A Complete Guide to the UK Electronic Trade Documents Bill

It’s estimated that 25 million paper documents are created and transported around the world every year to facilitate international container shipping alone.

The UK Electronics Trade Documents Bill, which aims to tackle that, received Royal Ascent on 20th July 2023 and is now signed into law. It’s a bill which could have significant consequences for UK importers and exporters. That’s because it changes the rules around important trade documents, including Bills of Lading, marine insurance policies, warehouse receipts and more.

This article explains the bill in detail, why it has been passed and highlights how it could impact shippers to and from the UK.

“Today, four billion paper-based documents float through the system at any given time, creating inefficiencies that slow trade down and hamper growth and innovation.”

Craig Atkinson, a consultant at the United Nations (International Trade Centre).

What is the UK Electronic Trade Documents Bill?

The bill is officially described as “an Act to make provision about electronic trade documents; and for connected purposes.” Now, in layman’s English, that means it’s a bill that is going to give electronic trade documents the same legal standing as their paper equivalents, providing the electronic version meets certain requirements:

• It can be distinguished from copies.
• It is protected from alteration.
• Only one person has control over it.
• It can be security transferred.

There’s also a clause in the legislation that states; for an electronic trade document to be converted into a paper document, or vice versa, a statement about the conversion must be included in the new document.

Why has the UK Electronic Trade Documents Bill been introduced?

Primarily because it’s an area where legislation has not kept pace with technological developments.

Many documents, such as Bills of Lading, are crucial to international trade. Without this legislation, trade would continue to be largely paper-based. That means more costly, complex, awkward and time-consuming than it could be. Many paper documents must be posted, signed, and stored in physical form, which altogether is far more difficult to orchestrate than digital documentation.

Passing the Electronic Trade Documents Bill has the potential to end that issue.

Furthermore, until this bill, UK law didn’t recognise that intangible things could be in an individual or business's possession. This fact hindered the legal standing of electronic trade documents, compared to their paper equivalents. In the past, without technological developments, this was not an issue. However, with modern digitalisation, there are countless intangible items in the possession of businesses and individuals. The law needed updating to reflect that.

How can my business benefit from the UK Electronic Trade Documents Bill?

The primary benefit of the UK Electronic Trade Documents Bill is that it can be time and cost-saving for your business. Legislators have calculated there will be net financial benefits for businesses moving to fully electronic documentation. These calculations consider the costs associated with the transition to electronic trade document systems and the ongoing costs of operating with them.

Best estimates from the government suggest a £250 million annual saving for UK firms by 2032, although the figure could be as high as £445 million per year depending on take up. Reducing costs for UK businesses is only going to improve their competitiveness internationally. Both in terms of lower prices and availability of funds for R&D.

Best-estimate annual savings for UK businesses because of the UK Electronic Trade Documents Bill:

There are also crucial environmental benefits. Reduced use of paper, printing and delivery services means a lower carbon footprint for firms.

The digitalisation of processes is a vital step in the reduction of scope 1 emissions. In 2018, the UK emitted 2.5 million tonnes of carbon dioxide from paper and printing in international trade. When the transportation of these documents is factored in, the number would be considerably higher. Royal Ascent of the UK Electronic Trade Documents Bill presents the ideal time to make these paper and emission cuts.

For SMEs, it’s expected the bill will improve access to trade finance, a vital component of international business. This is achieved through the increased security, speed and confidentiality as a result of going digital. SMEs are able to use key trade finance platforms such as Contour and Komgo more succinctly.

What are the challenges associated with the Electronic Trade Document Bill?

Primary opposition to the bill centres around staff training and scepticism. Moving to digital systems will require education for staff on their operation. This can be time-consuming and costly.
Furthermore, in some sections of the logistics industry, there is opposition to digital documents because of the lack of physical product. Despite evidence to suggest digital forms of documentation, when stored correctly, are more secure than their paper equivalents, scepticism continues to be an issue. Some in the industry still prefer and trust a physical copy.

Another challenge that remains is apathy or lack of motivation. Paper, printing, and postage are low costs to a business in many cases. Motivating senior leaders to cause significant disruption for a potentially low-cost saving could be difficult.

“Thanks to blockchain and encryption technology, electronic documents are in fact significantly more secure than a paper version that is being posted or faxed. Furthermore, the transfer of digital documentation is considerably quicker.”

Anthony Bour, IT Director, WTA

What electronic document systems could I use?

It could be the case that as a UK business you don’t need to adopt any system for your logistical documentation needs. You may receive all your shipping documentation in PDF format, which cannot be edited. However, you will have to make the decision whether your approach meets the legal standing outlined in the bill, for documentation to qualify as an equivalent to a paper document.

If you have more complex documentation requirements as part of your shipping and other processes, you may want to invest in a system. In this instance, you’re looking for an EDMS (Electronic Document Management System). A quick Google search of that term will reveal a range of options on the market, for a variety of budgets.

Keep in mind the terms of the new bill when choosing a new system. How does the provider store the documentation securely? Does only one individual or organisation have control over the document? Can it be transferred securely?

The Electronic Trade Documents Bill is a much-needed modernisation of UK Law. However, its impact with vary dramatically from business to business, depending on the nature of their operations.

There are also significant challenges to overcome. Firstly, the wording of the bill leaves a lot for the court’s interpretation in the unlikely case of a dispute. Shippers need to be sure any eDoc processes fulfil the criteria of the bill. There are also challenges with opposition to digital documentation.

The reality is plenty of trade documentation is already wired electronically, but there is room for significant improvement and this legislation aids that by bringing electronic documents onto an equal standing with their paper equivalents. Furthermore, any legislation which brings about improvements on sustainability without significant disruption must be welcomed.

If you have any questions about the new UK Electronic Trade Documents Bill, reach out to our team below for expert guidance on reducing your shipping costs.

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