In a globalizing world where cross-border e-commerce is ever-prevalent, logistics practitioners and customs authorities are eyeing new technologies like blockchain to help process transactions, share and secure data and weed out criminal activity and counterfeit products.
“Blockchain. Blockchain. Blockchain. That’s all I hear about when I go to meetings,” Ken Brown, senior vice president of the supply chain security firm SICPA North America, said Tuesday at the Global Supply Chain Summit hosted by the U.S. Chamber of Commerce in Washington, D.C.
The supply chain topic emerged as a hot theme at last week’s Consensus conference in New York, with FedEx chairman Fred Smith calling blockchain technology the disruptive force of the future. It is trending as a sexy topic in policy circles as well, particularly as the U.S. and other nations implement the Trade Facilitation Agreement, a global compact forged by members of the World Trade Organization to reduce red tape and bureaucratic barriers to commerce. The TFA details were finalized in 2013 and countries began implementing it last year.
To realize the full potential of this new era, Tom Donohue, president of the U.S. Chamber, urged both industry and regulators alike to consider new technologies that can ensure that the flow of goods and services moves at the “speed of commerce” rather than the “speed of bureaucracy.”
Seizing the opportunity, the supply chain industry, which comprises two-thirds of the global economy, and the customs and border authorities that govern cross-border commerce are actively exploring how new technologies and methods of data sharing can unleash pent-up economic activity and provide nation states a leg up vis-a-vis their competitors.
“It’s traditionally been about revenue collection and controls, but more and more countries are seeing border management as a competitive tool to participate in the global economy that we have today,” said Ralph Carter, vice president of trade and international affairs at FedEx Express, adding:
“If you want to be competitive, you have to have efficient borders. People need to be able to move items in and out quickly.”
Kevin McAleenan, commissioner of the U.S. Customs and Border Patrol, stressed that the explosion of e-commerce and the associated growth in incoming packages and parcels – which have tripled in the past four years – is putting greater pressure on his agency to simultaneously facilitate increased trade while continuing to protect consumers from counterfeit goods and enforce controls against criminal activity.
Using technology to improve the ability to track and trace not just the provenance of goods but also the origins of shipments and parcels is critical to fulfilling this dual mandate.
“Opacity in the supply chain is really the risk. It’s hard to know what’s involved in the manufacturing process, so breaking down some of that opacity and getting more transparency in the supply chain is a primary goal for us,” said Emile Monette of the Cyber Supply Chain Risk Management Initiative at the Department of Homeland Security.
Referencing Smith’s remarks at Consensus last week in New York, Cynthia Allen – vice president of regulatory affairs and commerce at FedEx Express, stressed that blockchain was a “game changer” for the logistics industry and that its emergence and adoption will constitute a “giant leap forward” in the business world on par with the transition from bricks-and-mortar commerce to e-commerce.
“Everyone here would be well-served to start paying attention to that,” she explained, encouraging the industry to engage in the education process as customs and border protection agencies in the U.S. and elsewhere continue to explore the technology:
“We as an industry have an opportunity to influence how the CBP and other government agencies build those systems. It behooves all of us to participate in that.”