BIMCO has presented a scenario involving the loss of paper bills of lading to underscore the critical benefits of adopting electronic bills of lading (eBLs) in the shipping industry.
As BIMCO narrates, in a recent incident, the loss of paper bills of lading led to significant complications, costs and delays that could easily have been avoided if electronic bills of lading had been used.
Typically, when paper bills are lost, parties accept a Letter of Indemnity (LOI) to reissue new bills. However, in this case, the ship owners insisted on a more stringent process. They required the bill of lading title holder to file an application in court at the port of destination to officially declare the original bills void and remove the title from the lost set.
The cargo interests found themselves in a prolonged debate over who held the title and who was responsible for filing the court application.
Furthermore, the legal process to void the original bills and issue new ones was expected to take up to two months. Given the high value of the cargo, they were understandably hesitant to land it without proper title documents.
Although deemed “unreasonably cautious” by some, the owners’ stance was guided by their P&I club and was legally defensible to avoid a mis-delivery claim. However, their action resulted in the vessel being anchored off the port of destination for over two months, accruing a staggering $2 million in demurrage costs. There is currently no resolution in sight.
According to BIMCO, this complex and costly scenario highlights the critical importance of safeguarding shipping documents and points to a more efficient solution: electronic bills of lading (eBL). Unlike paper bills, eBLs cannot be lost, damaged, or stolen, offering a secure and efficient alternative. By adopting eBLs, the shipping industry can reduce the risk of lengthy legal disputes, decrease the risk of fraud, and ensure the seamless transfer of cargo ownership.
In an exclusive interview to SAFETY4SEA, Bertrand Chen, CEO of GSBN, discussed he benefits of an electronic Bill of Lading (eBL), saying that to survive and thrive in this new world, the industry needs to share data, process it and act upon it quickly. Given the complexity and interconnectedness of the shipping industry, there will not be a single solution that can fit the bill, but rather a portfolio of solutions built atop of a common data infrastructure.
The lesson from this incident is clear: transitioning to electronic bills of lading can prevent similar logistical nightmares in the future, protecting both time and financial resources.
… BIMCO concludes.
