THE enormous ships steaming into and out of the world’s ports do not only carry cargo. They also represent paperwork: bills of lading (BOLs), packing lists, letters of credit, insurance policies, orders, invoices, sanitary certificates, certificates of origin. Maersk, the world’s biggest container-shipping line, found that a shipment of avocados from Mombasa to Rotterdam in 2014 entailed more than 200 communications involving 30 parties. A giant container vessel may be associated with hundreds of thousands of documents. “A Venetian merchant…would recognise some of our documentation,” says John Laurens, head of global transaction services at DBS, a Singaporean bank.

According to the World Economic Forum, the costs of processing trade documents are as much as a fifth of those of shifting goods. Removing administrative blockages in supply chains could do more to boost international trade than eliminating tariffs. Full digitisation of trade paperwork, reckons the UN, could raise Asia-Pacific countries’ exports by $257bn a year.

After years of talk about digitisation, such a shift may at last be taking place. Banks, insurers, shippers, their corporate customers and governments, abetted by technology companies, are combining forces to digitise the paper trail. Lots of projects are under way, building platforms which the various actors can use. Several are based on the blockchain, or distributed-ledger technology.

Using blockchain means that everyone with access to a ledger—for that consignment of avocados, say—sees the same, up-to-date version of the truth. Flows of goods, information and money are thus aligned. The ledger would contain the purchase order, certification that the fruit came from Kenya, its eligibility for a concessionary European tariff, an updated record of its physical condition, phytosanitary certificates, the BoL and so on. An embedded “smart contract” could trigger payment, in full or in part, once certain conditions were met. All sorts of details could be included, says Tyler Mulvihill of Viant, a blockchain startup, such as the provenance of fish or drugs, or a mining firm’s environmental credentials.

In January Maersk and IBM, a computing giant, unveiled a blockchain-based joint venture aimed at digitising the supply chain from end to end. Big companies, ports and the American and Dutch customs authorities have carried out trial projects. The platform will be open to all (and run independently of Maersk): the hope is that logistics firms, financial companies and other shippers will join.

TradeIX, a fintech startup, R3, another blockchain firm, and several banks are testing another open platform, Marco Polo. Last year eight European banks and IBM unveiled we.trade, a trade-finance conduit for small and medium enterprises. They expect to deploy it in the second quarter of 2018. This month Evergreen, a big Taiwanese container line, teamed up with Bolero, a provider of electronic BoLs. Bolero and essDOCS, its rival, have offered electronic BoLs for several years, but have made limited headway. Similarly, electronic letters of credit have been available for some time, but have not been widely used.

Go-ahead governments are also encouraging digitisation. Singapore is building a National Trade Platform (not based on blockchain), involving banks, shippers and technology firms. It will bring “the whole trade ecosystem onto a single platform”, says Satvinder Singh of International Enterprise Singapore. Hong Kong is creating a trade-finance blockchain platform. In November the two Asian trading hubs said they would create a cross-border platform, the Global Trade Connectivity Network, which is due to go live next year.

Part of the gain from digitisation lies in cutting costs. Banks employ armies of people in back offices, looking for discrepancies that may betoken fraud or honest error. Digitisation should also free the flow of finance to firms starved of it, partly by helping banks’ compliance with anti-money-laundering rules. The Asian Development Bank has put the gap between available trade finance and demand at $1.5trn.

Thomas Olsen of Bain & Company, a firm of consultants, thinks that digitisation could also slow the trend away from formal letters of credit, which now account for about 15% of trade finance, down from half in 1970. “Open account” trade, in which exporters send goods to importers and trust that their invoices will be paid, now accounts for the bulk. That is fine for big corporations and companies familiar with one another; less so for SMEs. “There would be more risk mitigation if it weren’t such a pain,” Mr Olsen says.

Paper wait

Institutional obstacles to digitisation loom larger than technical ones. For instance, a UN convention adopted in 2008 extends the recognition of electronic documents. But to come into force it must be ratified by 20 countries. Only four have: Cameroon, Congo, Spain and Togo. Upgraded industry standards are essential. The International Chamber of Commerce, a standard-setter for trade since 1919, established a group last June to co-ordinate work on trade finance. A new initiative based in Singapore, Digital Standards for Trade, may also help push things along.

Bain’s Mr Olsen thinks the co-ordination problem will not stop progress. “It’s a misconception that a lot of people have to leap at the same time,” he says. He expects competing blockchain initiatives to develop piecemeal. Some platforms will become utilities; some will specialise; some will fade. Paperwork will not vanish. But at a difficult time for traders, one burden should become a lot lighter.