Electronic bills of lading will slash costs for shipping companies and reduce delays for container ships at ports
Singapore is planning to shift international trade to a paperless system with the implementation of e-bills of lading later this year.
The aim is to cut costs for businesses and to also reduce delays for container ships during docking and unloading at ports.
Singapore's Minister for Communications and Information S. Iswaran announced the project during his ministry's Committee of Supply debate in the Parliament.
"TradeTrust will enhance our attractiveness as a business hub and improve the efficiency of our trading and logistics sectors," said Iswaran.
Paper bills of lading can run up to hundreds of pages for a single transaction
He also revealed the Singaporean government's plan to introduce changes to the Electronic Transactions Act to recognise digital bills of lading.
The bill of lading is one of the most important documents in global trade. It is an evidence for the contract of carriage and receipt and ownership of goods. The paper-based bill of lading is still the most commonly used form of trade document in shipping, although some countries are slowly moving to adopt digital bills of lading.
The processing and administration of paper-based trade bills is estimated to add about 20 per cent to the cost of shipping a single container. Paper bills of lading can run up to hundreds of pages for a single transaction. Moreover, there is fraud risk associated with paper bills as they must be mailed or handed over to each party concerned.
Electronic bills of lading, which are generated through blockchain technology, provide all parties with proofs of authenticity for digital documents being exchanged. They also eliminate the need for repetitive checks at each country to determine the legality of bills received.
Iswaran said that TradeTrust project will allow for the exchange of electronic bills both locally and globally and will lower the risk of fraud.
TradeTrust is Singapore's second pilot project that aims to digitise billing documents. In October 2018, Singapore's Pacific International Lines (PIL) announced a partnership with IBM to digitise its supply chain management.
Under the joint project, IBM and PIL plan to conduct a trial, based on blockchain technology, to design and produce e-bills of lading.
The project is backed by Singapore Shipping Association, the Maritime and Port Authority of Singapore (MPA), Singapore Customs, Infocomm Media Development Authority and Bank of China's Singapore unit.