Electronic bills of lading — planning for areas of risk

DOIhttps://doi.org/10.1108/eb025656
Pages311-316
Publication Date01 Jan 1995
AuthorÅke Nilson
Journal
of
Financial Crime
Volume
2
Number
4
Electronic bills of lading
planning for areas of
risk
Åke Nilson
Received: 14th
November,
1995
Åke Nilson joined the London marine insurance
market following an LLM degree from Uppsala
University and, having become interested in
electronic business practice, in 1988 set up an
electronic trading consultancy, Marinade
Limited, which he continues to manage.
ABSTRACT
This paper explains how the uptake of elec-
tronic
business practice
in international trade
is hindered by the difficulty of
implementing
an
electronic
equivalent of a
document
of title.
It
shows
how
a current European
Commission
project tackles
the
issue
and
promises to deliver
results with cross-industry application. The
paper
also
gives a
brief
introduction
to the con-
cept of
digital signatures
and how they can
prevent
fraud.
BACKGROUND
International trade depends on a huge
volume of paper flowing through the
system. The number of documents
required for a single shipment starts
from about 20 and can easily reach into
three figures, if all copies are counted,
and there are at least 100m consign-
ments transported across the world's
borders annually.
In many industries, the trend is to
replace paper correspondence with
electronic means of communication, for
instance electronic mail for personal
correspondence, and Electronic Data
Interchange (EDI) for routine business
data. EDI simply means the direct
exchange of data in a standard structured
format from computer application to
computer application, usually by means
of a telecommunications network. EDI is
particularly well suited for routine
exchanges of standard documents, such
as purchase orders or invoices, and in
some industries, such as the automotive
or electronics sectors, it has become the
normal way of doing business, at least
for domestic transactions. Nearly all of
the shipping documents are in a standard
format, with very standardised data con-
tents,
and there already exist suitable
EDI message formats for most of them.
Bearing in mind the enormous number
of paper documents in international
trade, and the well-known disadvantages
caused by delays in the mail, re-keying
errors,
filing and handling costs, and not
least the high risk of fraud, EDI would
seem to be an obvious solution. None-
theless, there are remarkably few EDI
transmissions between the many parties
involved.
There are several reasons why this
may be so, but a very significant one is
related to one particular document, the
maritime Bill of Lading (B/L).
The B/L is issued by the carrier (ie the
shipping line) as a receipt for the goods
received for shipment. But the carrier
also promises not to deliver the goods
other than against presentation of the
original document at the port of destina-
tion. This gives the maritime B/L a
Page
311

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