A Conceptual System of Blockchain-Based Electronic Bill of Lading

Introduction

Rapid advances in information technologies enable the transfer of a bill of lading in the electronic environment instead of using ordinary paper. The printing of bill of lading costs billions of dollars every year to the shipping and transportation industry. Thanks to the electronic bill of lading, its stationery is significantly reduced in international trade and unexpected events such as the original bill of lading cannot reach the destination on time due to delays in courier services. Hence, consignee does not need to pay a considerable amount for guarantee letters to the banks. Addition to fast delivery of the electronic bill of lading, there are several advantages to the stakeholders in the logistics industry:

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  Security in the issuance of electronic bill of lading: There is no central storage system (Bolero project etc.) which could be attacked by hackers. Electronic bill of lading is the most crucial document, which is to be encrypted and securely written on the blockchain network, accessible only with traders' private keys.

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  Fast transfer of an electronic bill of lading: The electronic bill of lading provide to issue an electronic bill of lading instantly and is immediately available to the exporter. When the agreed conditions are met, the bill of lading is transferred to the legal owner of goods – instantly, without couriers in the middle.

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  Paperless documentation: A blockchain-based bill of lading is an electronic bill of lading, which is legal and functional of a paper bill of lading. There is no need to print, send, store and archive it in a conventional way anymore.

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  Cost reduction in the transfer of documents: The transfer of bill of lading originals with couriers making business extremely expensive and too slow. The average courier cost is around $100 and it takes up to 10 days to ship to the final destination. Millions of bill of lading are generated every year.

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  Payment in the transfer of ownership: The issuance of bill of lading will be done by paying Ethereum coins. The stakeholders may buy electronic tokens from Ethereum network and they can easily transfer of funds to the exporter by Ethereum coins. It will protect exporter or importer from exchange fluctuations. On the other hand, the electronic bill of lading may offer a service that the importer may transfer money by using the electronic letter of credit conceptual models.

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  Tracking of cargo and bill of lading: The blockchain based electronic bill of lading may offer real-time cargo tracking through Internet of Things technology.

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  Backup of an electronic bill of lading: The stakeholders may view the archive of issued and received electronic Bill of lading.

Digitization in bill of lading has many attempts since 1980s. At the beginning of digitization, electronic bill of lading platforms were member-only systems, which have the central registries and controlled by the trusted organizations. When closed central registries make a transaction, the user should be registered to the system. In case of involvement of non-member to the system, a paper bill of lading should be used instead of an electronic bill of lading.

This is the major obstacle to use the electronic bill of lading platform for non-members. Addition to the membership, the insurance of transactions is another obstacle for electronic bill of lading’ stakeholders. The stakeholders may avoid using electronic bill of lading so that every transaction should be insured in in central registry very costly (Bolero Project etc.).

Hence, this study aims to establish blockchain based electronic bill of lading by creating its own algorithm and that a conceptual model may help stakeholders who may able to state and transfer cargo ownership rights without the hassle of the handling paper and propose an implementation of the framework for researchers.

The article starts with a critical review of the literature on relevant technologies before explaining the phenomenon. The methodology section presents the conceptual model architecture and the creation of new algorithm for blockchain based electronic bill of lading. The findings are then presented and the study concludes with recommendations for future research.