The UK Law that Could Revolutionise Shipping

On 20th July 2023, the UK government passed the Electronic Trade Documents Act.

The new law grants digital documents the same legal status as physical trade documents — a major milestone, and a significant step forward in the digitalisation of the shipping industry.

I may be optimistic, but I believe the door of digital trade documents may be about to swing wide open.

WHY IT’S SIGNIFICANT

The UK is a major global importer and exporter, so this law sends a big message to other countries — “we are going digital, are you?”.

As the UK increases its focus on digital trade and establishes more digital trade corridors, other regions will have reason to adapt. Whether it’s taking advantage of favourable terms for those who embrace digital, or missing out on trade opportunities, this law will likely put pressure on others to change.

Secondly, international shipping law is based on UK law (an estimated 80% of all trade documents). When those who wrote the book on shipping law say that digital is the future, then we can expect change as a result.

Personally, I believe we will look back at this as a major milestone in the digitalisation journey when the adoption curve ramps sharply upward.

THE IMPACT OF DIGITAL?

By now everyone understands that paper documentation comes with a lot of friction. The cost, inefficiency and risk of fraud or loss make international trade more difficult and expensive than it needs to be, which is prohibitive for many businesses.

Digital documentation simplifies existing trade, but also opens up new opportunities too — precisely what the UK government is trying to do:

What may look to many of us as a small change to the law is something that will have a massive impact on the way UK firms trade, and in turn, is going to boost our economy by over ￡1 billion over the next decade.

Paul Scully, Minister for Tech and the Digital Economy

As I reflect on it, the digitalisation of trade documents reminds me of the digitalisation of personal travel (and the trade that comes with it).

It wasn’t so long ago that global travel meant traveller’s cheques, side street cash exchanges, writing your destination on a piece of paper and jumping in a taxi with blind faith.

Now, with smartphones, eSims, multi-currency apps and contactless payments, it’s infinitely easier. You can be in a remote town buy a bottle of water (in the local currency) with the tap of your phone. You can jump in a taxi with Google Maps loaded up and have a sense of security of where you are going.

The digitalisation of trade documents will have a similar impact. Greater ease, efficiency, reduced cost and a sense of security, which will facilitate more trade.

As I’ve discussed before, the eBL is the first step in this process, and it’s reassuring the see the UK taking a larger perspective on digital documentation as a whole.

GAMECHANGER OR BUSINESS AS USUAL?

The funny thing about the adoption curve is that things typically move slowly until suddenly, as if overnight, it’s everywhere. It often takes a few key pieces to line up, just right, and before you know it, everything changes.

I believe the Electronic Trade Documents Act could be one of those milestones. I could be wrong, and time will tell, but it looks like we may soon see many other regions take similar steps.

But that’s just my opinion, what do you think?

Is this going to be a gamechanger or just another small step forward? I’d love to hear your thoughts in the comments.