Trade documents on a ledger: bills of lading, letters of credit and lessons from closed platforms

A system that still runs on paper

A single container shipment can involve an exporter, an importer, a freight forwarder, a shipping line, port operators, customs authorities in two countries, insurers and one or more banks. Many of them need to see, check or hold documents along the way.

The most important of these is the bill of lading. It is a receipt for the goods, evidence of the contract of carriage and — in its negotiable form — a document of title: whoever lawfully holds the original can claim the cargo at the destination. That is why it has traditionally been printed, signed and physically couriered, sometimes several times, while the ship is already at sea. Banks financing the shipment through a letter of credit examine these documents before they pay, adding more steps.

The problems are familiar to anyone in the industry: documents arrive after the goods, cargo waits in port, couriers and manual checks cost money, and fraudsters occasionally present forged or duplicated originals to more than one bank.

Where a ledger fits

One version of each document

If every party reads the same record, there is no need to reconcile slightly different copies, and changes are visible to all. That alone can shorten checks at banks and customs.

Transferring control, not just copying

The hard part of digitising a document of title is singularity: at any moment there must be exactly one holder, just as there is exactly one paper original. A digital file can be copied endlessly, so a system must record who controls the document and allow control to pass from one party to the next. This is closely related to the double-spending problem that ledgers were designed to solve, which is why trade documents attracted so much attention.

Shared visibility of shipment events

Beyond documents, logistics platforms tried to record events — container loaded, vessel departed, customs cleared — in one place, so that every participant could follow a shipment without phoning the others.

The legal piece: electronic transferable records

Technology alone could not make an electronic bill of lading equivalent to paper. In many legal systems, the rights attached to a document of title depended on possession of a physical original. Until the law changed, a purely digital version could only work inside closed contractual "rulebooks" that every participant had signed.

In 2017 the United Nations Commission on International Trade Law (UNCITRAL) adopted the Model Law on Electronic Transferable Records (MLETR), which sets out how electronic records can perform the functions of paper documents of title. Several jurisdictions, including Bahrain, Singapore and the United Kingdom, have since adopted laws based on it. The UK's Electronic Trade Documents Act 2023 allows qualifying electronic documents to be possessed and transferred in the same way as paper.

These laws are technology-neutral. They require a reliable system that identifies the document, protects it against unauthorised changes, and ensures only one person can control it at a time. A ledger can meet those requirements, but so can a well-run central registry.

Network effects decide the outcome

A trade-document platform is only useful if your counterparties are on it. An exporter cannot send an electronic bill of lading to a bank that does not accept it, and a shipping line will not change its processes for a platform that few customers use. Rival carriers and banks were also wary of joining networks led by a competitor. In practice, these commercial and governance questions decided the fate of most projects.

Interoperability has since become a central theme. If electronic documents can move between different platforms, an exporter does not need every bank, carrier and buyer to join the same network. Associations of container carriers and standard-setting bodies have published data standards for electronic bills of lading with exactly this aim, and the legal reforms described above make such cross-platform transfers easier to recognise.

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