In an increasingly paperless world, electronic bills of lading are garnering attention as an industry choice for cross-border commercial and shipping transactions. This article provides an overview of the legal framework prescribed by Articles 7 and 9 of the Uniform Commercial Code for a secured lender seeking to perfect its security interest in electronic bills of lading.

Bills of lading have a long history in commercial transactions, dating back as early as the eighteenth century.1 Among the numerous pieces of paper that accompany shipments (certificates of origin, letters of credit and others), bills of lading are arguably the most important, as they serve several significant purposes: (1) they evidence the carriage agreement between shipper and carrier, (2) they serve as a receipt for the goods (including confirmation that the goods have been shipped on board the carrier at a named port for delivery to a named destination) and (3) a negotiable document of title evidences constructive possession of the subject goods.2

Electronic bills of lading (“EBOLs”) are garnering increasing attention as an industry choice for cross-border commercial and shipping transactions. Compared to “tangible” bills of lading, EBOLs provide greater security, efficiency, convenience and the cost-effectiveness of utilizing an electronic medium.3 With tangible bills of lading, there is greater time and money spent passing the physical bill of lading from party to party (which also increases the possibility of misplacement and delay), and there are greater concerns for human error and fraud since the paper can be more easily forged or mishandled. In contrast, EBOLs are generally shared and used on secure electronic systems, where access is more readily monitored and controlled. Yet authorized parties can access them almost instantaneously from any part of the world. Recent global events, such as the COVID-19 pandemic, have also encouraged industries to transition to paper-less methods to conduct business, including the use of EBOLs. 

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