Chip Off the Old Block: Acknowledging the Obstacles to Widespread Adoption of Blockchain Bills of Lading
| Author | Jake Fava |
| Position | JD (University of Melbourne) '21. 2020 Editor of the Melbourne Journal of International Law |
| Pages | 181-231 |
2021
Chip Off the Old Block
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Chip Off the Old Block:
Acknowledging the Obstacles to Widespread Adoption of
Blockchain Bills of Lading
Jake Fava*
ABSTRACT
The bill of ladin g has been a staple of the maritime shipping industry for centuries. Its
evolution to facilitate three core functions was slow and arduous, with little change in the bill of
lading’s form and function ever since. The advances in electronic communication brought the
prospect of electronic alternatives; however, the concept never succeeded, plagued with issues of
excessive costs, trust an d privacy concerns from industry participants and a lack of global legal
recognition of the extension of the bill of ladin g to an electronic equivalent. However, the advent
of blockchain technology has brought with it the prospect of blockchain bills of ladin g
overcoming the problems of the past. This article argues that despite the promise of the
technology, the global adoption of blockchain bills of lading is not guaranteed. It first addresses
the lack of a universal legal framework, b e it via uniform domestic laws or an intern ational
instrument, and evaluates the UNCITRAL Model Law on Electronic Transferabl e Records
as an imperfect but necessary solution. It also highlights that the technology’s commercial
scalability is dependent on establishing a broad global network of industry participants, which
in turn requires overcoming issues of trust in the technology and amongst industry competitors,
and improving the accessibility of and interoperability between the current siloed blockchain
solutions. These obstacles can arguably be overcome, but it requires addressing both the legal
and non-legal issues simultaneously rather than linearly. This would also requ ire unprecedented
coordination between key industry stakeholders and public organisations at the domestic,
regional and international levels.
* JD (University of M elbourne) ’21. 2020 Editor of the Melbourne Journal of
International Law. I would like to thank Professor Richard Garnett for his
encouragement and guidance with the initial draft, and Raoul Renard for his insight into
relevant movements on the international plane.
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LSE Law Review
Vol. VII
INTRODUCTION
COVID-19 has overtly affected our lives in many direct and indir ect ways,
including through its impact on international trade. Whilst consumers order
more goods from the comfort of their own homes, workers in the maritime
trade industry follow strict COVID-safe protocols or stay home if they or a co -
worker have been infected at the workplace, plac ing an extraordinary strain on
the global trade network. Amongst other pandemic -induced shi pping issues,
receivers wait for their paper bill of lading (BoL) to arrive, which must be
presented to the carrier to release and deliver the goods to the intended receiver.
This has exacerbated the problem of containers remaining stuck at ports,
terminals, depots and warehouses, with ships forced to anchor outside of ports
for days and weeks.1 Consequently, shipping liners, ports and other operators of
key shipping infrastructure have endured a significant rise in costs, amounting to
hundreds of thousands of dollars for shipping liners for every day of delay; each
day a ship is stranded waiting to enter a port reportedly costs an average
AUD150,000.2 Naturally, rising costs have been passed on to consumers and are
contributing to unprecedented price inflation for freighting goods; freight rates
have risen by up to 900% on some shipping lanes compared to the end of
1 Hariesh Manaadiar, ‘The Beginning of the End for the Paper Bill of Lading’ (Shipping
and Freight Resource, 25 May 2020) <www.shippingandfreightresource.com/the-beginning-
of-the-end-for-the-paper-bill-of-lading> accessed 1 November 2021; Sam Chambers,
‘Carriers Prepare to Bid Farewell to the Old Bill of Lading’ (Splash247, 19 May 2020) <
https://splash247.com/carriers-prepare-to-bid-farewell-to-the-old-bill-of-lading>
accessed 1 November 2021.
2 David Claughton, Kellie Hollingworth a nd Kath Sullivan, ‘Sea Freight Costs May Have
Peaked, but More Ships Are Needed to Bring Them Down’ ABC News (Sydney, 14
October 2021) <www.abc.net.au/news/rural/2021-10-14/sea-freight-costs-stabilising/
100535856> accessed 4 December 2021.
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Chip Off the Old Block
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2019.3 The logistical complications behind these consequences ostensibly appear
to be unique to the pandemic; the reality is that the pandemic has merely
brought to the fore problems with paper BoLs that have existed in the industry
for decades.
As explained in Part I of this article, the industry has theorised that the
digital revolution would bring with it the opportunity to finally move away from
paper BoLs towards more instant and efficient electronic BoLs. Whilst many
attempts have been made, all previous efforts have failed to make even a small
impact in the industry: on ly 0.1% of all BoLs are currently issued electronically.4
However, the birth of blockchain technology in 2009 has brought with it a
newfound excitement and confidence that it c ould fulfil the legal and practical
requirements of an electronic BoL.
Blockchain has the potential to revolutionise not just the BoL but also the
carriage of goods by sea more broadly. However, it faces many of the same, and
some completely new, obstacles to becoming a global, industry -wide solution.
At the core of this article, Part II will outline the mixture of legal, technical, and
behavioural obstacles that could inhibit the acc eptance and integration of
blockchain technology on a global scale. In doing so, two observations will
emerge. First, the obstacles to a widespread adoption of electronic BoLs,
particularly through a blockchain system, are multifaceted and involve more
than just mere legal discrepancies or a lack of unification. Second, current
3 United Nations Conference on Trade and Development, ‘Container Shipping in Times
of COVID-19: Why Freight Rates have surged, and Implications for Policymakers –
Policy Brief No. 84’ (19 April 2021) UNCTAD/PRESS/PB/2021/2, 3. See also United
Nations Conference on Trade a nd Development, ‘Review of Maritime Transport 2021’
(18 November 2021) UNCTAD/RMT/2021, 59–61. There are also concerns and
investigations into anti-competitive pricing behaviour by shipping liners and ports during
the pandemic, namely price gauging and collusion: see e.g. Brendan Murray, Ann Koh
and Richard Weiss, ‘Freight-Cost Pain Intensifies as Pandemic Rocks Ocean Shipping’
Bloomberg (New York, 4 February 2021) <www.bloomberg.com/news/articles/2021-02-
04/freight-cost-pain-intensifies-as-pandemic-rocks-ocean-shipping> accessed 4 Decem-
ber 2021; Sue Lannin, ‘ACCC Launches Investiga tions into “Exorbitant” Shipping and
Port Charges’ ABC News (Sydney, 14 September 2021) <www.abc.net.au/news/2021-09-
14/prices-ports-transport-shopping-accc-covid-inflation/100458836> accessed 4 Dec-
ember 2021.
4 Digital Container Shipping Association, ‘Standard for the Bill of Lading: A Roadmap
towards eDocumentation’ (8 December 2020) 5 <https://dcsa.org/wp-content/uploads
/2020/12/20201208-DCSA-P4-DCSA-Standard-for-Bill-of-Lading-v1.0-FINAL.pdf>
accessed 13 February 2022.
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