Container transport is fraught with challenges, and the Ever Given incident – which brought shipping through the Suez Canal to a standstill for almost a week – is a case in point.But for trade finance institutions, it’s compliance issues that pose the greatest challenge.John Turnbull, executive adviser Bank ABC, said in light of the massive growth in containerisation in recent years, the world of compliance had also changed, and the requirements for banks in respect of addressing regulatory compliance had grown significantly as well.“However, one of the areas that causes banks problems is that we are dealing primarily as a banker with documents, not with the underlying goods. And historically, banks focus very much on the documents in documentary credits, for example, and don’t look behind the documents. That's changed significantly, and regulators now require banks to work in a methodology that employs sound due diligence and requires 'know your customer', anti-money laundering procedures and so on, which sounds fine in theory. But in practice, this can lead to several problems for banks.”Derisking cargoes has therefore become of critical importance, said Turnbull, especially in light of the enormous cost burdens that banks are carrying.Theoretically speaking, it should not be that challenging to do. Not the case, said David Cuckney, director of the International Maritime Bureau (I MB).“One of the biggest challenges of containerisation is that there are so few physical inspections and ultimately no one is sure what is inside these boxes. I'd estimate probably under 0.5% have had the doors physically opened to check that what's meant to be inside was there,” he said during a recent online event.The primary role of the IMB is the investigation or the verification of bills of lading that are presented to trade banks for financing. The lack of inspection, said Cuckney, was one that made this task very difficult.“The vast majority of suspicious or fraudulent bills of lading that we identify are issued by Non-Vessel Owning Common Carriers (NVOCCs),” he said. “It is important to note, however, that the vast majority of NVOCCs conduct themselves to a very high standard and are very professional in the way they go about their business. It is a case of a small minority who sort of ruin it for everyone else.”The reality is though that the vast majority of fraudulent bills of lading are issued by this small minority. Coupled with so little inspection, it is a major problem.“For a bank, it is imperative that the document that you have been presented for financing not only accurately ref lects the underlying shipment, but also that it's been issued with the correct authority.”Cuckney said banks and financial institutions, as well as importers, exporters, or any other stakeholder, needed to be comfortable that the bill of lading accurately ref lected what was actually inside a container. This was not only important from a trade finance or banking perspective, but also for general safety at sea, said George Devereese, director, maritime & trade, IHS Markit. “I used to work for a container shipping company as a safety security inspector. And I remember multiple times getting phoned at 3 am from a captain at sea saying we have a container that's leaking black liquid, what shall we do?”Devereese said the answer to such a call was always to check on the manifest. “In most of these incidents, the manifest and the actual contents vary extensively.”The lack of visibility, as well as the discrepancies between the bill of lading and the actual content of many containers, was, therefore, a huge concern, he said, that resulted in significant risk, requiring the industry’s full attention to come up with solutions.FN4587SDOne of the areas that causes banks problems is that we are dealing primarily as a banker with documents, not with the underlying goods.– John Turnbull