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ELECTRONIC BILLS OF LADING (eBL)

Industry heavyweights commit to digitization

The FIT Alliance has initiated the "Declaration of the electronic Bill of Lading" (eBL) to accelerate the digital transformation of global trade. This comes after the Digital Container Shipping Association (DCSA), a FIT Alliance member, secured commitments from nine of the world's ten largest container shipping carriers to adopt eBLs. The plan is to achieve 50% eBL adoption in five years and 100% in ten years.

The FIT Alliance comprises of major organizations like the International Chamber of Commerce (ICC), Swift, DCSA, BIMCO, and the International Federation of Freight Forwarders Associations (FIATA). The coalition aims to replace paper-based processes, starting with the bill of lading, which is fundamental to trade as it signifies cargo ownership during transit. As of 2022, only 2.1% of the 45 million bills of lading were digital, a slight increase from 1.2% in 2021.

The potential impact of eBL adoption is enormous. McKinsey estimates that eBL could yield $6.5 billion in direct cost savings and boost global trade by $30-$40 billion. Two significant challenges have hampered rapid adoption. The first is the lack of legal recognition for eBLs, though this is gradually changing. The second is the absence of interoperability among different eBL solutions. Both DCSA and Swift are working on making these solutions compatible.

To counter procrastination in adopting eBL, BIMCO, another FIT Alliance member, has initiated a '25 by 25' pledge, aiming for 25% eBL adoption by 2025. This pledge has garnered commitments from major mining firms like BHP, RioTinto, and AngloAmerican, as well as 27 industry bulk carriers. COSCO Shipping is the only top-ten container shipping carrier missing from the DCSA commitment.

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The software covers loading plans for all containers, flatbed trailers, pallets, and more so that anyone can create accurate shipment visualizations within minutes.

VIDEO OF THE WEEK

Masterful Logistics : Watch how Amazon adapted to dominate during the pandemic

Albert Einstein famously said, "In the middle of difficulty lies opportunity," a principle demonstrated by Amazon during the COVID-19 crisis. While many large corporations struggled to adapt, Amazon operated with the agility of a startup. It couriered deliveries from China to the U.S. by leasing planes and because it had been pioneering in logistics for years it was able to utilize its custom-built shipping containers with privately-chartered cargo ships to keep goods moving. This strategy has not only given Amazon a competitive edge but has also pressured rivals like Walmart, Home Depot, and Costco to follow suit.

TRADE NEWS

Millions being spent to “skip the line” at Panama Canal

Congestion in the Panama Canal, exacerbated by low rainfall and shifts in oil and gas flows, is causing a significant rise in shipping costs. Historically low rainfall has led authorities to cut the daily vessel limit from 40 to 32, resulting in a backlog of over 100 ships. While the Panama government insists the canal is "open for business," the average waiting time for northbound ships has tripled from June to August.

The bottleneck is affecting freight prices severely. The canal's congestion has led to an auctioning system for slots driving costs unpredictably higher. Historically, the fee for skipping the queue was around $840,000 for northbound and $400,000 for southbound transits. These fees have surged to as high as $2.4 million recently and if you include the regular fee, the total cost can approach $3 million making alternative routes like the Suez Canal or the Cape of Good Hope financially attractive.

This spike in costs is particularly concerning as the busiest period for the Panama Canal typically doesn't peak until the fourth quarter. Although rainfall is expected to increase briefly, experts predict low water levels to persist, indicating that high shipping costs and delays may continue for the foreseeable future.

GLOBAL TRADE SNIPPETS

Trade Finance Gap rises to $2.5 trillion USD – five key takeaways from ADB’s latest report on trade finance gaps, growth, and jobs after its largest single-period increase since inception.

Amazon tests $35 free shipping minimum: The e-commerce giant is testing the free shipping threshold with select groups of non-Prime members. Previously the minimum free shipping threshold was $25.

China announces tariff hike on $75 billion of U.S. products. China also will increase import duties on U.S.-made autos and auto parts Tariffs of 10% and 5% will take effect on two batches of goods on Sept. 1 and Dec. 15, the finance ministry said in a statement.

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