US agricultural trader Cargill announced the extended operational use of CargoDocs, an electronic bills of lading solution from Electronic Shipping Solutions (ESS), on June 13.
The company plans to use the electronic document presentation system further in Asia and credits increased adoption by ship owners, ships agents, and end receivers for making the process more feasible.
“Reduced administration and increased efficiencies save time and costs at every step of the supply chain for every participant - from ship owners, to charterers and trading companies,” explained Ernst Herger, Cargill’s global project manager for E B/L, in a press statement.
An E B/L is an electronic version of a trade document that confirms goods have been loaded or unloaded from a particular vessel at a particular port. The documents are key to confirming letters of credit, as well as supporting open account transactions for trade between companies.
“Electronic bills of lading make it easier to manage any changes or splits along the way and also protect the bill of lading from the risk of being lost or misused. We are confident that this is the right solution for the future of the shipping industry,” Herger said.
Herger is happy enough with the process that he plans to roll out E B/Ls for bulk iron ore cargoes in trades from Australia to China, a process BHP Billiton has already engaged in.
Though E B/L systems like ESS and Bolero can be used by banks, backed by the Electronic Universal Customs and Practice, to confirm letters of credit, they can also be used to support open account trading between two corporates.
Industry sources note that the ESS CargoDocs E B/L’s only involve three parties, the two corporate trade partners and the shipping company. An electronic letter of credit would also necessarily loop in financial institutions and thus involve five parties.
Skeptics have long argued that the legalities and eccentricities of trade are not suited for standard electronic formats. Further still, that the diverse shipping companies and port jurisdictions make the electronic standardisation impractical, if not impossible.
But several large corporates have announced electronic trade document programs over the past year, BP, BHP Billiton, and Cargill, to name a few. All have specified that shipping companies are more ready to adopt the practice of electronic bills of lading platforms.
In an interview with CT, Alexander Goulandris CEO of ESS said inter-Asia trade is a big part of the trend to electronic documents. ESS is engaged in a number of projects in Asia-Pacific including the iron ore trades from Australia, there are sugar trades from Australia, and chemical trades from Singapore.
Interestingly, Goulandris said, “the primary destination in all these projects is China,” Indicating Asia’s largest economy is leading demand for the newer trade document presentation method.
CargoDocs E B/Ls is typically used as a web-based solution, so no software instillation or hardware purchases are required, ESS claim. Setup and training can be completed in a few business days, and thereafter users are supported by phone or email around the clock by ESS. Exporters, traders and banks also need to pay a small set up and or transaction fee, but there are no costs for ship owners, ships agents and end receivers.
The electronic documents are routinely transferred through the entire trade chain in minutes, or hours, so any short-sea trade chain is a good fit. In addition, CargoDocs allows parties to request and implement amendment for routes where bills of lading are required to be split or amended.