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When the UK Electronic Trade Documents Act comes into force on 20 September 2023, electronic bills of lading will move a step close to being a practical alternative to traditional paper bills of lading.

The Act updates the UK’s legal framework so that digital documentation is effectively on the same legal footing as original paper versions. This matters because English law applies to 80% of international bills of lading.

But are electronic bills of lading (EBOLS) really a practical alternative to original paper bills of lading for UK exporters?

EBOLS aren’t practical yet – but you need to get ready 

The short answer is no. EBOLS are not a practical alternative to original paper bills of lading. Yet. 

But once secondary legislation puts meat on the bones of the current Act, EBOLS will be on the road to widespread adoption. If the United States follows through on proposals to update its own Uniform Commercial Code (UCC), which seems likely, then other countries will follow. Digital innovation will then gather pace and transform the global goods trade far quicker than precedent would suggest.

Don’t wait til the last minute

Inevitably some businesses won’t be ready when the digital floodgates open. These digital laggards will then be scrambling to catch up with their EBOL-enabled competitors — losing valuable market share in the meantime. 

Practical steps to prepare for electronic bills of lading

So in practical terms, what does a UK exporter of secondary raw materials such as waste paper OCC, scrap metals and recyclable plastics need to do to get ready for using electronic bills of lading?

Well, let’s assume you’re still running your back-office off a combination of Excel spreadsheets, bog-standard office software and thousands of disorganised email threads.

Step 1 – Get a single source of truth database

A sensible first step is to digitalise your back office with modern scrap trading software that puts all your data in one place where it can be updated and synchronised with a single click. Basically, start to get everyone reading off the same digital page. If the software can generate electronic documentation using accurate and up-to-date information from your single source of truth, then you’re nearly set up.

Again, it’s highly recommended to avoid software that doesn’t have a single source of truth. Otherwise costly errors will creep into your documentation and your shipments will be exposed to unnecessary risks. Our own research has shown that many traders of waste paper consider claims and penalties caused by contract errors to be an unavoidable cost of doing business. It’s not!

Step 2 –  Get an API

An application programming interface (API) is a fairly common technology that allows applications to talk to each other. This will enable your system to exchange real-time data with your shipping line or freight forwarder, correct errors on screen, and connect to the secure blockchain infrastructure that underpins EBOLS.

You need software that is API enabled.

Step 3 – Reach out to EBOL-enabled partners

Shipping line MSC has already partnered with tech innovator WAVE BL to pilot EBOLS. There are others out there already – and there will be many more.

So go ahead and ask them about their plans for electronic bills of lading.

Step 4 – Is your destination country EBOL-friendly?

Singapore has already joined the UK in updating its laws to allow electronic bills of lading. Spain is taking steps, and the U.S. is on the way too.

But take care. Even when a country or a port tells you that it accepts EBOLS, the banks involved might not agree! Paper bills of lading with wet signatures are still required for banks in India, for example. So check with your agent on the ground – and stay updated on the waste management rules and legislation in your destination countries. 

When change happens, it happens fast.

On 20 September 2023, the UK Electronic Trade Documents Act came into force, marking a seismic shift in the way commodities will be traded over the coming years.

The headline news is that some of the functions of a paper bill of lading can now be performed by a digital version. Since English law applies to about 80% of bills of lading worldwide, and paper originals have been required for over 150 years, this is an Act of global significance.

What’s in the Act?

The Electronic Trade Documents Act is only seven pages long but effectively puts electronic bills of lading (EBOLS) on the same legal footing as paper versions. The main proviso is that there needs to be a ‘reliable system’ in place that ensures the electronic document cannot be tampered with, mistaken for a copy, or controlled by someone after it’s been transferred.

For now the Act covers just a few documents relating to the import and export of shipped goods. These include bills of lading, bills of exchange, promissory notes, ship’s delivery orders, warehouse receipts, mate’s receipts, marine insurance policies, and cargo insurance certificates.

The Act is short on detail for a reason. It intends to provide a flexible legal framework that can respond to digital innovations coming down the line. In due course, secondary legislation will arrive to fill in the gaps and provide legal clarity where needed. What, for example, is meant by a reliable system in practice? We’ll probably only find out when it is tested in court.

Action required?

You don’t need to do anything, yet. Traditional paper bills of lading remain valid, and most countries still require the original paper versions. This will continue to be the case until lawmakers in other jurisdictions agree that the boost to trade outweighs the seldom talked-about political costs of enabling digitalisation. However, you will soon have the option to adopt electronic bills of lading in certain circumstances, which you didn’t have before.

What is an EBOL?

An EBOL is a digital version of a standard bill of lading, which is a legal document that provides evidence of what’s been loaded onto a vessel, who owns it, who’s in control of it, and who is entitled to receive it.

Benefits of EBOL

Electronic documents such as EBOLS can save time and money by enabling documents and data to be shared in real time while reducing the cost of printing and couriering hard copy documents. In a digital world, it’s more convenient and efficient to consult documents and correct errors on a screen. The environmental costs of using paper documents are also reduced. In the UK, exporters of secondary raw materials such as waste paper are already piloting EBOLS with WAVE BL and a major shipping line, MSC.

Risks of EBOL

The main risk of EBOL to the carrier is when the person entitled to receive the shipments turns up to claim it. Let’s say a carrier accepts a forged or hacked electronic bill of lading and then consigns the goods to someone who’s not entitled to them. That could lead to a costly dispute. Because of this risk, many carriers are wary of accepting EBOLS, even though paper originals are clearly vulnerable to forgery as well. 

Long term impact of the Act

The UK’s Electronic Trade Documents Act isn’t going to change the world overnight. But it heralds growing adoption of new technologies such as CTRM software that will drive greater efficiencies and transparency global physical commodity trading.