When speed to market is a priority—and these days, this universal truth is inescapable for any apparel-related business—importers who are held up by U.S. Customs and Border Patrol (CBP) because of intellectual property protections stand to lose valuable time and money.
It’s a frustration many apparel importers know quite well. All too often IP protected goods are held for exam simply because CBP doesn’t immediately know the retailer or manufacturer has this authority to make entry.
“Often, apparel importers may assume that they’re permitted to make entry on the IP protected goods because it’s authorized in their purchase order, or [they] have an agreement on file,” explained Salvatore J. Stile II, president of logistics provider Alba Wheels Up International. “However, CBP doesn’t have access to these purchase orders unless it’s requested.”
Given that importers are traditionally not the licensee in apparel shipments, this has become a frequent occurrence, said Vincent Iacopella, executive vice president of growth and strategy at Alba. As a result, these challenges can combine to result in a variety of adverse short- and long-term impacts, including exam fees, possible holds and delays to market. Longer-term effects may also include a higher risk assessment of the importer by CBP, chargebacks due to late delivery, and a damaged relationship with the importers’ customers and retailers.
“Full container exam costs can be as high as $2,200 per container,” Iacopella added, “and so delays can be substantial if not handled proactively.”
To help importers circumvent this issue, logistics provider Alba participated in the U.S. Customs IPR Blockchain Proof of Concept this previous fall, a program that tested the potential use of blockchain technology within intellectual property rights. Blockchain, a digital ledger technology, is widely considered to be an impactful tool in increasing verification and transparency across the entire supply chain because of its immutability.
During the September test, both Alba and apparel importer Gutotai USA tested their use cases in the proof of concept.
For Guotai, navigating IPR holds was a stumbling block the company was eager to solve. With Alba as its broker, even before any proof of concept tests, Alba’s IPR program was able to take a proactive approach to the issue by using advanced data to anticipate challenges and flag shipments that may be vulnerable to these types of holds, said Joseph Cohen, president of Guotai USA.
“Guotai USA companies import for dozens of IP-protected brands, and we are often not the licensee although we are authorized,” Cohen said. “We valued the opportunity to participate in the U.S. Customs Border Protection Proof of Concept for IPR and blockchain applications to demonstrate the challenges we sometimes face on this issue, which can be costly.”
This was not the first test of blockchain CBP had conducted, having tested it in 2018 for origin certifications to qualify goods for preferential treatment under NAFTA and CAFTA-DR. Under this test, such benefits as expedited communication and entry processing, as well as better documentation, were observed.
The technology is also being tested by various supply chain and cross-border management companies for tracking cargo containers, said Stile, as well as confirming cross-border payments and transferring shipping documents.
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