Interoperability seen as key to unlocking shipping’s digital potential
Digitalisation is changing the trade landscape. Within the shipping sector, solutions such as the electronic Bill of Lading (eBL) are increasing efficiency across the supply chain. While progress has been steady, stakeholders are looking to accelerate change. With this in mind, Niels Nuyens, Chief Product Officer at Digital Container Shipping Association (DCSA), sat down with Parsan Chand, Senior Director, Global Logistics at Lenzing AG, to discuss the importance of common standards in advancing digital transformation.
To kick off the discussion, Niels explored Lenzing’s motivations to explore digital trade solutions. An international textiles manufacturer, Lenzing works with suppliers and businesses from around the globe. As such, efficient shipping processes are central to supporting their business model.
Lenzing places a strong focus on efficiency and transparency. It therefore recognises the fundamental role digital transformation plays in a seamless supply chain. Yet while, on the product side, digitalisation has become a cornerstone of its strategy, when it comes to trade, traditional processes – notably those concerning the transfer of documentation – remain prevalent.
eBL faces barriers to progress
With transit times taking anything from four days to six weeks, Parsan highlighted that customers are frequently frustrated with the amount of time it takes to receive the documentation required for goods transportation. To overcome this issue, it is placing a growing focus on exploring digital alternatives to traditional documentation such as the Bill of Lading (B/L).
Offering greater efficiency, security and transparency, the eBL has been a key component of Lenzing’s drive to optimise its supply chain. While its interest in the solution predates the Covid-19 pandemic, Parsan noted that this time marked a turning point for the industry. “Inefficiencies were exposed on a scale previously unseen within the sector. In turn, businesses began to recognise digitalisation was no longer simply a luxury, it was a necessity – and the eBL had a central role to play.”
Since, there has been a significant increase in momentum from stakeholders from across the supply chain and a surge in eBL solution providers entering the market. In turn, almost 20% of all B/Ls generated by Lenzing globally are now electronic and other businesses are following suit.
However, progress has since reached a plateau, with issues such as a lack of interoperability between platforms creating a barrier to widespread transformation. Parsan highlighted the impact this has on stakeholders such as banks. “Banks must undergo stringent compliance requirements and lengthy validation processes to onboard a new solution. As such, they are often reluctant to work with more than one solution provider.”
Given a handful of global banks are involved in around 70% of Lenzing’s business – and considering its customers interact with many more across various jurisdictions – this poses a considerable barrier to transformation.
And this issue is not exclusive to banks. Lenzing works with the top ten global carriers across various regions, all of which use different systems to process the eBL. As a result, Lenzing must alternate between three different eBL platforms, which complicates processes internally. Parsan explained that, while previously, teams could simply print a B/L, they must now navigate multiple different systems. This can be both confusing and time-consuming, as well as increase the margin for error.
Industry must collaborate on standardisation
To overcome these issues, Niels highlighted the importance of digital standards that enable the transfer of information across platforms. In addition to making communication less complicated, Parsan highlighted standardisation’s role in improving visibility across processes – bringing greater transparency to the trade ecosystem.
Niels also explored the role of collaboration in moving the industry forward. For Parsan, banks have a crucial role to play in this regard. With fintech and alternative trade finance companies changing the trade finance landscape and offering financing options that traditional banks are unable to, he highlighted the importance of working alongside industry players to increase eBL adoption in order to remain competitive.
Beyond this, current trends – such as the tokenisation of trade documentation – are opening up new possibilities for stakeholders wanting to get involved in trade finance. This not only underscores the urgency to embrace digital transformation, but also the increasingly collaborative nature of the trade sector.
To wrap up the discussion, Niels and Parsan explored the outlook for the industry, focusing on what needs to be done to increase eBL uptake. For Parsan, crucially, “the industry must adopt a standardised framework that ensures interoperability to manage eBL processes – seamless communication across different platforms will reduce current complexities and improve communication”. This, in turn, will lead to reduced costs, greater transparency and better control over trade flows – enabling all stakeholders to collaborate efficiently, said a report by DCSA.
source: Exim News Service: Amsterdam, Dec. 8