Paper VS. Paperless: Advantages of Digital Documentation in Container Tracking

Container shipping relies on information exchange, which draws on both paper-based and paperless methods. Given it can be processed by anyone, paper has served the industry well. However, digital processes are now faster, more efficient and more sustainable. Notably, digital information exchange enables superior container tracking given its ability to provide real-time updates, while paper-based documents offer limited visibility over status and location.Traditionally, shipments begin with a paper-based Bill of Lading (B/L) which functions as the contract of carriage and shipment receipt. Created by the carrier, the B/L holds vital details about the type and quantity of goods, the origin and destination of the cargo, names of the shipper and recipient, and much more. While paper bills still dominate the maritime industry, reliance upon them creates a plethora of challenges.Alongside cargo, thousands of pieces of paper are transported along the global logistics chain, with new B/Ls constantly being created. These must be manually inspected by customs officials. Not only is this an inefficient, time-consuming process susceptible to human error, it can also create delays and entail additional costs if any issues have to be rectified. In addition, paper B/Ls are vulnerable to security concerns as physical documents can be lost or stolen.The COVID-19 pandemic highlighted the weaknesses of paper-based methods when ports were closed due to lockdowns and the transfer of paper B/Ls came to a halt, leading to global trade disruptions and delays. Yet while the banking and aviation industries have embraced digitalisation, the shipping industry is closer to where it was in the 1400s. There is therefore an urgent need to modernise container shipping processes.

Container tracking's transformative power

As the maritime industry undergoes its digital transformation, many advantages become clear. Real-time tracking means that shippers and carriers are able to organise their inventory more easily and make decisions based on the most up-to-date information. Additionally, by converting to a digital system, time-intensive manual data entry is kept to a minimum as automated processes can be established using predetermined rules set by customs officials. Not only does this speed up customs clearance, it also eliminates the risk of human error, meaning no extra time is lost rectifying mistakes. Should an error occur, electronic B/Ls can simply be cancelled and re-issued.

Advantages of digital documentation

Digitalisation helps speed up information exchange, supporting greater accuracy, efficiency and transparency, while improving operational efficiency. Indeed, a United Nations Conference on Trade and Development found that online trade information portals in Kenya have supported the simplification of 42 trade procedures, saving 69 hours of work and removing 64 documents from the process.Digital documentation provides further benefits too, including cost savings and environmental sustainability. Savings can be significant, as traditional processes not only require the printing and shipping of paper-based documents, but also the work of couriers to transport them. The costs to cover these tasks are substantial and can be avoided with digital documentation. Indeed, a 2022 study found that an electronic B/L (eBL) could directly save $6.5 billion and enable $40 billion in global trade. Another study found that paper documents make up fifteen per cent of the cost of transport.What’s more, a digital transition is beneficial to the environment. According to the Economic and Social Commission for Asia and the Pacific, transitioning could reduce greenhouse gas emissions by 32 to 86 kg per end-to-end transaction. Scaling to trading volumes in Asia and the Pacific indicates potential savings of an average 13.8 million tons. This is equivalent to the planting of 439 million trees.

Types of digital documentation in container shipping

Various types of digital documentation are used in container systems, including the eBL, shipping instructions, freight manifest, proof of delivery and the certificate of origin. The eBL provides the same information as the paper-based B/L, but it operates under its own legal framework and uses technology to replicate the functions of a traditional bill.

Electronic Bills of Lading (eBLs)

eBLs streamline the shipping process by digitalising data entry, allowing for the use of electronic stamps and digital signatures. Once an eBL is generated, cargo data, information and ownership can be instantly transferred to another party. This also means that, when using an eBL, everyone involved and authorised will have access to the document online instantly using any smart device connected to the internet. Indeed, analysis by digital trade finance platform, Bolero, found that the eBL requires less than a tenth of the time to process documentation than its paper-based counterpart. It also found that transactions using an eBL typically concluded in 2.6 days on average, whereas the same process took 30 days when using paper-based methods. Further, digital documentation saves time compared to paper documentation due to the lengthy consignment process required for paper-based documents. Typically, the time it takes for the consignee to obtain their cargo is nearly doubled because paper documents are transported globally or may be lost, further prolonging the process.

The role of electronic Bills of Lading in paperless trade

The eBL plays a pivotal role in facilitating paperless trade and helps with transparency, security, and compliance. For example, an eBL has an audit trail where every action taken is documented, including information on everyone who accessed the bill, when it was accessed, and what changes were made. This level of transparency means that everyone is held accountable for their role in the shipping process at every stage, and any errors or issues are resolved quickly and efficiently. Additionally, while traditional B/Ls can be tampered with and forged, an eBL provides a higher level of security as documents are encrypted and securely stored in digital servers which can only be accessed and shared by authorised parties. This minimises risk of data infringements. Finally, the eBL helps businesses meet compliance obligations more efficiently. Paper-based B/Ls complicate the verification process as it can be difficult to confirm that all shipments comply with the required legal and regulatory standards. This is further compounded by the diversity of regulations that exist across jurisdictions and international borders, which increase the likelihood of errors and inconsistencies. Contrastingly, an eBL operates under an automatic verification system where digital tools are used to verify documents against regulations and adapt to regulatory changes easily. Digital systems can also be automated to update as soon as new laws are introduced, lowering the risk of fines or delays.

A paperless future with DCSA's standards

Container tracking systems are crucial for supply chain and logistics management in the shipping industry. They must be efficient, enhance visibility, and minimise errors and security risks. A modernisation of the industry’s systems, with a shift from paper to paperless, offers transformative benefits. These include real-time tracking for enhanced visibility, reduced manual data entry for improved accuracy, and overall operational efficiency gains. The eBL plays a vital role in this process – significantly reducing paperwork while helping to address sustainability and security concerns.The journey from paper to paperless in container shipping not only addresses the challenges faced by the industry, but also aligns seamlessly with DCSA’s mission. By embracing digital documentation, the eBL, and advanced tracking solutions, the industry paves the way for a standardised, interoperable future.

Paper vs. paperless: advantages of digital documentation in container tracking