It is the trite law that delivery of cargo may be made only upon surrender or
presentation of an original bill of lading. Under present practices, the seller issues the
bill of lading which may take weeks to be delivered to the owner of the cargo, who
then uses it to claim possession of the cargo. With blockchain technology, legal and
commercial problems arising from this traditional use could be mitigated if not
resolved.
In instances where the original bill of lading arrives after a vessel does at the
discharge port, there may be commercial pressure to deliver the cargo without
surrendering the original bill of lading. Such pressures are greater when there is a
tight delivery schedule or where the cargo contains perishable goods. Succumbing to
such pressure, parties may execute a letter of indemnity to deliver the cargo. Such
situations give rise to unwanted legal risks. A smart contract bill of lading would be
helpful in these circumstances given the fast delivery and speed of data transmission.
Hence, under a blockchain bill of lading, problems of delays in discharging of cargo
and ensuing demurrage charges are less likely to occur.
51
It is of paramount importance that information appearing on a mate’s receipt and
correspondingly on the bill of lading be consistent. This is often not the case and the
responsibility for it is frequently laid on the master of the ship. Several problems are
likely to arise when there are discrepancies between the mate’s receipt and the bill of
lading. In such potential circumstances, the use of the blockchain bill of lading is
useful for accurately clausing the bill of lading and the mate’s receipt. If this is to
become the norm, relevant personnel must be adequately trained in the basics of a
smart contract and its use in the context of the blockchain bill of lading.
6.3.3 Transparency
In a survey conducted in late 2017 it was revealed that shippers expressed major
complaints regarding containerized cargo including lack of real-time visibility at any
point in the supply chain, in particular, in instances of transshipment of cargo and
intermodal transportation. That result demonstrates the types of issues that
blockchain technology could be used to address. Other complaints were lack of a
centralized system of space allocation which is apparently handled by local offices,
and no system for the quick adjustment of supply chain routes in the event of
disruption at some point of the supply chain.
52 Transparency in shipping operations
is not simply a matter of responding to customer needs in the transportation chain;
today it is as much, if not more, a matter of compliance with regulatory regimes put
in place for combatting such things as corruption, unlawful activities such as
trafficking of contraband and human as well as violations of environmental regulations. These are issues of legal concern which also detrimentally affect the reputation
and standing of the parties in the business. These can be satisfactorily addressed by
51 Tricoli (2018).
52 Russ and Water (2018).
Blockchain and Bills of Lading: Legal Issues in Perspective
429
presentation of an original bill of lading. Under present practices, the seller issues the
bill of lading which may take weeks to be delivered to the owner of the cargo, who
then uses it to claim possession of the cargo. With blockchain technology, legal and
commercial problems arising from this traditional use could be mitigated if not
resolved.
In instances where the original bill of lading arrives after a vessel does at the
discharge port, there may be commercial pressure to deliver the cargo without
surrendering the original bill of lading. Such pressures are greater when there is a
tight delivery schedule or where the cargo contains perishable goods. Succumbing to
such pressure, parties may execute a letter of indemnity to deliver the cargo. Such
situations give rise to unwanted legal risks. A smart contract bill of lading would be
helpful in these circumstances given the fast delivery and speed of data transmission.
Hence, under a blockchain bill of lading, problems of delays in discharging of cargo
and ensuing demurrage charges are less likely to occur.
51
It is of paramount importance that information appearing on a mate’s receipt and
correspondingly on the bill of lading be consistent. This is often not the case and the
responsibility for it is frequently laid on the master of the ship. Several problems are
likely to arise when there are discrepancies between the mate’s receipt and the bill of
lading. In such potential circumstances, the use of the blockchain bill of lading is
useful for accurately clausing the bill of lading and the mate’s receipt. If this is to
become the norm, relevant personnel must be adequately trained in the basics of a
smart contract and its use in the context of the blockchain bill of lading.
6.3.3 Transparency
In a survey conducted in late 2017 it was revealed that shippers expressed major
complaints regarding containerized cargo including lack of real-time visibility at any
point in the supply chain, in particular, in instances of transshipment of cargo and
intermodal transportation. That result demonstrates the types of issues that
blockchain technology could be used to address. Other complaints were lack of a
centralized system of space allocation which is apparently handled by local offices,
and no system for the quick adjustment of supply chain routes in the event of
disruption at some point of the supply chain.
52 Transparency in shipping operations
is not simply a matter of responding to customer needs in the transportation chain;
today it is as much, if not more, a matter of compliance with regulatory regimes put
in place for combatting such things as corruption, unlawful activities such as
trafficking of contraband and human as well as violations of environmental regulations. These are issues of legal concern which also detrimentally affect the reputation
and standing of the parties in the business. These can be satisfactorily addressed by
51 Tricoli (2018).
52 Russ and Water (2018).
Blockchain and Bills of Lading: Legal Issues in Perspective
429