Covantis is a blockchain powered startup founded by the world’s biggest agribusiness providers. It went live in 2021 targeting post trade for agribusiness. Now it plans to launch an electronic bill of lading (eBL) solution for its users, through a partnership with SECRO which has a DLT based eBL offering.
Covantis’ backers include ADM, Bunge, Cargill, COFCO Corporation, Louis Dreyfus Company, Marubeni and Viterra (formerly Glencore Agriculture).
The new eBL offering has been approved by the International Group of P&I Clubs, the insurance network. This approval is crucial for shippers, as the eBL serves as a vital document that signifies ownership of cargo in transit. Additionally, it plays an important role in trade finance, as banks use it for Letters of Credit.
With the continued growth of Covantis, eBLs will become available for many shipments. In its 2023 update, Covantis said it had 180 entities using its platform. It has deep penetration in major grain and oilseed markets in certain regions. The platform was used for 76% of Brazilian exports, 53% of United States exports, 34% of Canadian exports, and 51% of Argentina’s grain exports. Sugar is now supported and the geographic reach is expanding into Europe and elsewhere.
Promoting eBL usage
There are major moves afoot to digitize bills of lading, and most of the popular eBL platforms use blockchain.
A copy of the paper version has to be couriered from the port of origin to the destination. Plus paper is prone to forgery. Hence, eBLs can save time, money, are safer and greener. Additionally, once the bill of lading is digital, it makes it easier to digitize all the other related processes, including trade finance.
In 2022, 98% of shipments used paper bills of lading. The situation is improving with eBLs expected to account for 4% of transactions this year.
Last year several trade and shipping bodies made commitments to rapid progress. For example, bulk shipping association BIMCO launched a program to reach 25% of shipments using eBL by 2025. The Digital Container Shipping Association (DCSA) secured commitments for 50% adoption in five years and 100% in ten years. Plus eBLs are being promoted by the FIT Alliance, which includes BIMCO, the DCSA, the International Chamber of Commerce (ICC), Swift and the International Federation of Freight Forwarders Associations (FIATA).
One of the key challenges to eBL adoption has been the proliferation of different eBL platforms which are incompatible with each other. An eBL has to pass through several parties, so they all need to support the digital document. But expecting them to support a dozen different formats is a challenge. Hence, the DCSA, Swift and several eBL providers are working on improving interoperability.
