The UK Government passed the Electronic Commercial Documents Bill through Parliament on Thursday 13 October, ending the legal requirement to obtain certain commercial documents, such as bills of exchange, promissory notes, warehouse receipts and marine and freight insurance certificates. printed on paper.
Learn more: Letters of credit risk disappearing from digital tools for cross-border trade
According to the government, the new law will provide a £1.14 billion ($1.6 billion) boost to UK businesses over 10 years by reducing contract processing times and cutting administrative costs .
By removing the legal requirement to keep paper documents and putting digital and paper documents on the same legal footing, the bill is also expected to help reduce the millions of paper documents UK businesses print every day.
In the shipping sector in particular, digitization has been significantly slowed by outdated legislation and a lack of standardization.
For example, the Digital Container Shipping Association (DCSA) estimates that in 2020, only 0.3% of the 16 million bills of lading issued by ocean carriers were electronic, with paper documents costing the industry an estimated $11 billion annually. .
This overreliance on paper invoices and certificates in the shipping industry has resulted in significant inefficiencies that could be addressed by electronic documents.
For anyone unfamiliar with global shipping, transporting documents across the globe between carriers, customers, banks and insurers can seem ridiculous in the age of instant communications. However, this bureaucratic system is the reality for signing the vast majority of international ocean freight trips.
With as many as 30 different parties involved in each trip, organizing the signing and handing over of stacks of documents slows trade and hinders the growth of the industry.
Apart from the economic cost of paper trails, moving 16 million documents around the world every year can be considered an unnecessary use of carbon-emitting transport when an electronic transaction can do the same job.
Add to that the tons of paper used to print multiple copies of documents and package them for delivery, and the benefits of electronic alternatives become immediately apparent.
Research from the Economic and Social Commission for Asia and the Pacific (ESCAP) suggests that the emissions savings resulting from the full digitalization of trade regulatory procedures could save between 32 kg and 86 kg of equivalents CO2 per end-to-end transaction. On a large scale, ESCAP said that figure implies annual savings of up to 13 million tonnes of CO2 in the Asia-Pacific region alone.
Politics and technology go hand in hand
While a change in policy alone cannot drive the shift to paperless global business processes, the UK government’s announcement can be seen as a step in the right direction.
Learn more: Blockchain accelerates the digitization of business transactions
At the international level, the transition to paperless commerce is also on the agenda of the United Nations (UN). The United Nations Commission on International Trade Law adopted the Model Law on Electronic Transferable Records (MLETR) in 2017 to encourage the adoption of electronic transferable records.
Meanwhile, DCSA is leading the private sector charge to develop and implement global standards for eB/L and other important electronic document formats. Founded by MSC, Maersk, CMA CGM, Hapag-Lloyd, ONE, Evergreen, Yang Ming, HMM and ZIM, DCSA members include seven of the world’s top 10 shipping lines by cargo capacity.
The bill could also see the UK adopt blockchain technology to prevent data breaches and document fraud, which in turn increases security and trust in the trade documentation process.
It’s a solution that companies like CargoX have sought when creating blockchain transfer systems for secure document authentication and communication.
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