Since the COVID pandemic, we've seen significant momentum in the adoption of electronic Bill of Lading (eBL). Other than the commitment made by container carriers for 100% adoption of eBL by 2030, a few jurisdictions have already followed the Model Law of Electronic Transferable Record (MLETR) to introduce local laws that recognize eBL as the equivalent of a paper Bill of Lading. The adoption of eBL is finally picking up, from just 2.1% in 2022 to 5% in 2024. This increment isn't solely a result of the push from carriers and legal reforms - it's also a testimony from the market that eBL is indeed more efficient and secure than its paper twin.

Amidst the growth spurt, we've already seen some early winners - WaveBL, IQAX eBL, Wisetech(Bolero), ICE Digital Trade, and others - each penetrating a specific segment in the supply chain. Given their unique value propositions for their core customers (WaveBL with blockchain, Wisetech with freight forwarders, ICE with commodity traders, and IQAX with carriers), it's highly unlikely that one solution alone would capture the entire market. 

So, what needs to be done for eBL to become interoperable?

This question has been around for a few years already. Some say that it is the need of a standardized schema so that solutions can communicate with one another. Some say that it is the technological design that has to preserve the fundamental characteristics of validity, unicity, and security of the eBL even as it moves from one platform to another.

While these are all valid points, the most important prerequisites above all are the legal validity and a solid liability framework across participants. Without solving either one, an interoperable eBL would remain merely an interesting technical proof of concept without any real world applications. 

Legal Validity

Currently, the validity of eBL and its transfer are supported by contractual law through rulebooks. However, in an interoperable scenario, we face multiple solution providers, each with their own rulebook. While these rulebooks share common themes, they differ in terminology and representation - like two solution providers discussing eBL transfer rules in different languages. This creates potential confusion and ambiguity around transfers and liability. We must break this "language barrier" and establish a common legal basis for interoperable eBL solutions.

There are two ways to achieve this. The first is creating an agreement that bridges all participating providers' rulebooks, ensuring bill validity across solutions. While this would provide a common legal basis, bridging these rulebooks is complex. It requires reconciling diverse legal principles shaped by different technologies and jurisdictions. Such fundamental changes make compromises difficult.

In our eBL interoperability pilot, we've chosen an alternative approach - leveraging local law. With jurisdictions like the United Kingdom and France introducing legislation that recognizes electronic trade documents as equivalent to paper, we can use local legislation as the "common language" that transcends different rulebooks. This approach eliminates the need to reconcile diverse legal principles across solutions. Instead, eBL providers simply need to provide an interoperability addendum based on local law, ensuring their framework meets local requirements for maintaining legal equivalence with paper documents.

Liability Framework

Now that we've found a common legal basis for the eBL solutions, let's consider the scenario when rules of engagement are violated - disputes. When there's only one eBL platform, liability is straightforward - it's always between you and the platform you're using. But with interoperable eBL, multiple solution providers contribute to the transfer chain. This raises critical questions: How can customers determine who's at fault and whom to hold accountable for losses? Despite solutions' claims of robustness, customers need clarity on compensation mechanisms for potential losses, or they won't adopt interoperable eBL.

Let's unpack this further. Between eBL solutions, we need clear rules of engagement that define which solution provider is the controlling platform and under what conditions, establishing clear accountability at each point in time. To facilitate this, GSBN serves as a Control Tracking Registry, providing a blockchain layer that records not only transfers and their corresponding statuses but also identifies for each interoperable eBL the controlling platform at any given moment. This complete and immutable audit log on a neutral third party eliminates the Two Generals Problem in bilateral communication and provides clarity on the liability of each eBL solution provider.

Clear rules of engagement and a comprehensive audit log, however, are just the foundation. We also need a proper liability framework based on the agreed upon rules of engagement, such that we can attribute responsibility clearly in case of disputes. This ensures that customers need only to interface with their contracted eBL solutions, while the solutions can use this framework and the audit log to determine responsibility for compensation between themselves in case of losses.

This framework represents an initial result from our collaboration with ICE and IQAX eBL. I'd like to thank Marina Comninos for spearheading the creation of the liability framework that governs the roles and responsibilities between eBL solutions in an interoperability context, providing the comfort and assurance our customers need.

Tying It All Together 

Having established the foundations for legal validity through local legislation and a robust liability framework between solutions, we're now positioned to tackle the technical aspects of eBL interoperability. Utilizing a blockchain data platform, together with the use of a Control Tracking Registry, we can ensure that each eBL preserves its fundamental characteristics - uniqueness, validity, and security - even as they move across platforms. 

Another key aspect to consider is the cost of interoperable transfer, ensuring we do not introduce additional barriers. As a not-for-profit organization, GSBN is committed to providing the Control Tracking Registry at the lowest possible cost to maximize adoption. 

Adoption before Interoperability

However, there's still one crucial prerequisite we haven't fully addressed: adoption itself. While some view eBL interoperability as the key to widespread adoption, we see it differently. Yes, interoperability removes significant barriers by allowing solutions to communicate across their respective ecosystems, but true transformation still requires eBL to deliver value that traditional paper Bills of Lading simply cannot match.

This perspective was reinforced at our recent Shanghai eBL summit, where 120 industry participants collaborated to develop new use cases for eBL. This collaborative effort demonstrates that interoperability is just one piece of the puzzle. Full digitalization requires examining how digital bills of lading can create new value within existing processes.

Our upcoming whitepaper will detail these insights and use cases, marking another step toward a fully digital future in global trade. Because while interoperability removes barriers, the ultimate driver of adoption will be the new value it creates for the industry.