interoperability that allowed machines to communicate was solved by the DCSA using a computer language that gave systems the ability to talk.

“Technical interoperability [of bills of lading], is worked on by the DCSA. It defines a standardised set of APIs for communicating between systems. Furthermore, DCSA standardised the structure / semantic layer as well, because it created a standardised format for representing eBLs using JSON [Java Script Object Notation],” explained Čekrlić.

More difficult to solve was the third and fourth interoperability levels, with the third level concerning the legal implications of what is essentially a legal document between contracting partners. DCSA created a system where contracting partners accept additional terms and conditions to accept eBLs, and Čekrlić points out that that this system is still subject to further development.
However, Čekrlić argues that a simpler method is to use the UN’s Model Law on Electronic Transferable Records (MLETR).

“Basically, MLETR equalises the paper and electronic formats. A lot of countries around the world have accepted laws based on MLETR. The UK accepted it, and it's called ETDA - Electronic Transferable Documents Act. And just about a fortnight ago a similar law was accepted in France as well. Now you have a mandatory legal ground for transferring the eBL,” explained Čekrlić.

The fourth level of interoperability is crucial, but should be easily overcome, and that is, simply put, ‘who pays?’.

Perhaps the most crucial level of the interoperability challenge is posed in Čekrlić’s last question, “do I want to work with you?”

Given the number of players involved in the movement of freight around the world and the trust required to make these cargo movements secure, it is a pertinent question that should be asked by every actor in the supply chain.

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