By partnering with electronic document solution provider CargoX, South Korean carrier HMM aims to offer substantial benefits to its customers, achieve significant cost savings, and enhance security in the documentation aspect of the supply chain. The carrier is integrating CargoX’s functionalities into its digital services to modernize and streamline e-Bill of Lading (eBL) workflows, thus improving the efficiency and security of global trade documentation.
HMM’s new partnership with CargoX is seen as a move towards digitalizing the shipping industry, though the claim by Kurt (Wonjun) Jang, SVP of HMM’s container operations office, that it will “spearhead the digitalisation of the shipping industry” might be an overstatement. Nevertheless, HMM, as a founder of the Digital Container Shipping Association (DCSA), is indeed contributing to the broader shift towards digitalization in the industry.
For several years, DCSA has been advocating for the adoption of eBLs, promoting the potential for a $6.5 billion reduction in direct costs and a projected $30-40 billion increase in annual global trade growth. To reach these goals, nine of the top ten shipping lines formed the DCSA to lead the transition, requiring industry-wide support. This support materialized through the FIT Alliance, which includes organizations such as BIMCO, FIATA, DCSA, the International Chamber of Commerce, and Swift, the global payment platform provider known for its secure financial transaction services.
A significant barrier to the widespread acceptance of eBLs has been the lack of interoperability in digital freight transportation documentation, caused by the adoption of different computer languages and standards across the industry. However, CargoX CEO Bojan Čekrlić argues that this issue is more complex than it appears. According to Čekrlić, interoperability involves five levels, based on the EU’s National Interoperability Framework Observatory’s work. He believes that achieving the first, technical, level of interoperability is relatively straightforward, requiring consensus on technical standards.
New Collaboration Aims to Modernize and Streamline Global Trade Documentation
The DCSA has addressed system interoperability by creating a standardized computer language enabling systems to communicate. “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, by creating a standardized format for representing eBLs using JSON [Java Script Object Notation],” explained Čekrlić.
More challenging are the third and fourth levels of interoperability, which involve legal and business process implications. The third level addresses the legal status of eBLs as binding documents between contracting partners. The DCSA has developed a framework where partners accept additional terms and conditions to use eBLs, although this framework is still evolving. Čekrlić advocates for a simpler approach using the UN’s Model Law on Electronic Transferable Records (MLETR), which equalizes paper and electronic formats. Several countries, including the UK and France, have adopted laws based on MLETR, providing a legal basis for eBL transfers.
The fourth level of interoperability, which concerns the financial responsibilities associated with eBLs, is essential but straightforward. The key question, according to Čekrlić, is whether industry players are willing to collaborate. Given the numerous stakeholders involved in global freight movements and the necessity for trust to ensure secure transactions, this question remains critical for the successful implementation of eBLs.
HMM’s integration of CargoX’s eBL solutions is a significant step towards addressing these challenges. By leveraging CargoX’s technology, HMM aims to enhance the security and efficiency of its documentation processes, providing a more reliable service to its customers. This move is expected to contribute to the broader industry goal of reducing costs and increasing the speed and reliability of trade transactions.
The potential benefits of this partnership are substantial. Enhanced security measures can help prevent fraud and errors in documentation, while streamlined processes can reduce administrative burdens and expedite transactions. Moreover, the adoption of eBLs can lead to significant environmental benefits by reducing the need for paper documents.
As HMM and CargoX work together to implement these solutions, they will contribute to the ongoing transformation of the shipping industry. By addressing interoperability challenges and fostering greater collaboration among industry players, they aim to create a more efficient, secure, and sustainable future for global trade.
