How emerging tech can streamline trade and customs

Blockchain and AI are the future of customs processing, stakeholders say.

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Blockchain and machine learning technologies can provide a solid foundation for the Customs and Border Protection's 21st Century Customs Framework and could help ease larger cross-border criminal issues, vendors and lawmakers told the agency.

"Public distributed ledger systems can link manifests and invoices" using a secure data chain, providing opportunities for "real-time enforcement" against shippers of counterfeit products and money launderers, Sen. Bill Cassidy (R-La.), said at an event on the future of customs technology.

The meeting to discuss CBP's 21st Century Customs Framework drew hundreds of companies, from those who use its trade systems, as well as technology providers.

CBP Deputy Commissioner Robert Perez said the meeting is one of the first steps to address technological changes impacting the shipping industry and customs processing. The agency is officially taking public comments on how to proceed with the plan -- dubbed 21CCF.

CBP last tried to modernize trade processing systems in 1993 with the Customs Modernization Act. The volume and speed of trade and the precision of shipping logistics has changed things since then.

In 2018, Perez said, $2.6 trillion in imported goods entered the U.S, in 29 million trucks, railcars and shipping containers. Another 500 million shipments came in through the international mail system, with 130 million of those via express mail services. CBP is responsible for getting security and basic data and collecting fees on all of those shipments.

Skyrocketing volume of small packages is beginning to supplant more traditional large shipping containers. International vendors are eschewing larger shipping containers, shifting to sending those small packages directly to consumers, said Perez.

Commercial companies, including shippers and product suppliers, talked with CBP officials at the 21CCF meeting about transformative technologies that could be brought to bear to address the changing environment.

Those companies all advised CBP that blockchain, artificial intelligence, commercial cloud and machine learning technologies should be critical parts of the agency's next generation customs system.

"All of those have enormous potential," John Drake, executive director for supply chain policy at the U.S. Chamber of Commerce. Drake also advised CBP to keep its current Automated Customs Environment (ACE) system – a cargo processing system that took 17 years to complete -- up to date, as well as not to overlook on-the-ground technologies in the mix.

"AI linked to machine learning," said Rick Ryan, senior research fellow at Pitney Bowes Inc., "can be deployed to streamline the process by identifying threats and prohibited items." The technologies, he said, could be particularly valuable in winnowing out packages used to ship counterfeit, dangerous goods, as well as drugs into the U.S. from overseas.

CBP has already begun piloting a blockchain-powered system to manage certain trade-agreement certifications. But outside observers cautioned that the agency must keep its policies as up to date as its technologies.

"Technology always outpaces regulations," said Craig Seelig, product manager at single shipping platform solutions provider Wisetech Global. CBP, he said, has struggled with electronic recording keeping regulations, as well as federal security concerns over commercial cloud-based solutions. "Keep that in mind moving forward," he said.