Posted on: 23 September 2021
As part of London International Shipping Week, global law firm Reed Smith played host to a panel of shipping industry experts to discuss the key challenges and opportunities facing the sector in a changing world.
Dozens of attendees from across the industry tuned in to hear the views of industry experts, Birgitte Barfoed, Attorney-at-Law, Senior Vessel Portfolio Manager, A.P. Moeller – Maersk A/S; Alexander Goulandris, Co-Founder & Co-CEO, essDOCS; and Dr Katrina Kemp, Autonomy Technical Specialist, Maritime Future Technologies.
Panel moderators and Reed Smith shipping partners Sally-Ann Underhill and Nick Austin introduced the first topic of discussion, electronic bills of lading, in particular the recent proposals by the UK Law Commission to reform English law regarding “possession” of trade documents currently “dependent on a physical but not virtual existence”.
Austin said: “This could be a major step forward to achieving true electronic bills, especially given the prevalence of English law in shipping and trade contracts, and following hard on the heels of Singapore’s recent adoption of UNCITRAL’s Model Law. All this suggests we might finally be reaching a tipping point where trade documents truly become digital.”
The panellists were in agreement that the law reforms were a positive step forward. According to Goulandris ‘The UK law commission’s proposals to change the law would be massively impactful,’ He added: “The UK is the largest maritime centre – at least in a legislative sense – in the world, it is a leader of maritime law and is looked at as a country that drives the direction of legislative change. A change in local law at UK level would have an enormous impact on supporting the proposals to push for EBLs on a global basis, it will undoubtedly make other commonwealth countries accelerate their work in this regard.”
“It’s a fantastic step forward, it won’t solve all the problems because obviously we need a critical mass of countries to adopt to a point that the multipartite frameworks won’t be needed at all, but it is a really important step forward.”
“It’s going to be a must have, not a nice-to-have”, Goulandris added.
While the panellists agreed that electronic documents present new challenges, the overwhelming feeling was that the pandemic had; forced the industry to begin to adopt new technologies at a faster pace; introduce hybrid working; and futureproof their businesses in the form of digitisation.
Goulandris, who has been at the forefront of promoting electronic bills since the term first appeared, believes that change is happening at a much faster pace. He said: “This time is very different and I think Covid is really the catalyst behind this. We now have a pandemic that’s been going on for over 18 months and seems to show no signs of ever dying out.
“Clearly this [pandemic] is something we are probably going to have to deal with forever. With that we have had habitual change, with people working from home for 18 months, there’s now massive discussions about hybrid working, and you cannot do hybrid working with a paper-based trade system. It’s just impossible.”
The panellists discussed the many benefits to the adoption of electronic documents in the shipping industry, such as cost savings, better security, and a lower risk of fraud, all of which have intensified during the pandemic.
“Shipping is a big industry and many documents exchange hands when cargo is transferred from A to B across the world,” said Barfoed, “This last year and a half, we can also see from our customers, everyone has realised the need for a more digitised trade. Due to Covid, which has impacted many countries, customers, and carriers, we have definitely seen the difficulties of having paper bills.
“The events that have happened across the world have shown, both for carriers and customers, the need for more digitisation, and Maersk definitely think that, going forward, if you can make it more digitised it would hopefully reduce the risk of fraud.”
Turning to blockchain and the recently announced Global Shipping Business Network which uses blockchain technology, the panellists were keen to emphasise that blockchain is just one of the options available for digitalisation, but there seemed to be a recognition that it is one of the preferred ones in the market at the moment. Barfoed said that security is one of the key benefits of TradeLens, which is underpinned by blockchain, although challenges have included educating counterparts about the technology. Goulandris said the developments in the use of blockchain are likely to lead to greater collaboration but he does not see one platform as monopolising the digitalisation of the industry.
Current and upcoming environmental regulations were also key topics of the panel discussion. It was broadly agreed that the shipping industry is well prepared but the true test will come when the new regulations come into force and the sector can assess how various jurisdictions will approach enforcement.
The panel also addressed autonomous vessels, and the IMO’s Maritime Safety Committee’s four degrees of autonomy. According to Kemp, the technology for automation is here already but when considering regulation “we need to future proof and be open minded in our thought process” to be able to respond to new technologies and challenges. There was a frank discussion about the potential issues and a recognition that whilst there are smaller autonomous vessels already on the seas, there are also further challenges for the industry to ensure that technological developments and the legal framework align. And in terms of the IMO’s report identifying the gaps in the current regulatory framework, Kemp said that it is still to be decided whether the existing framework can be amended or whether a separate code is required.
Reed Smith’s Transportation Industry Group would like to thank Birgitte, Alexander and Katrina for joining the panel and sharing their views on the challenges and opportunities facing the shipping industry.