We sat down with senior global trade experts, Diana Jones, Director of Solution Architecture, and Juanjo Ruiz, Head of Strategy and Business Development at TradeLens to discuss the proliferation of electronic bills of lading (eBL) and the disruption of blockchain as an emerging technology with a substantial opportunity to support banks with unlocking a $3.4 trillion trade gap in the trade finance market. The following is a Q&A on these topics.

What is the historical value of Bills of Lading and why are they still relevant and critical today?   

Ruiz: Original Bills of Lading are arguably the most important transport documents because they serve as the contract of carriage, a shipment receipt, and, more importantly, a document of title. The BL holder is the only entity that has the right to pick up the goods at destination.

Jones: This proof will always be required, although the mechanisms need to evolve to keep up with global trade. 

What do bills of lading mean to financial institutions and the banking industry? 

Ruiz: Bills of Lading are the backbone of the financial transaction in global trade. The longer duration and the multitude of entities involved in sea shipment creates major risks and uncertainties. Given the unique BL properties, all actors in a single transaction use them to make sure they receive payment for the services provided, including the buy/sell transaction and any form of credit or advance payment. The BL can be used as collateral, to reduce fraud, and to resolve disputes.

Jones: Ensuring the authenticity and provenance of those BLs can speed financial transactions among trade partners.  

Are eBLs a primer for sustainable/profitable trade?  

Ruiz: Trade is riddled with manual paper-based processes and unpredictable supply chain disruptions. In a world where documents are structured and digitized, we can automate a lot of this labor, eliminate time and waste, and increase velocity. Therefore, creating a cleaner and more efficient trade ecosystem that is good for both the bottom line and the environment. Digital Bills of Lading require industry adoption and change management leadership yet the benefits are truly win-win for everyone involved.    

How do eBLs help mitigate financial risks in a digital world prone to facilitate fraudulent activities? 

Jones: Blockchain is used to establish the provenance of trade documents and provide non-repudiation. It proves the origin and integrity of the documents and identifies all of the parties involved in the trade. When that is associated with goods being traded, it becomes much harder for illicit actors to hide their participation and it is mathematically impossible to alter or falsify information without leaving a trail. 

What makes blockchain an agile technology? 

Jones: It’s not about the technology itself but about what it unlocks. Using blockchain to secure the integrity of a process makes the process as a whole more agile. If all parties agree that the data and documents that underpin their processes are trustworthy and legally defensible, they are much more likely to be willing to change the way they work with other trade partners so that they all be more efficient or agile in responding to disruptions. 

Are eBLs the key to unlocking a digital world? Why or why not? 

Ruiz: They’re definitely a good first step. When eBLs will be widely adopted, that will mean that the biggest players in trade have figured out how to digitize and communicate the most fundamental elements of the goods being traded to any other party. They will also have established the business processes and the mechanisms for working together, eliminating days in manual processing, and repairing paperwork problems.

Jones: But you’ve also got to ask why a digital world is good for global trade. That world unlocks so many more opportunities to digitize and automate other logistics business processes, enabling companies to proactively identify and respond to bottlenecks and disruptions.  

What is TradeLens' unique solution to the market? 

Jones: We have a unique blend of high-tech and shipping matter expertise. We deliver solutions tailored to the specific needs of global trade participants and our open and collaborative approach allows for straightforward integration into systems and processes. The true value of TradeLens lies in how we standardize data, connectivity, and inter-company processes to allow for digital collaboration between trusted parties.